In this episode, Timur Eligulashvili, Founder and President of Logistics Remix joins the show to talk about the rise of alternative carriers, and how shippers can best partner with them.
Finding the Right Alternative Carrier for You (ft. Timur Eligulashvili)
One topic dominated parcel shipping news, conferences, and conversations in 2023: carrier diversification.
The rapid changes eCommerce and parcel shipping have seen over the past few years have fueled a revolution in the carrier market. Regional/alternative carriers are gaining funding, expanding their networks, and earning customers as more and more shippers want to break away from the FedEx/UPS duopoly.
In this episode, Timur Eligulashvili, Founder and President of Logistics Remix joins the show to talk about the rise of alternative carriers, and how shippers can best partner with them.
- What’s fueled the growth of regional/alternative carriers
- What businesses should diversify their carrier mix
- Navigating challenges shippers face when diversifying
- How Logistics Remix matches shippers to carriers
- Predictions for the future of the carrier market
Hey, welcome back to another episode of LeaderShipping! We’ve covered a wide range of topics since starting this show, but there’s one that we really haven’t given its due yet. And that one has dominated industry conversations, whether that’s in the press or at industry conventions – and that topic is on carrier diversification. I think shippers are ready to get away from a duopoly of FedEx and UPS that acts like a monopoly. And this has really helped fuel the growth of regional carriers around the United States.
Joining us to talk about the regional and alternative carrier market is one of the most prominent experts on this topic, Timur Eligulashvili. Timur, welcome to the show!
Hey, Caleb. Thanks for having me on.
Absolutely. Timur is the President and founder of Logistics Remix, a carrier representative company. Timur why don’t you tell us a little bit about what that means and what is Logistics Remix?
I’d be happy to. So Logistics Remix, we help retailers and 3PLs bring new delivery providers into their network to save on costs, improve delivery performance, and ultimately drive mutual success. You know, prior to founding the company, I have 20 years experience in the logistics space. So I’ve been at a regional carrier, Lone Star Overnight.
I was at a multi-carrier shipping software system player called ShippingEasy and had some other stints at logistics companies such as uShip, Echo Global, C.H. Robinson and others. So, yeah, excited to talk about this topic that I think is near and dear to both of our hearts.
Yeah, me too. I think it’s one of those things that, as I mentioned, we’re lucky to have you because you’re one of the most prominent experts on this topic. And with your background that you just mentioned there with C.H. Robinson, Echo Global, uShip, ShippingEasy, Lone Star Overnight, you name it, your job over the last 20 years seems to have been providing customers with the option of choice. It seems like if you had a theme, that’s probably what it would be.
I’m really curious from your perspective, and just diving right into this, what has fueled the growth of regional or alternative carriers in recent years?
So I think, you know, in my mind, it really comes down to three things that happened. Over just the last three years, e-commerce grew by 50%, right? So we had some of the fastest growth in e-commerce in over 20 years, just in three. And all had to do with the pandemic, people staying home, people shopping more online. And you saw the rise in e-commerce just boom.
With that, when that demand goes up and as we know, the capacity is constrained. UPS, FedEx, the national carriers, they just couldn’t handle all the volume that the retailers were looking to ship. As you recall, a couple years ago, Carol Tomé, the CEO of UPS, made the statement just before peak season, basically saying to everyone, “hey, look, we’ve got 5 million more daily packages to deliver than there’s capacity.”
And you look at the end of the day, what does that mean? Well, that’s a message to all retailers that says, “we’re not going to be able to deliver all those packages you want to ship, all those orders your customers are placing.” And that message I think was received pretty loud and clear. I mean, I’ve heard stories from retailers that basically said, “yeah, you know, we had trucks picking up, but half my orders were just sitting on the dock.”
Yeah, I’ve heard the same story. And it’s a nightmare situation for a lot of those retailers. Oddly enough, these are not small retailers. These are not where UPS or FedEx are saying, “hey, we’re going to protect our biggest, largest accounts.” It was almost a hindrance to be an enterprise shipper in that moment. They were getting hit. Some of the hardest. And without alternative options, I’m sure they felt like they were up a creek.
