VIENNA, VA — April 29, 2025 — OnTrac, the #1 alternative carrier network for ecommerce, today announced two targeted programs designed to help retailers regain control in a rapidly-shifting market landscape. The Reciprocal Discount Program helps importers respond quickly to rising tariff exposure, while the Ground Switcher Program gives brands an opportunity to pay less for better speed—offering a compelling off-ramp for shippers still relying on Ground Saver-style delivery models undergoing delays and unexpected price increases. 

Both programs respond to mounting pressure on logistics strategies once considered cost-efficient. As tariffs climb and deferred ground options grow more volatile, retailers are seeking smarter pathways that don’t require operational overhaul. OnTrac’s latest initiatives are built for speed—both in transit and activation. 

Reciprocal Discount: Act Before the Tariff Freeze Ends on June 30

With the current tariff freeze set to expire on June 30, 2025—and China notably excluded—importers are facing a narrow window to adjust sourcing strategies before landed costs rise. OnTrac’s Reciprocal Discount Program is built for this moment, offering tailored incentives to ecommerce brands that have already begun diversifying their global supply base. 

“The Reciprocal Discount Program offers targeted relief for importers who’ve already taken steps to future-proof their supply chains,” said Michael Cannizzo, Chief Commercial Officer at OnTrac. “By linking incentives to sourcing agility, we’re seeking to help forward-thinking brands act before tariffs further impact the bottom line.”

Program highlights include:

• Targeted Pricing Based on Sourcing Exposure — Shippers provide basic origin data to receive a Tariff Resiliency Score, which helps determines discount eligibility
• Alternative Injection Support — OnTrac helps shippers identify zone skip and routing options that offer more flexibility as brands rethink their inventory positioning strategies and air capacity tightens.
• Long-Zone Spend Reduction — Shippers can move volume closer to end customers via OnTrac’s 1–2 day network to minimize reliance on costly long-haul or air lanes
• 7-Day Network Advantage — While traditional carriers limit or charge extra for pickups and pause linehaul and sort operations on the weekends, OnTrac operates seven days/week across pickup, sort, linehaul, and delivery—enabling later fulfillment cutoffs, weekend delivery promises, and incremental sales capture

“This isn’t just about rates—it’s about giving customers more control when they need it most.” said Cannizzo. “Whether it’s shifting injection points, testing new routes, or offsetting landed costs, we’re helping customers take action now—before the next wave of pressure hits.”

Ground Switcher: Better Transit Times, Lower Cost—No Drama

Many ecommerce brands still rely on deferred ground models in the belief they offer the best combination of cost and reach. But as those offerings grow slower, more expensive, and subject to frequent pricing and service changes, the value proposition is increasingly uncertain. OnTrac’s Ground Switcher program is built for shippers ready to simplify—delivering faster delivery and meaningful savings beyond Ground Saver-type rates, without operational disruption. 

“Ground Switcher is designed to help shippers make a smart switch—quickly,” said Cannizzo. “It simplifies onboarding, accelerates time-to-value, and improves delivery speed with pricing that’s ready to move.”

Program highlights include:

• Purpose-Built Pricing — Discounts are specifically structured for shippers transitioning from Ground Saver and postal consolidator models, many of which are facing turbulence from changing cost structures and delivery performance
• Built-In Protections — Includes $100 package protection, 7-day/week operations, and no weekend surcharges
• Fast Onboarding — Especially quick if a shipper is using an OnTrac partner platform (view partners)
• Predictable Service, Consistent Speed — Shippers can avoid the uncertainty of frequent rate changes and shifting delivery commitments, and deliver via better transit times with a stable, purpose-built ground network

Availability

The Reciprocal Discount Program is available through June 30, 2025, for shippers who are not currently working with OnTrac, can provide basic sourcing data, and are looking to reduce landed costs through more diversified origin strategies.

To learn more or request a consultation, visit ontrac.com/reciprocaldiscount

The Ground Switcher Program is available through August 31, 2025, for shippers who are not currently working with OnTrac, currently using a Ground Saver-type service, and are seeking to lower costs with the benefit of improved speed.

To learn more, visit ontrac.com/groundswitcher.

