Parcel shippers need to strike a delicate balance between loyalty to carriers and the desire to diversifying their service providers, says Oscar Gladman, director of parcel carrier development with Geodis.

When it comes to strategies for working with parcel carriers, COVID-19 “changed everything for us,” Gladman says. A raft of new carriers entered the market during the height of the pandemic, in response a surge in consumer demand. And while that demand has softened a bit since then, capacity in the marketplace remains “very high.”

The mismatch is causing shippers and carriers to rethink their strategies. The big question they face: Is carrier consolidation the right option now, or should shippers continue down the path of diversification?

Gladman recalls a time of tight capacity that became especially evident beginning in early 2019. Packages were being left on the dock, he says, causing shippers to consider broadening their carrier base. In response, “new entrants popped up every day.”

Many of the new players were regional in scope, at least from the outset. Some grew to “super-regional” status as shippers continued to seek nationwide options to the dominant national carriers. In addition, the market saw an increase in niche carriers serving specific markets, in some cases moving packages from point to point rather than through a hub-and-spoke system. For shippers, there were “many unique options that weren’t broadly available before,” Gladman says.

Now, shippers have to decide whether to keep pursuing the strategy of carrier diversification, or reap the benefits of showing loyalty to a smaller number of service providers. A single-carrier option “is a very risky strategy,” Gladman says, but spreading one’s volume too thin is also problematic. The solution lies in striking a balance between “keeping strong relationships with long-standing partners while testing the market and finding new opportunities.”