Parcel Shipping: It’s Anything But Simple

Parcel is becoming a more important transportation mode for manufacturers and retailers due to the rapid growth of e-commerce and other factors, which is driving greater demand for parcel solutions and services. What differentiates parcel from the other transportation modes? What are some of the unique complexities involved?

“Unlike other modes, like less-than-truckload and truckload that tend to have some level of standardization, parcel is an open book,” explained Steve Williamson, Supply Chain Support Specialist at Kewill in a recent episode of Talking Logistics. “While there are some similarities between the various parcel carriers and the services they provide, if you peel back the logos what you find is that they are very different underneath.”

And those differences extend across geographies, as Williams goes on to explain:

You have parcel carriers that have expanded through acquisition and what they do here in the United States versus what they do in Canada versus what they do in Europe is completely different and it just adds to the complexity…Not only is parcel unique in how it’s rated and zoned and the accessorials involved, but because of these acquisitions, each carrier operates differently across geographies and relative to each other.

Williams highlighted another interesting trend that is impacting parcel operations:

When you look at parcel movements, what used to be UPS handling a package from Point A to Point B is now becoming UPS handling it from Point A to Point A+ and then the postal service taking it from Point A+ to B. So now you have multiple carriers involved and rating complexities added in to what is just a standard parcel movement.

“Another difference today is the broadness of the carrier market,” Williams added. “You might think we have a two pony race here in the United States [with UPS and FedEx], but that’s not true. There are a lot of regional parcel carriers that are playing a greater role today, and there are even alliances between these regional carriers that are enabling shippers to get better delivery windows and rates compared to the big guys.”

One of the things you often hear about parcel shipping is the importance of carrier compliance, but what does that mean exactly, and how do shippers stay in compliance? Watch the short clip below for Steve’s response, where he talks about how each carrier essentially has their own “rule book” for how to do business with them, and how those rules differ by region and are continuously changing.

So, how are leading companies leveraging parcel solutions to manage the complexities of parcel shipping? Steve shares some customer case study examples in the video clip below, and what I like most about his examples is that they’re not just about retailers shipping packages to consumers — which is what most people associate parcel shipping with these days — but they also include manufacturers and how they’re using parcel to manage just-in-time inbound shipments from suppliers.

I encourage you to watch the rest of my conversation with Steve for additional insights on this topic, including how transportation management systems (TMS) have evolved over the years to meet the growing demand for parcel shipping capabilities and the role APIs and web services are playing. After watching, post a question or comment and share your perspective!