About OnTrac

OnTrac is the parcel carrier of choice for last-mile ecommerce deliveries, helping retailers and shippers build a competitive advantage through faster transit times, lower costs, and coast-to-coast coverage. The OnTrac delivery network reaches more than 70% of the U.S. population across 35 states and Washington, D.C., providing retailers with a reliable alternative to traditional shipping services. With over 65 years of experience, OnTrac is a trusted partner for leading ecommerce brands seeking greater flexibility and efficiency in their supply chains. For more information, visit www.ontrac.com.

***

Vienna, Va. — January 29, 2025 — OnTrac, the #1 alternative parcel carrier network, today announced the appointment of Michael Cannizzo as the company’s new Chief Commercial Officer (CCO). With an extensive background in rapidly scaling commercial organizations at the world’s leading logistics companies, including UPS and Amazon, Cannizzo’s appointment comes as the company looks to contend with traditional parcel carriers as the most credible alternative. As CCO, Cannizzo will spearhead a recently-redesigned and expanded commercial organization to drive market share growth.

“Michael’s leadership experiences with the launches of UPS Supply Chain Solutions and Amazon Shipping will prepare OnTrac for its next phase of growth,” said Mike Duffy, CEO of OnTrac. “The market is looking for a credible alternative to the traditional carriers in what promises to be a very volatile year in the parcel industry. With Michael’s help, we’ll solidify our position as the provider of choice for e-commerce and B2B shippers. We’re excited to welcome Michael to the OnTrac team.”

Cannizzo’s appointment caps a year of highly-regarded industry veterans joining the executive team at OnTrac, including:

• Mike Brown (formerly of Amazon, Chewy.com, and Flexport) appointed as CFO;
• Brian Spencer, (formerly of DHL Ecommerce and UPS) as VP Sales;
• Robin Rodriguez (formerly of FedEx and Forward Air) as VP Sales Operations;
• Vijay Ramachandran (formerly of Pitney Bowes and Manhattan Associates) as VP Marketing;
• Josh Taylor (formerly of UPS and ShipWare) as VP Revenue Management.

This leadership team collectively brings over a century of experience in the e-commerce logistics and small parcel industries, cementing OnTrac’s position as the most capable alternative in the market.

“I couldn’t imagine a better time to be joining OnTrac, just as the company emerges as a true challenger to traditional parcel carriers,” said Cannizzo. “I’m excited to lead our world-class commercial team in engaging with all our customers, to understand how we can better meet their needs. We have an opportunity to become the preferred logistics partner for all parcel shippers amidst unprecedented market change.”

For more information or to schedule an interview, please contact Caroline Taylor at mediarelations@ontrac.com.

###

Download Full Report

The e-commerce landscape is in a constant state of evolution. Over the last few years, consumers have come to depend on online shopping for their daily needs, mounting the pressure on retailers to provide a faster, hassle-free home delivery experience that meets their expectations. At the same time, retailers are constantly facing a number of supply chain challenges, ranging from avoiding the skyrocketing price hikes and capacity limits from national carriers in 2020, to overcoming the impacts of inflation and softened demand today. Exhibit 1 shows the greatest obstacles supply chain professionals are currently managing.

As the industry continues to evolve, one thing remains true: A retailer’s supply chain strategy is fundamental to their success and can make or break their business. How retailers handle their supply chain strategies today is not the same as it was three years ago, and adapting to the ever-changing environment is critical.

OnTrac partnered with Hanover Research to survey 300 C-Suite, VP, and director level supply chain professionals at large retailers about the challenges they’re currently facing, how they plan to respond to those challenges, and areas in which they plan to invest. The results indicate that retailers are investing in faster delivery, leveraging multi-carrier strategies, consolidating their carrier bases, and have already implemented buy online, pick up in-store (BOPIS) and other forms of click and collect.

In this whitepaper, we will dive into the key takeaways and offer recommendations to help retailers overcome these obstacles and develop a supply chain strategy that delivers a competitive advantage.

Key Takeaways

1. Retailers are Investing in 2-Day Delivery or Faster
2. Retailers have Embraced Carrier Diversification
3. Carrier Consolidation is Already Happening
4. Retailers Have Already Implemented BOPIS and Click and Collect

Retailers Are Investing in Two-Day Delivery or Faster

Consumers today are increasingly shopping around to find faster delivery options—and retailers are working to answer the call in order to win back customers.