Oh, no, for sure. I mean, it was kind of a desperate times to, you know, it was good times from the standpoint that orders were moving, you know, upwards. But it was bad becauseif you have half your orders, they can’t get out the door, that builds up and builds up very quickly. That backlog is huge. Yeah, so look, I think I’ll say three things. So one is that growth in eCommerce.
You know, the second one was that, I think capacity was just majorly constrained to the point that we just discussed. And I think the third one, what we saw was that over the last three years, we’ve seen a rise private equity and venture capital interest in this market, right? Usually it’s a technology play for those companies, but we saw an interest in investing in regional parcel carriers. So there’s regional parcel carriers that probably didn’t exist over seven years ago that were well-funded, that were able to take that funding, expand their services, expand into new markets. But I should also add, you know, with that point – new carriers that, new regional, new alternative carriers, they came to rise in the market. It was also existing players, right? We have got to remember that some of these regional carriers we’re talking about have been around for 30, 40, 50 years, right? And many of them were initially focused on just B2B delivery. So think like commercial deliveries, like payroll checks, architectural drawings, a legal document, something that needed to be overnighted next-day to the customer, things that essentially where the need is kind of going away. If you think about all the things that I just mentioned, a lot of them are pretty much things you’ve got technology solutions for. And so you saw these carriers that have been around that are serving a certain region for 30, 40, 50 years transition their business to do delivery for eCommerce and residential packages and so kind of uh, you know the combination of the eCommerce growth combination of money flowing into the market and and and popping up new carriers and then uh, you know existing carriers kind of shifting their focus more into the eCommerce. I think you kind of saw it rise and fuel growth in and these alternative carriers.
Yeah, I saw a really interesting stat around your comment with private equity and VC funding that has gone into kind of bolster the parcel regional carrier ecosystem, that over $280 billion has been raised since 2018, which is crazy to me. I mean, that is a massive amount of money that’s been raised in that short period of time.
And I would bet the majority of that money was raised from, you know, 2020 to 2023 after COVID had hit. And everybody started to experience pain on not getting their shipments there on time, getting it there damage free or getting it there, you know, sometimes even picked up at all, like we talked about. And I’m curious, you mentioned eCommerce quite a few times.
Is eCommerce the only industry or business group that should be diversifying their carrier mix today?
I think it really depends on the definition of what is considered to be a diversified carrier mix. To me, just having two carriers for a single service, such as ground, would be considered diversified. Look around, pretty much every single business that’s, let’s just say not a startup, but just up and running that ships parcel on a regular basis should probably have some level of carrier diversification. Now of course that doesn’t apply to everyone – if you’re just getting started and you only have a couple orders going out the door every day, the focus should probably be on growing sales and marketing and your product, not so much thinking about how to how to diversify your carrier mix that that can come later when you’ve got your brand out there and your brand story and your revenue is growing.
But pretty much every business that’s established, that’s growing or that’s stable, that’s shipping parcels could probably leverage a diversified carrier mix. And when I think about it, right, so there’s the “who” can leverage it. And I think, again, it’s pretty much everyone. But why? Why do it, right? So I think about why should they diversify their carrier mix?
I’ve got this model in my that I’ve shared before with people. And I think, you know, I call it the three C’s, right? So the three C’s stand for cost, capacity and capability.
Yeah, I love that.
Let me give a breakdown of the three C’s. First, cost. Well, I think that’s just like an easy one to get behind, right? So a lot of regional alternative carriers have very efficient operating models. So they’re not spending money or maybe even not any dollars on running marketing or TV ads, right? So they’re typically run very lean. Their cost structures are run as lean as possible and that allows them to be a lot more aggressive and competitive when it comes to pricing the business and pricing their offerings.
Capacity, I mean, that’s self-explanatory. Just that example we spoke about with the 5 million packages and retailers not being able to get orders off the dock. I mean, no one wants to get stuck in that situation ever again, right? So you’ve got one carrier and that carrier calls you and tells you they can only take half your orders, that’s it, you’re stuck. And so that’s a huge benefit to have. Now, we don’t know when that situation could come up again, right? So it’s not one of those that may be an issue today. But who knew that was going to be an issue three years ago, right? And so it’s just more risk mitigation.
