Insights from the Q2 Shipper Briefing: Why Parcel Diversification Has Become an Imperative

‍TL;DR

• Parcel diversification helps shippers reduce risk, improve service, strengthen carrier leverage, and protect the customer experience.
• The best diversification strategies start with technology, including rate shopping, tracking, analytics, and multi-carrier execution capabilities.
• Adding more carriers does not automatically create better outcomes. Shippers need the right operational processes, billing support, claims workflows, and distribution center readiness.
• Carrier pricing is changing throughout the year, which means parcel spend management now requires continuous monitoring rather than annual contract reviews alone.
• For many shippers, the question is no longer whether diversification matters. It is whether their technology, operations, and data are ready to support it.

Parcel shippers are operating in one of the most dynamic transportation markets in years.

During The Q2 Shipper Briefing, Hannah Testani (CEO), Joe Wilkinson (VP, Professional Services), and Sudipt Sapan, industry veteran currently running enterprise supply chain solutions for The Vitamin Shoppe, discussed the forces reshaping parcel strategy and why diversification has moved from a nice-to-have option to a serious business priority.

Hannah set the stage clearly: across several transportation modes, the market has been relatively stable. Parcel is different. Pricing is shifting. New delivery models are gaining traction. Customer expectations continue to rise. And for shippers that still rely on a single provider, the risks are becoming harder to ignore.

As Hannah put it, diversification creates power because it gives shippers options. If one door closes, another can open.

For Sudipt, the value of diversification goes well beyond cost.

“When we look at diversification, it’s not only about the cost,” Sudipt said. “It’s about service, it’s about flexibility, it’s about risk coverage.”

That perspective reflects where leading shippers are headed. Parcel strategy is becoming less about choosing a provider and more about building a network that can adapt.

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Diversification Starts With Flexibility

For years, many parcel conversations centered on pricing. That still matters, but the conversation has expanded.

Sudipt explained that shippers need to think about risk, service, customer experience, and the ability to move volume dynamically based on the needs of the business.

“How much dynamically you can move your packages from one carrier to another carrier is very important,” he said.

That kind of flexibility matters during peak season, service disruptions, pricing changes, and regional performance shifts. It also gives shippers more control when business conditions change.

Joe reinforced the point from a market perspective. Shippers that have the volume and operational readiness to diversify should be taking the opportunity seriously.

“If you can and you have the ability to diversify, diversify,” Joe said. “If you don’t have the ability, get that ability.”

Technology Has to Come First

Sudipt returned several times to one of the most important lessons from The Vitamin Shoppe’s own diversification journey: the technology foundation has to come before the carrier strategy.

He described the foundation as the “brain” behind the operation. Contracts can be signed with multiple providers, but the real value comes from being able to make smart decisions at runtime.

That requires systems that can evaluate rate, service, geography, performance, and operational constraints before a package leaves the building.

For shippers beginning that process, Sudipt pointed to several core capabilities:

• Rate shopping
• Tracking and visibility
• Multi-carrier execution
• Performance analytics
• Distribution center processes that support multiple pickup schedules and sort requirements
• Invoice and claims management across providers

“Diversification is all great, but if you’re not set up for that, it could also cause failure,” Sudipt said.

More Carriers Can Create More Complexity

One of the most practical parts of the conversation came when Hannah asked Sudipt how shippers know when they are over-diversified.

His answer was grounded in what happens on the distribution center floor.

From a corporate perspective, adding providers can look attractive. More options can mean more savings and more service flexibility. But on the warehouse floor, every additional provider can add sorting complexity, pickup coordination, labor requirements, and room for error.

Sudipt explained that when packages are manually sorted, too many providers can lead to mis-sorts. A package may end up on the wrong truck, sit with the wrong provider for several days, return to the warehouse, and then need to be resent.

A shipment that should have arrived in three days may take ten.

That is the operational reality behind diversification. The goal is to build the right mix, not the largest possible mix.

As Sudipt put it, shippers need to understand what their operation can actually support.

Analytics Help Shippers Choose the Right Option for Each Shipment

Hannah also pushed into a key question: once shippers have multiple options, how do they know which one to use?

Sudipt’s answer was analytics.

At The Vitamin Shoppe, the team evaluates more than the transportation rate. They look at the full customer delivery experience, including how long it takes to process an order internally, when the package is handed to the provider, when it is inducted, and how long delivery takes after that.

“We leverage the power of analytics,” Sudipt said. “We do that almost every quarter.”

That level of analysis helps the team understand which providers perform best by ZIP code, region, shipment profile, pickup time, and service requirement.

