Surcharges, shipping delays and an e-commerce boom — 2021 will be
a challenging peak season. In this QAD Precision Report we look at
how multi carrier shipping software helps shippers manage delays
and avoid surcharges.
This year has presented shippers with many challenges, from port
congestion and worker shortages, to increased shipping costs and
decreased capacity. These challenges, coupled with an increase in
e-commerce, has led many shippers to look for solutions to both meet
customer demand and control costs.
Lack of Drivers Means Delays
Peak season issues are nothing new to experienced shippers. Perhaps a
cargo shipment is late, carrier capacity is tight, or even demand is
outpacing supply? But all at once? Now that is new — but it is the
reality facing many shippers as we head into peak season.
One issue plaguing shippers in many parts of the world is the dearth
of truck drivers. In recent weeks, UK consumers faced empty
supermarket shelves, along with fuel shortages, due to the lack of
truck drivers. The UK’s Road Haulage Association estimates that the
country has a shortfall of around 100,000 drivers.
The problem is not confined to the UK. Research
from Transport Intelligence found that Europe has an
estimated 400,000 too few truck drivers. Poland and Germany, along
with the UK have the largest shortfalls.
The US Bureau of Labor Statistics found that during the COVID-19
pandemic, the truck transportation industry lost
6 percent of its workforce. While salaries are on the rise and
sign-on bonuses now common, the industry has not been able to add
enough new drivers as older cohorts retire.
Increasing Parcel Volumes and Carrier Surcharges
E-commerce saw a huge boom during the COVID-19 pandemic and it is
showing no signs of slowing down. The
Adobe Digital Economy Index estimates that in 2021, global
e-commerce sales will reach $4.2 trillion. With increased e-commerce,
comes an increase in parcel volume.
E-commerce volume has become so large that for the first time ever,
surpassed FedEx in parcel volume in 2020. Although carriers are
adding new facilities, staff and capabilities across many geographies,
keeping up with the demand has been a challenge. As a result,
increasing volumes means a decrease in capacity, and therefore an
increase in prices.
Major carriers, UPS, FedEx, and USPS have all announced peak season
rate increases. FedEx
announced that its rates will increase an average of 5.9 percent
for US domestic, export, and import services. USPS
is one of the last carriers to add peak season shipping surcharges,
only beginning in 2020 to account for additional volume.
Lack of carrier capacity is not only a problem for shippers — it can
also be a problem for consumers. Some shippers have been passing the
higher cost of shipping onto shoppers as the additional surcharges are
added onto merchandise prices.
How Multi Carrier Shipping Software Helps Navigate Peak Season
Peak shipping season — and the challenges it brings — is
predictable. However, the current spike in demand, along with lack of
carrier capacity and the shortage of truck drivers are not issues that
individual shippers can control.
What shippers can do, however, is ensure that their operations are as
flexible and adaptable as possible. One way to do this is with
multi carrier shipping software.
A comprehensive, global, multimodal, multi carrier shipping solution
can help shippers remain flexible to navigate the unknown, from peak
season surcharges to lack of carrier capacity. It not only can
potentially solve or alleviate challenges, it can help shippers
control costs and rise to meet increased demand.
Although no software solution can solve a driver shortage or help
your ship get into port sooner, what it can give you are options.
Multi carrier shipping software offers users the benefit of
flexibility with carrier choice. Shippers no longer have to rely on
one carrier, they can shop from multiple carriers. Shippers can
utilize a mix of carriers including regional carriers to get their
parcels to customers on time and for the lowest price.
Instead of being “locked in” to one carrier (and its surcharges),
shippers can rate shop and review carrier charges in real time.
Alternatively, parcels can be automatically routed to the carrier with
the lowest rate that will meet the delivery deadline.
Communication with Customers is Key
Delays are likely to be inevitable, especially during this holiday
season, but a benefit of multi carrier shipping software that should
not be overlooked is transparency.
A multi carrier shipping solution gives you the ability to track and
manage all shipments the same way, regardless of carrier selected.
This is especially important when communicating delays with customers.
You are able to manage customer expectations by efficiently and
honestly relaying information about the status of their parcel.
This information can be shared between logistics staff and your
customer support team. As a result, you will be able to clearly
communicate any issues that arise with your customers, as well as take
proactive steps to resolve problem shipments.
A multi carrier solution will also allow you to offer different
delivery options to your customers. These can include store pick-up or
parcel locker delivery.
Delivering packages to a central location where customers can collect
their goods is easier to manage than requiring a carrier to make
individual deliveries to home addresses. These options could help
offset delays and residential delivery surcharges.
While the current supply chain crisis is partly the result of the
pandemic, many of these issues will be with us for the foreseeable
future. Shippers need a strategy to manage these risks, protect
margins and ensure excellent customer service.
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