And the third C is capability. And this is the one that’s more interesting to me. So it’s can’t.. you know, capability can be everything else. Like what are the features of that carrier? What are the true benefits aside from cost and capacity? So can the carrier provide faster delivery times? Can they provide better performance? Are they easier to work with? Do they have some technology features that the recipients and the consumers prefer over someone else? So again, kind of summarizing the three Cs, it’s cost, capacity, capabilities.
Those to me are really the three main reasons why someone should be considering diversifying their carrier mix and if they already diversified, kind of making sure that they truly are diversified, right? Because everyone’s definition’s gonna be a little bit different based on the three Cs.
Yeah, and I love that approach actually. And I love the structure of keeping those three Cs in mind. I think if you, and what I’ve always kind of had some conversations with clients around is, if you can nail all three of those, it’s a home run. But two out of three isn’t bad either. And if you can structure it in a way that, hey, look, if it’s not maybe faster transit time, maybe if it’s standard similar transit time to what you’re experiencing today, but you know it reduces your overall risk and significantly reduces your overall cost, take it. I mean, I think those are those are some awesome things to keep in mind, especially when you’re when you’re looking at a new carrier contract and you’re trying to do that hard work to analyze it.
Part of what I hear from shippers all the time is, “hey look, I understand the benefits of carrier diversification, but there’s some challenges to that as well.” Can you outline some of those challenges shippers face when they go from single sourcing to diversifying, and I’m meaning diversification in adding a new carrier to the mix that you weren’t using before. What are some of the challenges that shippers run into when they try to do that?
Yeah, so let’s start with the customer experience, because I think that’s the most important, right? At the end of the day, if the delivery is not successful, that customer may not return as a repeat customer. And so the way e-commerce businesses grow these days is through repeat buying. So it is very important to touch on customer experience. So how do you maintain, how can you maintain that consistent customer experience across those multiple delivery providers, even adding another additional provider, but how do you maintain that consistency across your brand? And so there’s a couple of different ways, right? So one is just make sure you have, I always tell the person, the kind of top of the class shippers I work with, they have an SOP, right? It’s the standard operating procedure that they share with their carriers, right? Whether they have two carriers, 10 carriers, it doesn’t matter, right?
Make sure everyone knows what to do when there’s an exception to a delivery or what have you. So that consistent SOP I think is really important. I also think it’s important.. what I always try to do is make sure you’re introducing the teams from the carriers and the teams from the retailers that are going to be working together. Right. If there’s an issue that comes up, you want the people to know each other that are going to be resolving that issue because they’re going to get it done very quickly.
And I think three, again, if you’re placing two orders, I think a consistent tracking experience is important, right? So if you’re placing two orders and one gets shipped by carrier A and another one gets shipped by carrier B, you don’t want to have to, as a consumer, go to two different web pages to track those orders. You want to track them all in one place.
So I think, you know, coming back to that customer experience, keeping it consistent, having the right SOP that’s shared across all, making sure everyone knows what to work with is critical.
Operationally, I think it’s important, you know, because operationally, how do you make sure the goals are being met, right? So how do you ensure, one, that the package gets to the right carrier? Right? Because that’s where it starts. If that package gets off the dock and it’s misshipped, and you’ve got, for example, a UPS package that ends up in the hands of another carrier, forget delivery speed. You’ve got to figure out how to get that package back and out to the right carrier. So that’s important is the dock operations, getting it to the right carrier. Now, setting SLAs, right? So what are the performance SLAs, the goals that you want to hit, making sure that you’re managing, measuring what you want to manage, right? “If you’re not measuring it, you’re not managing it” is the old adage. And measuring those, to those performance SLAs and ensuring that things like invoicing is done correctly, right? So if you’ve negotiated a really great deal and you know, you’re going to get charged a certain amount, if you get charged a different amount, making sure that you have oversight into that and you can catch that early on. So the operational setup is really important to navigate some of the challenges.