We asked over 6,000 consumers about their shopping habits and preferences and 100% said that faster delivery influenced their decision to shop with a retailer. With so much focus on speed, it is no surprise that retailers are prioritizing how to deliver orders to their customers as quickly as possible. Nearly 40% of retailers plan to leverage faster delivery as their primary differentiating strategy, as shown in Exhibit 2.

When it comes to the level of speed retailers are aiming to achieve, two-day delivery or faster is the goal. Exhibit 3 shows that 64% plan to invest in two-day delivery over the next two years, while 61% plan to offer two-day delivery or faster as their standard commitment for the 2024 peak season, as shown in Exhibit 4.

As faster delivery continues to drive more purchasing decisions, retailers are investing in speed to differentiate from the competition. Retailers that make faster delivery part of a seamless online shopping and delivery experience stand to acquire and retain customers and boost brand loyalty.

Retailers Have Embraced Carrier Diversification

Carrier diversification is no longer a trend but has become fundamental to a successful supply chain strategy. Retailers have experienced the positive impacts of using alternative carriers and continue to lean on them today. Nearly all retailers currently use at least two alternative carriers, while 45% use four or more carriers. More than three-quarters (77%) are sending 16-50% of their total volume to alternative carriers, as shown in Exhibits 5 and 6.

Why are retailers diversifying their carrier bases? The pandemic proved the dangers of single-carrier strategies, revealing that relying solely on one parcel carrier subjects shippers to a multitude of risks, including rising costs, limited flexibility, and delivery delays and supply chain disruptions that compromise the customer experience. Compared to national carriers, alternative carriers provide faster delivery times, lower costs, increased flexibility, and personalized support.

The use of multi-carrier strategies is expected to continue moving forward, with 76% of retailers planning to utilize alternative carriers over the next year. This data makes a compelling case for the staying power of alternative carriers, which were responsible for only 4% of parcel deliveries in January 2020.

Exhibit 7 highlights why retailers use alternative carriers, with the majority citing cost-savings (57%) and faster delivery (43%) as the leading factors. Retailers also noted the influence of the quality of the delivery experience, on-time performance, and geographic coverage when deciding to work with alternative carriers.

Alternative carriers have proven especially beneficial as retailers work to mitigate the impacts of rising costs. In the last year, 53% of retailers received an off-schedule price increase on top of general rate increases, with 77% of those price hikes falling between 5-19%, as shown in Exhibit 8.

The duopoly has continued to raise costs, even as the carriers have been losing volume. Most recently, FedEx and UPS added surcharges ranging from $3.95 to $5.85 for deliveries in 82 ZIP codes, many of which cover parts of major urban areas. Retailers are more willing than ever to turn to alternative carriers in order to avoid such price hikes. Exhibit 9 shows that nearly 90% of retailers surveyed would switch from FedEx and UPS to get up to 20% cost-savings, up from 83% in 2023.

Carrier Consolidation is Already Happening

While Carrier diversification is here to stay, how retailers leverage it today to improve their shipping strategies is drastically different than three years ago. During the pandemic, carrier diversification became a necessity, and retailers could look to many different regional carriers that could provide faster delivery than UPS and FedEx, increased capacity, and lower shipping rates. However, conditions have changed over the last year and many retailers have over-diversified. Retailers on average used a record high of 6.17 last-mile delivery carriers in June 2023, as shown in Exhibit 10.

Retailers that have failed to consolidate their carrier mixes are struggling to balance multiple partners and losing out on opportunities for faster delivery and better pricing. Over-diversification is also causing constraints within the warehouse from sortation capability to available doors for carrier pickup. What’s next for carrier diversity? Carrier diversification dipped at the start of 2023, then the number of carriers shippers relied on spiked in June and July, as shippers prepared to mitigate supply chain disruptions from a potential UPS strike. Now that strike concerns have been alleviated, diversification is slowing down. Exhibit 11 reflects how number of carriers per company declined for three straight months at the end of 2023, dropping to 5.74 in December.

Carrier consolidation is already happening. Retailers on average are dropping around one carrier per month—and this theme is expected to continue. Capacity is no longer a concern due to softened delivery demand, and there is simply not enough volume to split up among multiple different carriers.

