Stepping over dollars to pick up dimes? Why volume based discounts can be counter-productive.

If you’re considering shipping with a single carrier to receive volume based discounts, you may be stepping over dollars to pick up dimes. The carrot that carriers dangle in front of you is in fact usually too good to be true. Not only do you typically end up not saving money by shipping with only a single carrier, you end up with highly leveraged risk. Learn more about why you should consider using multiple carriers instead of just one!


Tyler Douglas

If you’re considering shipping with a single carrier to receive volume based discounts you may be stepping over dollars to pick up dimes. 

Carriers frequently offer volume based discounts to their customers.  These discounts can sound so good that your account exec might convince you to ditch other carriers to hit volume requirements for discounts.

I’ve personally worked with multiple shippers who’ve been in this predicament.  After they test out shipping with just one carrier to gain a volume based discount, they have always gone back to using multiple carriers.

So before you decide to officially ditch other carriers and start shipping with just one, please read this!  I’ve assembled the top 3 reasons shippers I’ve worked with have always gone back to a multi-carrier strategy after trying to work with only one.

The first, and arguably most counterintuitive, is that working with multiple carriers gives you more bargaining power. If you’re all in with one carrier, you lose a big chip because they know they’ve already won all of your business.

The only way for them to get more volume from you is for your business to grow.  Whereas if you’re shipping with multiple carriers and splitting volume, they’re incentivized to come up with creative ways to earn more of your business. 

I’ve seen this manifest in interesting ways like changing your dimensional weight divisor, removing specific surcharges, or reducing your volume requirements to get discounts. 

Second, if you only ship with one carrier, you’re likely giving up service options for certain delivery configurations that will save you money. For example, if you only ship with FedEx and you have shipments under 1lb, you’re giving up the ability to ship with USPS Ground Advantage.  This service is specifically designed to help shippers save when shipping parcels under 1lb. 

Similarly, if you only ship with USPS, you might be giving up opportunities to save money on deliveries to businesses address where you can leverage FedEx Ground.  I’ve seen shippers save upwards of $50 per shipment to places like Hawaii and Alaska when they can leverage services like FedEx 2Day instead of USPS Ground Advantage. 

With millions of combinations of addresses, parcel types, and various surcharges, using multiple carriers grants you the highest likelihood of getting the absolute best rate for any delivery. 

Finally, and most importantly, using one carrier eliminates your ability to load balance - a practice that helps you avoid highly leveraged risk. But what is load balancing you ask?  Load balancing is strategically placing shipping volume across multiple carriers as necessary.  

You can load balance to do things like decrease risks caused by carrier bottlenecks.  For example, if a local sorting center is experiencing delays, you can reroute your parcel volume to another carrier to reduce delays.  

Or when demand surcharges kick in during peak season, you can split volume between carriers to limit the change in parcel volume over baseline. This will help you reduce or eliminate demand surcharges as your volume skyrockets during the holiday buying season.

Long story short, by opting to only ship with a single carrier, you’re likely giving up more than you’re gaining. Whether it’s sacrificing flexibility, giving up lower cost shipping options, or reducing your leverage for future negotiations, shipping with a single carrier isn’t what your account exec chops it up to be.

Get your free savings analysis from String!