And let me have one more, I think technology, and you probably know this one really well, right? So technology, how do you, you know, ultimately the technology is like, how do you make it work? Like, what is it that is gonna make this thing work? It’s the tech. Without the tech, it’s really hard to get a multiple carrier strategy, right? It’s hard to manage it consistently. So making sure the integrations can be done and streamlined and are working well, that the business rules are in place and the technology that, let me define the business rules, right? If I’m shipping to a state, Texas, for example, use carrier A, if I’m shipping to Illinois, use carrier B, right? Or if I need overnight delivery, here’s the carrier I’m gonna use. So setting up the right business roles that are gonna route the packages to the right carriers is critical.
And I always say, don’t set it and forget it because you do that, and all of a sudden, you know, things kind of spiral out of control.
Yeah, your business changes, the carriers change, you’ve got additional items that might have come up that what worked for you 24 months ago doesn’t work for you today. And I think that’s the beautiful part of using the right technology is being nimble enough to make those changes on the fly. Otherwise, you’re left wondering, “hey, why are my average cost per pack’s price going up 40%, 50%?”
And it started happening a year ago. A lot of shippers are kind of behind the eight ball when they really should be in front leading and I see that in a lot of ways. I also see a lot of shippers struggle because they’re not using, you know a rating engine or a TMS for the parcel side that can manage multiple carriers in one spot. I think that should be number one which is a look if you’re looking at bringing on additional carriers, get away from using UPS’s WorldShip system, or FedEx’s Ship Manager, or an in-house that might only provide a rate back to one. You need to be able to rate shop between multiple and have the ability to create labels between multiple carriers. One thing that I really love that you said around operationally is getting everybody on the same page.
Creating those SOPs that you can be able to say, “this is what we expect.” Having conversations between the regional carriers you plan on bringing in and your teams to make sure that everybody has a good understanding of what to expect. I don’t think enough shippers do that, and I love that call out. That’s a great one.
Yeah, I would highly encourage, especially in the beginning stages of onboarding a new carrier is putting together some kind of meet and greet calls, right? Those onboarding calls, those kickoff calls, whatever you call it at your company, just have it, right? Hold it and exchange contact information, make the introductions, ask questions like, “hey, what do we do in case X happens? What do we do if we need to change an address when our recipient moves? How do we do that? How do we do X, Y, and Z?” Because I think, one, when everything’s fine, great. And no one has to talk, but when there’s an issue, right? You gotta very quickly resolve it. How do you do it? You gotta know the right people to go to. And you have to have good rapport with those people. So highly recommend at the beginning of any kind of onboarding, introducing the teams that are gonna work together closely.
Yeah, I think a lot of us might forget that or put too much emphasis on the fact that it’s about the technology, or it’s about the rates, or it’s about this particular service. At the end of the day, it’s about relationships between you and your partner carriers. And that relationship needs to be strong, which means it’s not a… Oh, it’s not, you know, some of the best relationships are not one sided, which I think in a lot of ways, when I talk to shippers today, they get, they’re tired of it being one sided with, if they’re using FedEx or UPS or some of the primary carriers, because they feel like they’ve lost a little bit of control or the costs are skyrocketing or they feel like their ability of additional options or choices out there are limited.
And some of the best relationships are, it’s a two-way street. That’s a great call out.
I’m curious what led you to found Logistics Remix and what exactly does your company do?
Yeah, so happy to share some information. So Logistics Remix, we work with retailers and 3PLs, again, to bring new carriers into their network. The goals are saving money, improving service, and ultimately driving mutual success. We’re now going into the third year in business. So excited about that, excited about seeing the growth of my company.
And the customers that I’m helping out on a daily basis, I really take a customer-first approach. At least I think I’ve been told I build great relationships with customers. They care about those relationships to your point earlier. It’s a two-way street, right? And customers want to know that they’re going to be taken care of. And a lot of times that just means that they’ve got someone on the other side that’s going to help them, give them good news, bad news. But when there’s issues, urgently help them get through them and resolve any issues.
