Carrier selection

What is carrier selection?

Carrier selection is the process of choosing commercial transportation providers based on service requirements, cost, performance history and availability.

Businesses often use carrier selection software built into transportation management systems (TMS) to evaluate carrier options against criteria like destination and delivery deadlines. The aim is generally to select the carrier that optimizes cost efficiency while meeting delivery commitments.

Carrier selection optimization strategies

Less-than-truckload (LTL) carrier selection

Less-than-truckload shipping is a strategy that determines the optimal carrier by calculating density-based pricing and identifying opportunities to consolidate freight within shared truck capacity.

This allows businesses to leverage volume discounts, reducing per-unit shipping costs significantly versus alternative approaches.

Performance-based selection

Performance-based selection incorporates carrier scorecards into automated decisions. Rules can be established to route high-value or time-sensitive shipments to carriers with superior on-time performance even at higher cost, while directing routine freight to lowest-cost options. Carriers with a pattern of unresolved freight claims are often deprioritized under this same logic.

It’s a dynamic approach that balances cost optimization with risk management, protecting critical shipments from carriers with reliability issues.

Carrier capacity management

Carrier capacity management involves using selection algorithms to consider carrier availability and prevent over-allocation to carriers unable to handle it.

The selection system tracks tender acceptance rates and capacity commitments, routing shipments to alternative carriers when primary choices approach capacity limits. It’s effective at maintaining service continuity during peak seasons or tight market conditions.

How TMS handles the carrier selection process

The carrier selection process tends to follow these steps:

• The TMS receives shipment details from order management systems (OMS), identifies carriers in the relevant area and compares rates and capacity.

• Business rules are overlaid on basic carrier selection logic, prioritizing specific carriers for key customers or excluding carriers with performance issues.

• Quote requests are run for all eligible carriers. The system compares total cost, including base rates, fuel surcharges, fees and applicable discounts.

• The final options are ranked, with differences in cost and expected performance highlighted. Businesses can configure fully automated rule-based selection.

• Service level matching ensures the final carrier choice aligns with customer expectations, with the system prioritizing a balance of cost and performance.