Retailers Have Already Implemented BOPIS and Click and Collect

It’s no secret that buy online, pick up in-store (BOPIS) took off during the pandemic. Shippers adopted BOPIS and other forms of click and collect, including curbside pickup, in an effort to help offset rising logistics and last-mile delivery costs. Today, retailers continue to invest in BOPIS, even while 28% of consumers plan to decrease their use of this option. Nearly all retailers currently offer BOPIS from at least some store locations, with 74% planning to expand these options to additional stores, as shown in Exhibit 12.

While there is no denying its growth, retailers are still struggling with a number of logistical and operational challenges related to BOPIS, largely stemming from the physical stores themselves. Exhibit 13 shows that over half of retailers are concerned about the impacts of BOPIS on store operations and staff. Consumers anticipate their BOPIS orders to be ready for pickup within a few hours after checkout, and any errors or delays during pickup can negatively affect customer satisfaction and loyalty. At the same time, many brick-and-mortar stores were not designed for fulfillment and pickup of online orders, and when inventory is not quickly available, retailers risk losing sales to competitors that can fulfill a consumers’ order more quickly.

To successfully implement BOPIS, retailers will need to invest in inventory management systems to get real-time stocking updates and merge online and in-store inventory tracking. Retailers must also communicate clearly with customers across multiple channels on how to best use click and collect in stores to ensure a seamless, efficient pickup experience, while minimizing wait times.

How can retailers respond to the ever-evolving e-commerce landscape and build flexible, adaptable supply chain strategies that empower them to win back customers and gain a competitive advantage?

Recommendations

1. Win Customers with Faster Delivery
2. Leverage Free Shipping and Home Delivery to Rebuild Brand Loyalty
3. Consolidate Your Carrier Mix with the Right Carrier Partner

Win Customers with Faster Delivery

Consumers today want what they want, when they want it. In today’s instant gratification world, faster delivery is a key purchase driver that retailers can use to stand out from competitors, win new customers, and re-establish brand loyalty. This rings especially true for same-day and next-day delivery, which are increasingly driving consumers’ shopping decisions, as reflected in Exhibit 14. Speed also drives consumers to make future purchases, with 51% expressing they would shop again with a retailer that provides faster delivery.

Not only has speed grown as a competitive differentiator, but consumers are paying for it more than ever. Over the last year, 52% of shoppers paid for faster delivery, with two-thirds having paid more for next-day (66%) and same-day (61%) delivery, as shown in Exhibit 15. When it comes to how much consumers will spend, Exhibit 16 shows that nearly half (49%) will pay at least $4 for same-day delivery.

Retailers that fail to invest accordingly stand to lose customers and fall behind the 64% of brands that plan to offer two-day delivery or faster in the next two years. Diversifying your carrier base with a proven alternative that can provide faster delivery options empowers you to acquire and retain more customers, while transforming your supply chain strategy into a competitive differentiator.

Leverage Free Shipping and Home Delivery to Rebuild Brand Loyalty

Consumers today are constantly researching and comparing brands before making a purchase, and they have shown that they have no problem switching to retailers that better meet their expectations.

How can retailers win back customers and build lifetime value in a competitive, brand-agnostic climate? Along with fast delivery, consumers have made the answer clear: Prioritize free shipping and home delivery. Exhibit 17 highlights why consumers shop again with a retailer that they previously abandoned, naming free shipping as the leading factor.

Shipping cost also plays a critical role in driving customer loyalty. Sixty-four percent of consumers surveyed would purchase again from a retailer that provides free shipping, as shown in Exhibit 18.

Along with free and fast delivery, answering consumers’ demands for convenience by providing home delivery is crucial to acquiring and retaining customers. Despite nearly all retailers offering BOPIS, consumers overwhelmingly prefer having orders delivered to their homes, as reflected in Exhibit 19. While BOPIS will continue to exist as an option, Exhibit 20 highlights consumers’ plans to increase their use of home delivery moving forward.

Continuing to invest in BOPIS while consumers decrease their use of this option and prioritize retailers that provide faster delivery simply does not make sense. Retailers that can provide free shipping and deliver products directly to their customers’ doorsteps more quickly will be well-positioned to build brand loyalty and gain a lasting edge over competitors, while also avoiding the operational problems and required investment that come with BOPIS.