Yeah, so I’ll tell you a little bit about kind of, you know, the carrier side. So typically, you know, I mentioned that we’re working with retailers, helping them bring carriers on board, but that there’s also the carrier piece and the delivery company piece. And so on the carrier and delivery provider side, typically we partner with companies that are regional alternative carriers to the nationals. Their advantages are typically in the shorter zones, so zone two, three, sometimes zone two through four, delivery, so those are your shorter distances, you’re up, you know, your urban areas, your metros, your, you know, anything up to, let’s call it, 600 miles from your DC, where we can compete on speed and these carriers can compete on speed and price. Especially price with the nationals. And then we also work with solution providers that can help with some zone skipping. And so if you look around, you know, take a map of the US and plot out all the regional carriers, if you’re DC, let’s say in Seattle, and you’re thinking about, “well, how do I, how would I leverage a regional carrier in Texas? Well, I gotta get it to them first, right?” Because in a lot of cases, they’re not gonna come pick it up. Tthey’re not servicing your area. And so I have some partners that can provide that additional value by helping with either truck or air zone skip into the regional carriers. So now we can not only leverage the regional carrier in that retailer’s region, in their fulfillment center region, but we can leverage regional carriers across the country.
Yeah, I love that. I think zone skipping is often overlooked or not utilized when done properly. It is an amazing combination if you can inject that freight to the right carrier in the right part of the United States. And if you’re shipping a lot to zone 6, 7, and 8, and it doesn’t often, you know, it kind of depends on the product that you’re shipping to. If you’re shipping really lightweight product, it might not make that big of a per pack difference.
But if you’re shipping, and I mean lightweight meaning like under a pound, if you’re shipping more than that, heavier items, bulkier items, where you’re being dimensionalized out and you’re going a lot to zone six, seven and eight, zone skip that. If you’ve got enough volumes, zone skip that to a regional carrier. That is a phenomenal combo.
And I’m curious, Timur, there’s so much change happening in the regional market space right now. We mentioned at the top of the show how much money is being raised between private equity and VC groups that are kind of bolstering and supporting additional growth within regional carriers. What are some of your predictions for the future state of the market on the parcel side? And any advice for, you know, our listeners on navigating through that?
Well, let’s see. I’m happy to make predictions. I’m probably gonna be wrong most of the time. But who knows, maybe some of them will hit. But look, I think just kind of short term going into next year, we’re likely to continue to stay in a shippers market in 2024. So what I mean by that by shippers is the retailers, 3PLs, the companies that are actually shipping the parcel. They’re seeing the increased competition between the national carriers. They’re seeing the increased competition and increased capacity being offered by regional carriers. All of this is against the backdrop of, again, going back to more of a normalized growth in e-commerce. So, you know, demand’s kind of coming back to normal, and then you’ve got by capacity, I mean, it’s pretty wide. So, I do think it’s a shipper’s market, which I think will bode well for the retailers.
Look, I think advice there is if a retailer has not gone back to market yet in Q4, I’d highly encourage them doing that in Q1. I think there’s some really great opportunities to either bring on a new provider, multiple providers, or just take a look at what the market has to offer. Because we’re just in a different place and we’re seeing deals that, you know, we probably haven’t seen in, you know, since the pandemic started.
Yeah, I’ve seen better discounts offered in the last three years, you know, four years, from not just national carriers, but regional carriers as well. I think everybody’s built such capacity in their networks that since COVID has started to kind of normalize those shipping volumes and trends.
Those carriers are saying, I gotta keep my trucks full, I gotta keep these planes full. What can I do to be able to make that happen? And for shippers to keep an open mind and not necessarily just, “well, my rates are good, so I’m happy.” I think that there is a lot more to it than that, that shippers really need to be focusing on. I think that’s a great call out.
Yeah, I think that’s good. I was gonna say you probably have a great view into the market and can see all kinds of incentives that we’re starting to see and really competitive rates that are being offered to retailers to retain and grow their business. I don’t think anyone wants to retrench, right? So when you’ve built up that network, like you mentioned.
And I love that, right? I think it’s great that these regional carriers are continuing to expand. They’re performing good service. They’ve got a good customer base. More customers I wanna work with them continue to expand, but now they’ve got to remain competitive, right? It’s not gonna be as easy without seeing 50% growth in a two or three year period. Because I think those days are probably, again, probably long gone. So we’re just back to normal growth.
I also do think one area, again, my kind of longer term, I don’t know if you consider this an alternative carrier. I guess it should be considered as an alternative carrier, but I’ll get your thoughts on it too. But I think we’re gonna see some increased competition just between all carriers, but one to watch is gonna be Amazon. And they’ve thrown their name into the ring and they’re back at it.
