Automated least cost carrier selection

– now includes comparison of fixed price same day courier deliveries to overnight local delivery services

When you aren’t going to, or don’t have to, send it same day, make use of the potential savings that overnight local delivery may offer via automated least cost carrier selection in our TMS system.

For more than a decade third party dispatch management software programs have been used to estimate the cost of freight prior to its dispatch which has allowed distributors to collect data about how, and with what carriers, they are spending their freight budget on. In more recent times these systems have also allowed operators to use this information to make informed decisions about least cost carrier selection.

Commonly these types of analyses have been limited to carriers where their rates are defined by fixed costs such as per tonne, or cubic metre, or item, to a defined post code rate zone. Nowadays, we have another pricing opportunity to contend with and that’s couriers and taxi trucks for local metropolitan same day deliveries.

Traditionally couriers have priced their deliveries on the basis of time, such as the number of hours or minutes it takes to do the delivery from point A to point B. Alternatively, they may have created a grid over the delivery area such as a city, and assigned the cost of the delivery to the number of squares on that grid that the truck must travel across. This is really just another convenient way of expressing a cost per km.

Typically Interstate carriers use a group of postcodes to define a delivery zone (Sydney for example) for which a cost per item or kg is assigned. Couriers and taxi truck companies do not normally use these same post code groups. Typically their rate cards are expressed as a cost from one suburb (origin) to the delivery suburb.

Because the two types of carriers use different zone systems, dispatch systems have generally focused upon the defined calculations of freight going to a post code defined zone. This has meant that distributors have not had the ability to estimate the freight cost automatically in real time when dispatching the cargo by courier or taxi truck.

Times have now changed and new systems are now on the market that have combined fixed rate prices via courier or taxi trucks between metropolitan suburbs with databases of suburb names, to allow a distributor to estimate the cost of delivery by a courier or taxi truck from your origin suburb to any destination suburb. Apart from allowing distributors to price and collect data about the cost of their courier deliveries, we now have the exciting ability for distributors to estimate the delivery cost of a courier or taxi truck delivery and compare it to the traditional Local Overnight delivery of the parcel carriers.

This ability now gives the customer the chance to quickly and easily compare the cost of delivering a carton by Same Day courier compared to the cost of an Overnight Parcel service and the same for larger items like pallets.

Why is this important? Couriers tend to price their deliveries based upon km travelled as discussed, for example sending a carton from Dandenong in Melbourne to Campbellfield is more expensive than Dandenong to Bayswater; a much closer destination. Overnight Parcel carriers on the other hand are not as sensitive to distance as they have a series of runs from a set base and use the economies of scale that come from set runs to offer a competitive delivery price. Furthermore, they may often discount the cost of subsequent items for the same delivery because the driver is already at the location. Essentially without getting into all the intricacies of the delivery systems, what is important to note is that the competing systems offer different methods for calculating delivery charges for a similar service. Each system has its strengths and weaknesses.

What we now have is the ability for the customers to directly compare the cost of delivering items by the two systems. This means that customers now have the ability to take advantage of strengths of each system and therefore lower their costs without lowering their service.

For example, Same Day couriers provide a service where they pick up in the morning and deliver that afternoon, between 3-5 hours later. However if the customer’s parcel is not available for dispatch until the mid-afternoon they have to wait until the next morning for the item to be collected and delivered. With an overnight carrier that item can still be collected and delivered the next day, so the service offered is essentially the same.

For small items such as one or two parcels, or a pallet, and for destinations say, on the other side of town, the Local Overnight service will be far lower cost than the courier or taxi truck. Under different circumstances say, five parcels to a neighbouring suburb, a sender may be able to achieve a far lower price for a delivery via a courier while dramatically improving the service and having it delivered on a Same Day basis.

The benefit of the software being able to quickly and easily compare these two different delivery methods in real time prior to the dispatch allows the sender to improve its service and lower its cost structure at the same time and that’s exactly what we are all trying to do – aren’t we? If you think this capability is something that could help you improve your business, then let us know and we’d be happy to help demonstrate it.

  • Popular Searches Hide Popular Searches