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
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.
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
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.
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
export processes, documentation generation and regulatory
compliance screening makes it easier to expand your global reach.
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
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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