Who could forget peak season 2017? E-commerce sales soared beyond the expectations of retailers, carriers and 3PLs. The capacity crunch did not just impact retailers. Global shippers whose goods are not seasonal also struggled to get their parcels delivered. In the latest Precision Report we look at peak season shipping and five strategies for seamless transportation execution.
How well is your parcel shipping strategy performing? As we head into peak season, do you feel confident that you will be able to meet customer expectations?
Peak season is a busy time for most shippers — but crucial for retailers, carriers and third-party logistics providers. Delayed or late deliveries can tarnish your reputation and cost you both customers and revenue. Retailers are especially vulnerable here. If gifts and seasonal items do not reach shoppers on time, they will almost certainly look for alternatives in bricks-and-mortar stores. That means the product is likely to be returned. As a result, the retailer loses out on a sale but also bears the cost of fulfillment and return. Plus there’s the fact that around 95 percent of returns never get back on the shelf. Getting peak season shipping wrong is an expensive business.
The growth of e-commerce and mobile shopping has made shipping an integral part of many industries. Shipping volumes are increasing exponentially, particularly during the holiday season. Last year, peak season shipping outstripped forecasts. Although carriers had prepared for a busy season, many struggled to deliver the unexpectedly high volumes. In the US alone, Cyber Monday sales totaled $6.6 billion — nearly 17 percent higher than 2016. The trend is likely to continue this year.
To meet demand, carriers extended the workweek, paid overtime and had office workers pitch in to help deliver packages. It worked — mostly. Many of the biggest and busiest carriers got their packages where they needed to be — at least finally. Carriers relaxed delivery guarantees and delays were common.
Delays may be inevitable when a carrier experiences higher-than-planned demand. Your customers might give you some leeway because of that — but only under certain circumstances. If you ship business-to-business, have a strong relationship and timely delivery is not mission critical, then a delay might not be too damaging. Retailers however, don’t always have this luxury. After a poor delivery experience 39 percent of consumers won’t shop with a retailer again.
There is another consideration beside timely arrival. Many carriers add surcharges for packages shipped during the holiday season. That means the cost of fulfilling your orders could significantly increase if you do not have the ability to switch between carriers or choose the service levels you need.
With all this in mind, it is worth looking at your transportation execution strategy. How did it perform during the 2017 peak season? Were you satisfied then — or are you concerned about timely deliveries during the 2018 holiday season? To ensure that your transportation execution strategy supports your organizations needs, consider whether you need to leverage the following capabilities.
Shipping delays have become something of a holiday tradition. However, some carriers are more affected than others. A smart strategy to reduce the risk of delays during peak season is to reroute packages to carriers that are the least affected by the holiday rush. Ideally, you should look for multi carrier shipping software that includes global, national and regional carriers. Small and regional carriers often have capabilities that make them a compelling delivery partner across the limited geographies where they work. These may include capacity over peak season, different routes and lower rates.
If your current transportation strategy is based on a single carrier, implementing new carriers on an ad hoc basis is time-consuming. In addition, having to switch between carrier interfaces to compare routes, rates and services is inefficient. Last, but certainly not least, this results in separate data silos for your shipping spend, which makes it significantly more complex to track.
Your multi carrier shipping solution should offer you the flexibility to leverage thousands of carrier services around the globe. It should also allow you to switch seamlessly between them, and provide status alerts for every shipment with every carrier so that all your parcel shipping data is in one place.
In the last two years, cross-border e-commerce has become increasingly common. Research by Accenture concludes that cross-border e-commerce is the key driver of growth in B2C trade, with an expected compound annual growth rate of 29.3 percent from 2014 to 2020. If your current transportation strategy only offers domestic shipping capabilities, will this support your organization’s needs going forward?
Ensuring you have all the documents needed to process international shipping is labor-intensive and inefficient when you do it manually. If international shipping is — or is likely to be — an area of growth for your business, your transportation execution strategy should include a global trade management solution. This automates export processes, documentation production and customs reporting to ensure your shipments adhere to regulatory requirements.
Let’s say you have six shipments headed to San Diego. You could handle them all individually, and pay freight and shipping costs for each one. But what if you could save money by consolidating them into one shipment? Your transportation execution strategy should present you with consolidation opportunities by region and final destination up-front. This not only saves money — it also makes for more efficient shipping over peak season.
With many carriers applying peak season surcharges, are you able to accurately determine what your organization is paying to ship your freight? In the holiday rush, it’s not uncommon to find discrepancies in your carrier invoices. Your freight estimates could be under or over that of your carrier, or you might have been billed for a service that you did not receive, such as when shipments arrive late. Freight bill auditing software makes it easy to reconcile your shipping invoices. Organizations that process a high volume of freight transportation bills and invoices without auditing them are likely overpaying money without knowing it. Freight bill auditing software allows you to identify and recover the funds for each over-payment, without having to outsource auditing to a third party.
Returns are a fact of life for most global shippers, but definitely for online and omni-channel retailers. Globally, returns and excess inventory cost retailers a whopping $1.75 trillion every year. Online shoppers return goods in much higher numbers than those who shop in-store — 30 percent of all e-commerce purchases are returned, and up to 40 percent for clothing.
In many organizations, returns and reverse shipping are not well supported by their current carrier strategy. This is another area where a multi carrier shipping strategy has benefits. Multi carrier software can help you meet the challenge of reverse logistics and ensure that your products are returned to you at the lowest possible cost, while increasing customer satisfaction with a simple and convenient returns process.
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 our global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. The PRECISION solution’s open architecture allows for easy integration with leading Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS) and existing legacy solutions. An ISO-certified company, Precision Software assists companies around the world to minimize shipping costs, optimize first mile and last mile deliveries, avoid compliance delays and mitigate the risks associated with dynamic trading environments. Precision Software’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 Precision Software, visit www.precisionsoftware.com or email email@example.com.