Joe added that parcel portfolios should be analyzed by segment. Lightweight e-commerce, heavier e-commerce, and B2B shipments behave differently. Providers know this, and shippers should know it too.

“Your parcel portfolio is not a monolith,” Joe said. “It’s a number of segments glued together by your company.”

Customer Experience is Now a Parcel Strategy Issue

A major theme throughout the Briefing was the growing connection between parcel performance and customer experience.

Customers do not think in terms of transportation networks. They remember whether their order arrived when expected, whether tracking was clear, and whether issues were resolved quickly.

Sudipt noted that service matters when selecting the right provider for a shipment. That includes delivery performance, claims handling, responsiveness, refusals, and the ability to make changes when needed.

Hannah connected that point to the broader market. Some newer delivery models are winning attention because they are easy to work with, responsive, and focused on the customer experience. For shippers, that creates a new benchmark for what a parcel partner should provide.

Pricing Requires Constant Attention

The panel also discussed a major frustration for shippers: pricing changes are no longer limited to an annual general rate increase.

Sudipt explained that finance and procurement teams may see a headline increase and assume that is the full impact. In reality, surcharges and accessorial fees can create a much larger cost increase depending on a shipper’s profile.

“You have to go a little bit deeper than just looking at the headlines,” Sudipt said.

Joe called this pattern “pricing incrementalism,” noting that pricing changes are happening throughout the year. For shippers, that means parcel spend management has to be continuous.

Teams need to understand surcharge exposure, shipment characteristics, customer delivery patterns, and which costs can be influenced through better data, better operations, or a different provider mix.

Partnerships Still Matter

Even in a diversified network, carrier relationships remain important.

Sudipt emphasized that partnership has been central to The Vitamin Shoppe’s approach. That includes sharing forecasts, being open to pilots, giving incumbents a fair chance during sourcing events, and communicating clearly about what the business needs.

“Partnership goes a long way,” he said.

That philosophy also helps when something goes wrong. Strong relationships can improve escalation paths, claims handling, pickup issue resolution, and long-term collaboration.

Diversification does not mean treating providers as interchangeable. It means knowing where each partner fits best and building a network that serves the business, the customer, and the operation.

The Time to Prepare is Before the Next Sourcing Event

One of Joe’s strongest recommendations was for shippers to use the time between sourcing events to build the capabilities they will need later.

He said he often hears shippers say they would like to diversify, but they do not have the infrastructure. Then, two years later, they are in the same position.

That is a missed opportunity.

“There’s never a fun time to consider and invest in your technology stack, your facilities, your team,” Joe said. “That’s a lot of work, and it’s hard work, and it’s expensive. But it’s more expensive not to.”

Sudipt estimated that if the right technology is already in place, diversification can take about six months, including the sourcing process and operational setup. Without that foundation, shippers may need additional time to build the required systems and processes.

The message was clear: shippers should prepare before they need the flexibility.

The Time to Build Flexibility is Now

Parcel diversification is no longer only a procurement strategy. It is a way to build resilience, improve service, manage pricing pressure, and create a better customer experience.

But successful diversification takes more than adding providers. It requires technology, analytics, operational discipline, invoice management, claims processes, and strong partnerships.

For shippers still relying on a single-provider strategy, the next step is not necessarily an immediate network overhaul. It is understanding what would need to change to support more flexibility in the future.

Because in today’s parcel market, flexibility is becoming one of the most valuable capabilities a shipper can build.

Quick Q&A

Why is parcel diversification important?

Parcel diversification helps shippers reduce risk, improve service coverage, increase flexibility, and create more leverage in a changing market. It can also help protect customer experience when pricing, capacity, or performance shifts.

What should shippers do before adding more parcel providers?

Shippers should make sure they have the right technology, operational workflows, analytics, billing support, and claims processes in place. Without that foundation, adding providers can create more complexity than value.

Can a shipper have too many parcel providers?

Yes. Too many providers can create warehouse complexity, mis-sorted packages, pickup timing issues, billing challenges, and claims management problems. The right mix depends on each shipper’s volume, network, technology, and distribution center capabilities.

How does analytics support parcel diversification?

Analytics helps shippers understand which providers perform best by shipment type, region, ZIP code, pickup time, and delivery outcome. This allows teams to balance cost, speed, reliability, and customer experience when making carrier decisions.

How long does parcel diversification take?

If the technology foundation is already in place, a diversification initiative may take around six months. Shippers starting without the necessary systems, processes, or operational readiness may need more time to prepare.

What is the biggest mistake shippers make with diversification?

One common mistake is waiting until a sourcing event to think about diversification. Shippers should build the required technology, data, and operational capabilities between sourcing cycles so they are ready when opportunities arise.

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