Consolidate Your Carrier Mix with the Right Carrier Partner

The last-mile landscape and market conditions have evolved since the pandemic began. Since then, more carriers have entered the market and demand has not kept up with supply. Carrier diversification today is a matter of quality over quantity. Continued economic uncertainty has led to lower retail sales and e-commerce volumes, and in turn, forced retailers to go back to the table and look at over-diversification as a problem. Shippers should now be looking at a two to three carrier solution, rather than five or more options. Not all carriers are created equal, and retailers need to be strategic when choosing a partner. How can shippers choose the right carrier partner in a saturated market where supply exceeds demand? When evaluating potential carriers, it is imperative that shippers determine their goals, analyze the data, and prioritize service and partnership. Retailers should choose a proven alternative carrier that can provide the best combination of the following factors:

1. Speed: In today’s instant gratification economy, consumers are increasingly choosing retailers that provide faster delivery. Retailers should choose a carrier that can meet consumers’ growing demands for faster delivery in order to remain competitive.
2. Cost Savings: Retailers should look for a carrier that can offer the most cost-effective options to help them reach their customers. Too many retailers have compromised the delivery experience to compensate for rising costs, with 74% opting for slower shipping, despite consumers’ demands for faster delivery (Exhibit 21).
3. Service: Cost is important but shouldn’t be the only consideration. Retailers should carefully examine the service offerings and have conversations to understand if a potential partner’s solution fits their needs. A strong on-time performance record is critical, as well as an innovative tracking experience to make sure customers are satisfied.
4. Network Coverage: Nearly half (46%) of retailers cite limited delivery area as the greatest downside to using alternative carriers. Partnering with a carrier that can provide the greatest amount of geographic coverage will prevent retailers from having to onboard multiple carriers to reach their customers in different locations.
5. Delivery Innovation: Carriers that are investing in their networks and technology to improve the consumer experience should be a key focus for shippers.
6. Experience: A reliable, proven carrier with experience, expertise, and infrastructure can help retailers keep up with the evolving e-commerce delivery landscape.

Shippers that move away from reliance on the duopoly and diversify their carrier mixes with a proven alternative can set themselves apart from their competitors. Retailers should be intentional in choosing a long-term partner that meets their needs and can help them reach their goals. The right carriers will be transparent, flexible, and long-term partners who are committed to a retailer’s success.

As e-commerce continues to grow, faster delivery will continue to grow its influence as a key purchase driver and competitive differentiating tool. Retailers that fail to answer consumer demands for speed and convenience and keep up with new industry trends will lose business and fall behind. Shippers should move away from reliance on the duopoly and diversify their carrier mixes with a proven alternative that can help them stand out from the competition. Retailers should act now to partner with a proven alternative that empowers them to provide faster, free home delivery that builds brand loyalty, while increasing supply chain flexibility and protecting their margins with lower costs.

Download Full Report

About the Author

An industry veteran with over 20 years of experience, Josh Dinneen is the Chief Commercial Officer at OnTrac, the carrier of choice for last-mile, e-commerce parcel delivery, where he oversees revenue strategy, sales, marketing, account management, and call center operations. Josh has spearheaded the company’s transcontinental delivery service launch, which provides faster, cost-effective, coast-to-coast delivery to leading shippers and retailers. Prior to his current role, Josh created LaserShip’s e-commerce hub and spoke delivery network as the Vice President of Supply Chain.

About OnTrac

OnTrac is the parcel carrier of choice for last-mile e-commerce deliveries that helps retailers and shippers build a competitive advantage through faster delivery times, lower costs, coast-to-coast coverage, and reliable on-time performance. The OnTrac delivery network reaches approximately 85% of the U.S. population in 35 states and Washington, D.C. and enhances retailers’ ability to meet growing demand in the consumer e-commerce delivery market. With more than 65 years of experience, OnTrac has evolved into a critical part of the e-commerce infrastructure and is trusted by leading retailers and shippers that desire reduced transit times and increased flexibility within their supply chains.

We are thrilled to announce that we’ve expanded our e-commerce delivery network into the Midwest, empowering retailers to reach over 17 million additional consumers with residential e-commerce delivery at a lower cost. The added delivery coverage will stretch beyond Chicagoland and Illinois into the greater Midwest, through Madison and Milwaukee, Wisconsin, the twin cities of Minneapolis and St. Paul, Minnesota, and St. Louis, Missouri.

