The Pros and Cons of API-Based Shipping for High Volume Shippers

Note: The insights and recommendations in this blog post are intended for companies shipping 1,500 – 500,000+ packages/day, weighing the pros and cons of API-based shipping technology and/or a multi-carrier shipping system. 

Some years ago, many LTL and small parcel carriers began offering web-based API connections for shipping, including rating and routing. Like most other multi-carrier shipping vendors, CLS welcomed the introduction of shipping APIs as they offered a much faster time to market, especially for the growing list of new regional carriers entering the market in the past five years. APIs have proven to be an excellent solution for some of our clients using LTL and regional carriers.

The Attraction of API-based Shipping

The attraction of using carrier APIs to process shipments is understandable for both shippers and shipping system providers due to time savings when onboarding new carriers. Adding a new carrier to our customers’ shipping system via an interface to the carrier’s API can be done in a matter of weeks, while the development and approval process for a carrier’s resident rating component (writing a carrier-compliant component that will run on a customer’s local server or a private cloud server) can take much longer, ranging from months to sometimes over a year.

When to Use Carrier APIs

Some carriers provide APIs as their only solution to generate shipping labels (although this is not the case with UPS and FedEx). If you are a high-volume shipper, API solutions should only be used for regional or secondary carriers or to access selected services only offered via the carrier’s API.

For high-volume shippers requiring faster shipment processing speed and higher system uptime reliability, the best solution is to use a multi-carrier shipping system with resident raters that are loaded and accessed from within the system. Processing speed is much faster and more consistent, and system uptime is far more reliable, resulting in a more efficient and less costly shipping operation.

Challenges of API-Based Shipping

For high-volume shippers, using APIs for primary carriers can cause many problems. Two areas of consideration are:

1. Shipment processing speed
2. Carrier system downtime

The Risk and Cost of Slow Shipment Processing Times

The number one complaint we hear from our high-volume customers using APIs is that their shipment processing times are slow. When shipping higher package volumes, sub-second transaction speeds are required to efficiently process and stay ahead of daily shipping volumes.

Due to the nature of APIs and the online traffic to send a request and receive a response, their processing times are not fast. No matter what steps a company takes to speed up shipment processing within their operations, API speed is controlled by the carrier’s system and internet performance, which are outside the company’s control.
For example, if it takes more than a few seconds from the time you press the “Ship” key to having the label printed and either in your hand or on the box, your shipping process is too slow and is not scalable to support growth.

You may think that waiting 7 to 15 seconds for a label to print is average until you see it done in 3 seconds. For every additional second it takes beyond 3 seconds, you are paying your staff to stand around.

The Risk of Carrier Site Downtimes

Carriers often boast a 99% or higher uptime service level for their APIs, which sounds good. But if the 1% of downtime occurs when you have a heavy shipment volume, every minute the carrier site is down will cost you money and can quickly become an operational nightmare. The greater your shipping volume, the greater your risk of running into these issues:

• No response due to a carrier site being down (off-line)
• Slow or no response due to site contention
• Scheduled site downtime due to night and weekend updates
• No response due to an unannounced update that causes a site to be down

Downtime for any of these reasons will cause costly operational interruption and delays in customer order deliveries.

When to Make the Move from APIs to Resident Raters in a Multi-Carrier Parcel Shipping Software Platform

When weighing the pros and cons of relying on API-based shipping or migrating to a multi-carrier parcel shipping system that manages all carriers on one platform, the question is, what is the tipping point? What signals that it’s time to move from your current carrier-based API shipping method to multi-carrier shipping software that offers both resident raters for larger carriers and API options for smaller, regional carriers?

Your current and forecasted future shipping volume is a crucial factor. In my experience, if you ship 1,500 packages a day and your volume is growing, or if you ship 2,000+ packages/day and want to improve efficiency, it’s time to consider getting a Tier-1 multi-carrier shipping software solution with resident rating for your primary carriers.

There is no “one size fits all” universal parcel shipping software or parcel delivery software system that meets all the needs of small, medium, and large shippers. Based on your shipping volume, there is a range of solutions, from shipping APIs to multi-carrier shipping software solutions, to consider. If your shipping volumes are over 2,000 packages/day and you are struggling with slow ship times, high warehouse labor requirements, and rising freight costs, it is time to consider implementing a new multi-carrier shipping software solution.

In a high-volume shipping environment, a multi-carrier shipping solution that utilizes a smart combination of resident raters for the major carriers and API carriers for smaller regional carriers will significantly reduce your shipping time per package. This will, in turn, allow your warehouse to ship more packages in less time, lower warehouse labor requirements and reduce shipping costs.

The money you save usually results in an ROI in less than one year.