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Is Your Transportation Execution Strategy Ready for 2020?

January is an ideal time to examine your transportation execution strategy. In this QAD Precision Report we look at peak season 2019 and discuss areas where shippers can look to improve efficiencies in 2020.

Peak shipping season is stressful for any organization that delivers goods to customers. The holiday period is, unsurprisingly, particularly busy for retailers. However, whether you’re selling seasonal goods and gifts or are closing out your fiscal year end, peak season can be a challenge. Massive volumes of orders can impact warehouses, distribution centers and carrier networks. 

E-commerce has made small parcel shipping integral to many industries. Data released in December by two different consultancies found that across the US, carriers performed well over week 50 2019. Both UPS and FedEx achieved over 99 percent on-time last mile delivery during week 50. The USPS was only slightly behind with an on-time delivery rate of 98.7 percent during the same period. However, large parcel volumes and weather events caused delays across parts of the US, and on-time delivery rates slipped during weeks 48 and 49.

Keeping Up with E-Commerce Growth

Carriers were expecting a busy peak season. In November, UPS forecast that it would deliver around 32 million packages and documents every day during peak season. Likewise, FedEx predicted high volumes. The carrier estimated it would deliver 33 million packages on Cyber Monday — 2 December 2019. FedEx’s projections were off — the carrier handled 37.8 million packages on Cyber Monday alone. That’s nearly 5 million more packages in a single day — a 14.5 percent spike that was almost impossible to plan for, or predict.

Figures from last year show the unstoppable growth of e-commerce, particularly retail e-commerce. Cyber Monday is the largest online shopping day in the US. According to figures from Adobe Analytics, $9.4 billion was spent online on Cyber Monday 2019, an increase of 19.7 percent from 2018. Furthermore, Alibaba’s Singles’ Day — the world’s largest online shopping event — raked in a record $38 billion in online sales on 11 November 2019.

The challenge of handling these volumes has led carriers to invest in automation, as well as adding seasonal workers. In addition, many have added surcharges for oversized and overweight packages. 

It is not just carriers that have needed to make changes to handle the growth of e-commerce. Shippers too need new capabilities to manage volumes during peak season. Delays can be a common occurrence during peak season, particularly when the number of orders outstrips a warehouse’s ability to process them all.

Planning for 2020

The beginning of the new year is an excellent time to review your transportation execution strategy and consider the lessons learned over 2019. Peak shipping season is fresh in your mind — and returns spike during the first weeks of the year. Was your transportation execution strategy as efficient as it could have been? Did it serve you well during the 2019 peak shipping season? Is your current strategy fit for 2020? Or is it time to consider some changes? Here are six areas that are worth examining to see if changes are needed to meet 2020’s challenges.

RETURNS 

How well is your returns process working? Is it flexible enough for your customers? Are you paying too much for returns? What steps can you take to reduce returns? Are there clear processes in place so that staff know exactly how to handle every type of return? Are goods that come back unused and in perfect condition resold or do they end up in landfill?

Online shoppers return 30 to 40 percent of purchases, depending on the type of goods. Therefore, it is important to plan for returns.  To reduce the cost of returns and ensure your products come back to you in the most efficient manner and at the lowest cost, it is worth examining a number of different returns strategies, including drop-off points, in-store returns, and pre-printed return labels. 

Shippers can benefit from knowing why returns happen, and where they can take steps to reduce errors that result in returns. For example, shoppers are likely to return seasonal items that arrive late. They will also return goods that are damaged in transit. Furthermore, pick mistakes can be made in the warehouse, particularly during very busy periods. 

SINGLE VS MULTI CARRIER SHIPPING

Shipping delays are something of a holiday tradition. Although carriers performed well in week 50, storms, high volumes and a shorter peak season impacted on-time delivery. One strategy to reduce stress during peak season is to reroute packages to carriers that are the least affected by the holiday rush. This could include local and regional carriers as well as the global players. However, if you use only a single carrier for deliveries and returns, it may be time to look at a multi-carrier shipping solution.

FREIGHT BILL AUDITING

Tracking and auditing transportation costs helps control your logistics spend. It’s not uncommon to find discrepancies on your carriers’ invoices. In the busy holiday period, it is even easier for these to be overlooked. For example, if a shipment arrives late, you may still be billed for a service level that you did not receive. Freight bill auditing software allows you to easily identify errors and reconcile carrier invoices to control logistics costs without having to outsource auditing to a third party.

CROSS-BORDER SHIPPING

Global shipping is growing. The 2019 UPS Pulse of the Online Shopper survey found that while many of us prefer local merchants, younger shoppers are less wary of buying goods from international sellers. Shoppers look to international sellers for a number of reasons, including price, variety, and the perceived quality of products on offer. If your transportation execution strategy is based on domestic shipping only, will this hamper your ability to grow in the future? 

Global shipping certainly requires significant additional documentation. Manually processing paperwork is time-consuming and inefficient. Automating export processes, documentation generation and regulatory compliance screening makes it easier to expand your global reach. 

CONSOLIDATIONS

Suppose you have ten shipments headed to Dallas from Denver. If you handle each of these individually, you will pay freight and shipping costs for each one. Significant cost savings can be made by consolidating by region and final destination.

If you shipping globally, it is possible to use one carrier to move a consolidated shipment cross-border and a local carrier for the final delivery to reduce transportation spend. Moreover, a consolidated shipment only requires a single customs declaration, reducing regulatory headaches.

INTELLIGENT VISIBILITY

Logistics managers benefit from a single portal to track all post-dock shipments. That means that every shipment, with any carrier, anywhere in the world is tracked through the same portal. A global package tracking solution should ideally manage by exception. Staff are alert to deliveries at risk of delay. As a result, they can proactively resolve issues and communicate with customers if and when a delivery window slips. After all, as soon as your customer contacts the customer service team looking for a shipment, you are on the back foot. Further intelligent visibility can be achieved with real-time transportation data. Accurate delivery information builds customer loyalty, trust and repeat business. 

About QAD Precision – Trusted Global Trade and Transportation Execution

QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.precisionsoftware.com.

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