“We chose to expand to Chicago and the Midwest based on overwhelming customer feedback for a proven alternative carrier with our speed, cost-savings, service, and scale. With our expansion, OnTrac will now serve the top 30 metro markets in the United States and help our retail partners reach 70% of the population across 35 states and Washington, D.C.,“ said Josh Dinneen, Chief Commercial Officer. “OnTrac continues to grow our network to help our shipping partners reach their customers with faster, reliable delivery. We are excited to launch in Chicagoland and the Midwest and look forward to welcoming more team members to the OnTrac family.”

Our 334,000 square foot center, equipped with state-of-the-art material handling equipment, including fully automated small package sorters, will facilitate millions of deliveries to consumers across the Midwest.

Our expansion is the latest network and infrastructure investment we’ve made to support retailers. We launched deliveries seven days a week in March to help retailers and shippers reach consumers every day, including Saturday and Sunday at no additional cost. Last summer, OnTrac launched in Texas in the fast-growing, urban megaregion of Dallas-Fort Worth, Austin, Houston, and San Antonio. OnTrac also expanded its transcontinental delivery service—which connects the company’s East and West Coast delivery footprints to move packages from coast-to-coast in four days or less—to all of its sort centers.

Midwest consumers will be able to take advantage of the benefits of the OnTrac proprietary delivery platform, including its Visual Proof of Delivery (vPOD) service, which improves visibility and transparency by providing a photo confirmation with time stamp when package deliveries have been made, and NotifyMe, which provides SMS notifications to alert consumers of attempted and successful deliveries.

OnTrac continues to innovate and help our retail partners build competitive advantage through faster delivery solutions that win customers, enhance the delivery experience, and build brand loyalty. Contact our team to learn more about our Midwest expansion and how you can partner with us.

We’re excited to announce that we’ve partnered with Shipwise (formerly DesktopShipper) to empower retailers and shippers with faster, reliable, cost effective delivery solutions through ShipWise’s easy-to-use software to optimize delivery operations in today’s competitive market.
&nbsp

Key benefits of the partnership include:

• Extensive Coverage: The OnTrac delivery network reaches approximately 70% of the U.S. population across 35 states and Washington, D.C., and is continuously growing. The latest expansion is to Chicagoland and the greater Midwest, extending its network coverage into Madison, Milwaukee, Minneapolis-St.Paul, and St. Louis.
• Faster Delivery Times: OnTrac offers up to 2 days faster delivery compared to other carriers, helping businesses meet the ever-increasing demands of today’s e-commerce consumers.
• Reduced Shipping Costs: With OnTrac, businesses can enjoy cost savings of 10-35% compared to traditional carriers, improving their bottom line and competitiveness.
• Enhanced Reliability: OnTrac boasts a remarkable 98%+ on-time performance record, ensuring customers receive their packages predictably and on time.
• Minimize Errors: ShipWise automates everything from order entry and address verification to real-time tracking and delivery confirmation. Premium features like Cartonization optimize packaging, boosting accuracy and efficiency throughout your fulfillment process.
• Convenient Delivery Options Every Day of the Week: OnTrac provides Saturday and Sunday deliveries at no additional cost, helping shippers meet their customers’ expectations of faster delivery.
• Improved Customer Experience: OnTrac’s innovative delivery features, such as visual proof of delivery and SMS notifications, keep customers informed and satisfied.
• Easy Integration: Get up and running quickly with ShipWise’s intuitive set-up wizard, which walks users through setting up a new OnTrac account.

“OnTrac is a proven, alternative parcel carrier that empowers shippers to meet consumers’ growing demands of faster home delivery while lowering their costs,” said Josh Dinneen, Chief Commercial Officer. With ShipWise’s powerful, easy-to-use software, shippers will be able to seamlessly leverage our delivery network to acquire customers, build brand loyalty, and improve margins.”

We’re excited to partner with ShipWise to help achieve our mission of fast and reliable delivery for every package, every day.

Ready to create your competitive advantage with industry leading last mile delivery powered by OnTrac? Learn More.

Download Full Report

When COVID-19 sparked the shift from in-store to online shopping, retailers had to revamp their supply chains overnight. The pandemic quickly exposed the problems with single-carrier strategies, driving retailers to diversify their carrier bases and add alternative carriers to accommodate heightened volume and offset the seemingly endless surcharges, rate increases, and capacity constraints implemented by national carriers.

