Driving down carriage costs – a conversation with Paul Hill

The last mile can be a long one, especially with budgets tightening. With high inflation rates and customers tightening their purse strings, it’s undoubtedly a challenging time. However, this doesn’t mean that customer expectations have dipped. Retailers are still expected to deliver better experiences than ever before, while simultaneously reducing the cost of deliveries.

In fact, our 2023 survey found that 79% of consumers admit they wouldn’t purchase from a brand again after a negative post-purchase experience. That’s a significant amount of customers.

So, how can retailers drive down carriage costs and optimise customer experiences in the final mile? To answer this question, Paul Hill, our customer success director, joined us on the podcast. Paul is an expert in all things shipping, especially when it comes to carriage cost efficiencies and optimising last mile logistics. But where do you start? It comes down to adopting smart allocations.

It’s as simple as ABC:

• A – Availability. Which carriers can commit to delivering against promise?
• B – Blocking logic. Are there rules in place that need to be taken into account? For example, “don’t deliver via Carrier X on weekends” or “give all next-day traffic to Carrier Y”.
• C – Cost. That’s the bottom line. What is most cost-efficient?

If you haven’t used smart allocation before, it can sound daunting. Yet, with the right intuitive user interface, it takes a minimal amount of time to review, and requires just a few minutes of investment per day to maintain a completely smooth operation.

While some carrier management platforms use complex programmatic expressions to police allocation rules, Sorted’s Delivery Experience Platform uses step-by-step wizard configuration. The aim of the ABC allocation review process is to ensure the allocations are as optimised as possible. The data you gather over months or quarters can be used to make incremental changes that will continue to lower carrier costs, and ensure that the prime carrier is selected for the job.

Staying with the theme of smart allocations, a rules engine like the ABC model lets retailers be smarter about surcharges too. This is something many retailers are paying close attention to.

For example, if you have a delivery heading to the Outer Hebrides, there will likely be a surcharge associated with the Highlands and Islands destination. Adopting smart allocations, you can give the carrier the traffic that suits them best, avoid highly priced surcharges, and balance the interests of the retailer and the consumer.

Equally, you can load balance to ensure you don’t go above the agreed number of trailers, and avoid those pesky additional charges. Keep a close eye on commercial outcomes and adapt the smart allocations accordingly.

Retailers should also look at additional charges. Fuel isn’t cheap, nor are driver wages – and drivers themselves are scarce too. When it comes to the last mile, always ask whether there’s any space in that vehicle. Can more be done to optimise carriage costs?

Many debate whether to use a Carrier Management System (CMS), but it’s an essential weapon in your arsenal. When it comes to business relations, honesty is the best policy. You need data to be as real-time as possible if you’re making truly data-driven decisions.

A CMS not only provides more accurate rates, it also helps you negotiate more collaboratively with your carrier partners. There’s no longer a need for inflated, estimated volumes. Instead, you can forensically see what your traffic profile looks like, and your volume by carrier and geography. In a nutshell, you can present data in an honest, upfront manner.