Two decades ago relatively few companies were shipping via parcel. It was a niche mode appropriate for only a small segment of the market. Fast forward to today with the explosive growth of e-commerce, especially since the pandemic, and parcel shipping is now a critical mode of transportation for retailers, as well as for many manufacturers. This becomes even more intense during the holiday season. What is the current state of the parcel shipping market? What challenges and opportunities lie ahead? How can technology like a transportation management system help? Those are the key questions I discussed with Richard Palmer, Parcel Sales Director at Uber Freight, on a recent episode of Talking Logistics.
Current State of the Parcel Shipping Market
The parcel shipping environment has changed dramatically within the past five years. I asked Richard to share what has changed and the current state of the market.
Richard relates how parcel used to be a limited function characterized by simply slapping on a label and setting the package aside for a parcel carrier to pick up later. Today both volumes and costs are skyrocketing. Richard explains further in this short clip:
In short, customers are demanding free shipping and faster deliveries. Shipping managers are caught between the revenue/service side of the business who want to satisfy the customer while the CFO is demanding cost control.
“Ultimately, shippers have to get more creative in handling the increased volumes and cost pressures,” says Richard. “One solution has been increased use of regional carriers who can deliver locally, often at less cost.”
How Technology Can Help
Richard points out that the logical way to address the competing challenges of cost and service is through the use of transportation management technology. Parcel transportation applications can optimize parcel shipping costs and service considerations to keep the CFO and customers happy.
Richard gives the following example: A shipping clerk at the dock may see an order that must arrive the next day. Their inclination would be to slap a next-day air label on it and feel the issue is solved. But the customer may just be across town. A local ground carrier may be able to deliver it the next day at a much lower cost. Now multiply that scenario hundreds or thousands of times and you can see how technology can be used to significantly reduce costs while maintaining service priorities.
A parcel TMS can also evaluate which facility to ship an order from, as Richard explains in this short clip:
The bottom line is that the complexity of options in today’s parcel environment is too great to handle effectively without technology.
Richard points out another aspect is retailer’s efforts to provide the best customer experience both online and in stores. If a customer wants their order tomorrow, or specifically on Wednesday, the parcel TMS can seamlessly facilitate those requests while adhering to cost considerations, carrier contracts, and service pledges. It can also provide online visibility to orders and shipments for customers and CSRs.
Positioning for 2024
Given the fast-changing options, volumes, and costs for parcel delivery, how should shippers position themselves to compete successfully in 2024? And what potential mistakes should companies try to avoid? Richard shared some great insights on those questions and more, so I recommend you to watch the full episode to take advantage of his insights. Then keep the conversation going by posting a comment and sharing your perspective on this topic!