The last-mile landscape and market conditions have evolved since the pandemic began. Since then, more carriers have entered the market, demand has not kept up with supply, and national carriers are offering aggressive price discounts to win back volume.

So what’s next for carrier diversification?

The way retailers should approach diversifying their carrier bases today is not the same as it was three years ago. Not all carriers are created equal.

In this guide, we’ll explore why shippers are using multi-carrier strategies, the current dynamics between shippers and carriers, how retailers can choose the right carrier partner, and what the future looks like for carrier diversity.

The Rise of Carrier Diversity & Benefits of Multi-Carrier Strategies

Carrier diversification is no longer a trend but has become a fundamental part of a successful supply chain strategy. Retailers have experienced the positive impacts of using alternative carriers and continue to leverage them today. OnTrac surveyed over 150 supply chain executives from leading omnichannel retailers and found that 89% are currently relying on alternative carriers, with three-quarters (76%) of those sending 16-50% of their total volume to alternative carriers.

Why are retailers diversifying their carrier bases? Relying solely on one parcel carrier subjects shippers to a multitude of risks, including rising costs, limited flexibility, and delivery delays and supply chain disruptions that compromise the customer experience. Compared to national carriers, alternative carriers provide faster delivery times, lower costs, greater flexibility, and personalized support.

Sixty percent of retailers chose to use alternative carriers due to faster delivery, with another 36% indicating they were influenced by cost savings. Retailers also cited quality of delivery experience, on-time performance, and geographic coverage as driving factors.

The use of multi-carrier strategies is expected to keep pace moving forward, with more than half (53%) of retailers planning to utilize alternative carriers over the next year. This data makes a compelling case for the staying power of alternative carriers, which were responsible for only 4% of parcel deliveries in January 2020.

Current Shipper-Carrier Dynamics: Shippers Finally Have the Upper Hand

In a reversal from the last three years, retailers and shippers finally have the upper hand. Shippers are using the increasingly competitive landscape and soft demand environment to their advantage to negotiate discounts and concessions.

Shippers today have more parcel carrier options than ever.

More mature regional carriers have expanded and improved how they help shippers reach their customers, gig-economy carriers have emerged and carved out a niche in the marketplace, and USPS has become a more competitive option. With so many options available, a sophisticated shipper that cannot get what they want from Carrier A can likely negotiate and get it from Carrier B.

Along with increased competition, soft demand is helping to drive down shipping costs. In 2021 and 2022, carriers raised prices tremendously and shippers largely paid them out of necessity. Retailers in 2024 have far more leverage and are winning discounts from UPS and FedEx for the first time in four years, as the duopoly fights to win back business and market share amid soft market conditions. UPS is also fighting to win back volume lost amid concerns over the potential strike, during which time shippers diverted roughly 1 million parcels daily to other carriers.

Shippers are now seeing prices fall as a result of the current landscape. Ground parcel rates experienced their first year-over-year decline since 2019 in the third quarter of 2023. The ground parcel rate per package in Q3 was 23.2% above the January 2018 baseline, down from 26.9% the year prior. Larger pricing discounts, along with reductions in added fees and fuel surcharges, helped drive the index down. As for 2024, shipping discounts from UPS and FedEx are poised to soften the impact of their rate hikes on ground delivery customers, according to the latest TD Cowen/AFS Freight Index released January 17. The ground parcel rate per package is projected to reach 28.9% above the index’s January 2018 baseline in Q1, a decline from 31% the previous year.

Problems with Over-Diversification

While carrier diversity is fundamental to a successful supply chain strategy, the emerging trend of over-diversification puts retailers at a disadvantage. During the pandemic, carrier diversification became a necessity for retailers, as it became clear that a single-source logistics solution was no longer a viable supply chain strategy. Shippers could look to the many different regional carriers that could provide faster delivery than UPS and FedEx, increased capacity, and lower shipping rates. However, conditions have changed over the last year and a number of retailers have over-diversified. According to project44, retailers on average used a record high of 6.17 last-mile delivery carriers in June 2023.

Retailers that have failed to consolidate their carrier mixes are now losing out on opportunities for faster delivery and better pricing. Over-diversification is also causing constraints within the warehouse from sortation capability to available doors for carrier pickup.

