The world of 3PL is changing. Smaller shipments are going to more places, via more carriers, than ever before. Parcel shipping is expected to grow 20% between 2016 and 2018, fuelled by e-commerce and customer drop ship requests. Today’s 3PL firms are just as likely to be shipping small packages to far-flung parts of the globe via parcel carriers, as they are to ship bulk freight across town or across state lines.
This means more parcel shipping, more carriers, more destinations and more hassle for 3PLs whose business processes and technology systems may have been built around large freight orders.
These changes mean that multi-carrier shipping software should be at the top of every 3PL’s technology list. Your business has changed; the solutions you use to run your business must change with it.
Below are four reasons why your 3PL needs smarter multi carrier shipping software.
Changing Customer Needs
Many 3PL businesses are seeing a significant shift in their shipping profile, particularly in the retail portion of their business but also in other industry segments where shipping directly from a manufacturer or warehouse to a customer (also known as “drop shipping”) has become commonplace.
Before, 3PLs sent mostly large freight loads such as cases and pallets to a retail storefront for distribution. They often worked with just a few carriers to manage these shipments, which made managing these carriers, negotiating rates and following up on shipments to ensure their safe arrival a relatively simple task.
Under the traditional 3PL/retail/DC model, the journey of an item from the 3PL to the end customer looks something like this:
Or like this:
Although many 3PL customers still require these services, this journey to the customer is changing. e-Commerce and drop shipping has changed the game for 3PLs and their customers. Today, the journey to the customer involves fewer steps, most of them performed by the 3PL:
Customer needs are changing in other ways, as well, making a multi carrier shipping software solution attractive. Customers increasingly demand that reverse shipping—shipping returned items back to the 3PL warehouse—be handled quickly and efficiently. Yet, without a means to efficiently manage the process with your parcel carriers, it’s all too easy for items to be delayed or lost in transit, resulting in angry customers.
And, while 3PLs often can negotiate very low rates with parcel and freight shippers, there are some 3PL customers—including some of the largest high-tech global firms—who are already getting unbeatable rates. These customers are looking to their 3PL partners to manage the warehousing and shipping of their products, using the customer’s carrier account to get the lowest rates.
With the technology that most 3PLs use to manage their carriers, it is unwieldy to manage customer carrier accounts and in-house carrier accounts separately. But with multi carrier shipping software like PRECISION Multi Carrier and Enterprise Shipping, all carrier accounts—whether for bulk freight or parcel—can be managed in one centralized system.
There’s More Competition
Another reason multi carrier shipping software should top your technology list is the constant threat of competition that 3PLs face. Although the global shipping market is expected to post solid growth over the next few years, the pace of that growth is slowing. Many of the 3PL firms that flooded the market to take advantage of rapid post-recession growth are now having to adjust to slower growth and more competition.
Some of that competition is coming from companies that previously were customers, who—realizing how critical logistics is to their business—are seeking to bring these functions in-house, and even to profit from them. Amazon is among them, having recently announced its entry into the 3PL arena. Today, “Amazonification” is a term that applies to retail, logistics and a growing list of other industries.
To compete, 3PLs must force down cost while improving performance to make their services more attractive. Managing carriers more effectively—ensuring that shipments arrive on time at the lowest possible cost—is key to reducing costs and staying competitive. PRECISION multi carrier execution solution allows 3PLs to do just that.
Creating Additional Revenue Streams
The fourth reason multi carrier shipping software is so critical to today’s 3PL firms is that as global trade slows and customer needs shift, 3PLs that want to grow must open additional revenue streams to serve their customers in new ways. Freight and parcel shipping is a service that can be profitable for 3PLs. But to make a profit they need a solution that allows them to track costs for each customer across all carriers and pass these on with a profit margin, while still keeping cost to the customer competitive.
PRECISION Multi Carrier and Enterprise Shipping helps 3PL accomplish all of these goals and delivers seamless integration regardless of which carrier you choose. If parcel shipping is now—or is becoming—core to your business, then it’s time to find a better way to manage your carriers.