They’re offering shipping and competing shipping services competing with the nationals. So I think it’s gonna be one to watch. There’s some news about it. There’s not enough out there, but we’ve seen them do big things in the past and we know their capabilities. So it’s just, I think it will be one to watch. What do you think about that?
I couldn’t agree with you more. I think I’m surprised more people aren’t talking about it. Amazon’s one of the only groups in, I would say, the last 10 years that can truly compete for market share with the big regional or big national carriers of FedEx and UPS. We saw DHL try to do that when they came in after buying Airborne Express in the early 2000s. And there was a failure that they had in the marketplace, just given the fact that even them as globally, you know, they’re a massive organization and have a lot of money and really struggled to compete, because it takes a lot. Which means that the only company in my mind that can really kind of dismantle this duopoly is Amazon. I’m starting to see them make changes in that direction.
It is not a direct one for one at the moment, but just like if you think of Amazon is like FedEx or UPS or OnTrac or LSO, they too have built capacity in their network to handle COVID, more so than probably what the carriers had to have done. People relied on Amazon more than, you know, pretty much anybody else, e-commerce business-wise during the pandemic.
Amazon built out their network to accommodate that extra capacity. Now the capacity is shrinking and they’re going to look at other places to fill their trucks and airplanes and take some of that volume away from FedEx and UPS. I think it’s going to be really interesting. I think if they give shippers an option with better pricing, a little bit more simplified pricing and simplified accessorial fees. With their strong service, people are going to jump at it.
The challenge that I see is shippers aren’t going to be able to easily identify, here’s my FedEx and UPS rates, here is it compared to Amazon. Sometimes those data languages don’t talk to each other very well. And then like you mentioned in terms of your operations challenges that shippers face, implementing that is going to be somewhat of a challenge. But it’s totally doable and I think if I’ve learned anything in being in transportation for 20 years like you, it is that being in a shipper’s market does not always stay in a shipper’s market. If it’s a shipper’s market right now, it’ll be a carrier’s market in the near term. And what my point is with that is, strike while the iron’s hot. If the carriers are willing to give you discounts and you can get that locked in, and you’ve got options out there, go out and now’s the time to make that work, lock it in place, continue to revisit it, but don’t wait until it becomes a carrier market till you see your shipping costs start to increase to say, hey I need to make some changes on it.
100% with you. I think we’re in the right, it’s the right timing. And if anyone hasn’t gone out to the market yet or is thinking about it, I would just say make sure you do it in Q1. Yeah, and you know, the other thing is, you know, as carrier diversification, you should again, going back to my point of don’t set it and forget it, right? It’s, I just think it’s a continuous process, right? It’s a continuous review. It’s a continuous process. The business needs change. The product mix changes, where your ship from changes. And so continue looking and evaluating new providers and seeing what else is out there because at the end of the day, right, I mean, more knowledge is better. At least know what you have and what you have an opportunity to gain and continue to work on it, continue to reiterate, test, measure, and then implement, right? I think it’s not a once and done, it’s gonna be a continually evolving process for many retailers.
Well said. Awesome Timur. Thanks so much for joining the show. I really enjoyed talking with you about this. I think that this is something that is extremely important for shippers to take on for 2024.
Look, the stage is yours. Let our listeners know where they can get in touch with you the best way they can reach out to you.
Yeah, hey, thanks for having me on. I really enjoyed the conversation. And one of the best ways to find me is on LinkedIn. So you can find me on LinkedIn. You can connect with me or just hit the follow button. That’s where I share a lot of content, especially about this specific topic. And then also on my website. So go to logisticsremix.com. Connect with me if you’re interested in learning more about what we do and how we can help your business.
Awesome, I love it. If anybody hasn’t seen Timur’s LinkedIn, you should connect with him. You provide some phenomenal content and I know I’ve been better by following it and checking it out. I think you help me to kind of stay up to date on what’s happening and not just regional carrier networks, but in just parcel industry in general. So keep it going.
Awesome, thanks. I appreciate it.
Thanks so much for being on.
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