What’s Next: The Great Carrier Consolidation

Carrier consolidation is already happening. Continued economic uncertainty has led to lower retail sales and e-commerce volumes, and in turn, forced retailers to go back to the table and look at overdiversification as a problem. Shippers should now be looking at a two to three carrier solution, rather than five or more options.

Carrier diversification dipped at the start of 2023, with many newer providers leaving the market. The number of carriers shippers relied on then spiked in June and July, as shippers prepared to mitigate supply chain disruptions from a potential UPS strike. Now that strike concerns have been alleviated, diversification is slowing down. The number of carriers per company declined for three straight months at the end of 2023, dropping to 5.74 in December.

Retailers on average are dropping around one carrier per month—and this theme is expected to continue. Capacity is no longer a concern due to softened delivery demand, and there is simply not enough volume to split up among multiple different carriers. UPS and FedEx are also offering aggressive shipping discounts to counteract volume declines, which may lead shippers to find it more difficult to justify dividing shipments among a wide range of carriers in an uncertain demand environment.

How to Choose the Right Carrier

Diversification today is a matter of quality over quantity. Not all carriers are created equal, and retailers need to be strategic when choosing a partner.

How can shippers choose the right carrier partner in a saturated market where supply exceeds demand? When evaluating potential carriers, it is imperative that shippers determine their goals, analyze the data, and prioritize service and partnership. Retailers should choose a proven alternative carrier that can provide the best combination of the following factors:

1. Speed: In today’s instant gratification economy, consumers are increasingly choosing retailers that provide faster delivery. Retailers should choose a carrier that can meet consumers’ growing demands for faster delivery in order to remain competitive.
2. Cost Savings: Retailers should look for a carrier that can offer the most cost-effective options to help them reach their customers.
3. Service: Cost is important but shouldn’t be the only consideration. Retailers should carefully examine the service offerings and have conversations to understand if a potential partner’s solution fits their needs. A strong on-time performance record is critical, as well as an innovative tracking experience to make sure customers are satisfied.
4. Network Coverage: A carrier that can provide the greatest amount of geographic coverage will prevent retailers from having to onboard multiple carriers to reach their customers in different locations.
5. Delivery Innovation: Carriers that are investing in their networks and technology to improve the consumer experience should be a key focus for shippers.
6. Experience: A reliable, proven carrier with experience, expertise, and infrastructure can help retailers keep up with the evolving e-commerce delivery landscape.

As e-commerce grows and brand loyalty declines, retailers that diversify their carrier bases by moving away from the two national providers and partnering with a proven alternative can differentiate themselves from the competition. Shippers should be intentional in choosing a long-term partner that meets their needs and can help them reach their goals. The right carriers will be transparent, flexible, and long-term partners who are committed to a shipper’s success.

Download Full Report

About the Author

An industry veteran with over 20 years of experience, Josh Dinneen is the Chief Commercial Officer at OnTrac, the carrier of choice for last-mile, e-commerce parcel delivery, where he oversees revenue strategy, sales, marketing, account management, and call center operations. Josh has spearheaded the company’s transcontinental delivery service launch, which provides faster, cost-effective, coast-to-coast delivery to leading shippers and retailers. Prior to his current role, Josh created LaserShip’s e-commerce hub and spoke delivery network as the Vice President of Supply Chain.

About OnTrac

OnTrac is the parcel carrier of choice for last-mile e-commerce deliveries that helps retailers and shippers build a competitive advantage through faster delivery times, lower costs, coast-to-coast coverage, and reliable on-time performance. The OnTrac delivery network reaches approximately 85% of the U.S. population in 35 states and Washington, D.C. and enhances retailers’ ability to meet growing demand in the consumer e-commerce delivery market. With more than 65 years of experience, OnTrac has evolved into a critical part of the e-commerce infrastructure and is trusted by leading retailers and shippers that desire reduced transit times and increased flexibility within their supply chains.

Josh Dinneen, Chief Commercial Officer of OnTrac, takes the stage at Manifest to discuss “Carrier Diversification 2.0: The Great Carrier Consolidation.” In this session, Josh shares key insights on the state of the parcel carrier market, current shipper-carrier dynamics, and what the future looks like for carrier diversity. Watch to learn how to choose the right carrier partner to help you future-proof your supply chain.

Click on the image above or here to watch.

Download Infographic

Download Infographic