The global pandemic had a significant impact on how and what we
shop. In this QAD Precision Report we look at how 3PLs can manage
these challenges with multi carrier shipping.
E-commerce has revolutionized the way we shop. Everything and
anything, from groceries to gaming consoles can be bought online. In
2019, global e-commerce sales grew around 20 percent.
Industry experts forecast that online sales would grow around the
same percentage in 2020. According to payments company, ACI
online sales surged 74 percent in March 2020 compared to the
same month last year.
E-commerce may not continue to experience such skyrocketing growth in
the years to come. However, the rapid growth of e-commerce has been
underway for many years. The pandemic merely sped up the process.
Long before any of us had heard of coronavirus, logistics providers
were experiencing a seismic shift in their operations. The unstoppable
growth of e-commerce means that 3PLs are sending significantly more
smaller shipments to more places than ever before.
This is certainly true in the retail portion of a 3PL’s business, but
not exclusively so. E-commerce has impacted the way many industries do
business. The demand for expedited shipping is certainly not the sole
preserve of retail. Before the global pandemic, parcel shipping
volumes were forecast to surpass
100 billion parcels in 2020.
Small parcel shipments have increasingly become a part of a 3PL’s
distribution operations. More parcel shipments and more destinations,
means logistics providers often need to work with more carriers than
ever before. Consequently,
multi-carrier shipping has become ever more important. Multi
carrier solutions help 3PLs manage carrier relationships, remain
compliant with carrier standards, and control parcel shipping costs.
Logistics is a competitive business. As a result, efficiency is
crucial. A 3PL’s large customers have exacting requirements. This is
unsurprising — their customers are equally demanding too.
Last year’s Third
Party Logistics Study found that 3PLs need to be able to rapidly
respond to customer service requirements. In particular, the
“always-on, always-open shopping experience” that online shoppers expect.
This means that 3PLs need to manage carriers, ensure that orders are
fulfilled efficiently and at the lowest cost. This is no easy task.
Let’s take a look at how multi carrier parcel shipping software can
help 3PLs meet these demands, as well as save time and money.
When a 3PL partners with a single carrier, this is usually to reduce
costs via volume discounts. It is also easier to manage one
relationship and remain compliant with that carrier’s standards. These
are advantages, true, but having said that, not all carriers are the
equal. They don’t all offer the same services, routes and delivery options.
A transportation management system with multi carrier shipping offers
more flexibility. A 3PL can switch between carriers and use the best
service for each shipment. This could also include regional and local
carriers that offer lower rates or better routes for certain shipments.
With a multi carrier solution, a carrier has to win your business
for every shipment. This results in lower rates allowing you to drive
down transportation costs.
Furthermore, using a multi carrier solution, a 3PL can automate
carrier selection. This automation uses a parcel’s characteristics,
delivery destination, customer requests and the 3PL’s own business
rules. As a result, there is no need to compare carriers and research
rates — the solution does this automatically. The solution also
generates shipping labels and all necessary documentation, for both
domestic and international shipments.
shipment. This results in lower rates allowing you to drive down
Furthermore, using a multi carrier solution, a 3PL can automate
carrier selection depending on a parcel’s characteristics, delivery
destination, customer requests or the 3PL’s own business rules. As a
result, there is no need to research rates for the best carrier and
service for each parcel — the solution does this automatically.
Moving goods around the world is a complicated business. As we have
seen in recent weeks, carriers can change their service level
offerings, as well as reduce or even cancel services to some
geographies. Even under so-called normal business conditions,
disruptions are a fact of life. Storms, mudslides, heavy snowfall and
other weather events can make certain routes impassable, resulting in
delays and missed delivery deadlines.
A 3PL using a multi carrier strategy can mitigate these risks. Goods
can be sent via different routes bypassing storms or other unavoidable delays.
Logistics providers sending out large volumes of packages can
generally negotiate favorable rates from parcel carriers. However, it
is fair to say that the same is true for a number of their customers.
As a result, it is not uncommon for a customer to favor a particular carrier.
Global manufacturers of retail goods, electronics and so forth, can
get the lowest rates possible from parcel carriers. This is due to the
huge amount of packages they ship. These customers expect their
logistics partners to ship their goods using their carrier account to
avail of the lower rates.
A logistics provider that processes all parcel shipments with a
single carrier cannot meet these requirements without a number of
difficulties. A preferred carrier may penalize you with loss of
favored shipper status along with higher rates.
Managing customer accounts manually — particularly for multiple
customers — is very time consuming. Furthermore, the technology 3PLs
use to manage freight orders is often not optimized for such a task.
As a result, many logistics companies are forced to separately manage
their own carrier accounts, and their customer carrier accounts. A 3PL
using multi carrier shipping solution can manage all these accounts,
for all modes of transportation, in one system.
Goods ordered online come back in far larger numbers than items
bought in-store. On average, consumers return only one in ten items
bought at a bricks-and-mortar shop. For online shopping, it is an
average of three in ten, but as much as a quarter of all clothing purchases.
Unsurprisingly, many retailers and other industries want their 3PL
partners to assist with returns and reverse shipping. 3PLs need to
efficiently manage this process with parcel carriers to prevent items
being lost or delayed in transit. In addition, logistics providers
must ensure that goods come back at the lowest possible cost.
The high volumes of e-commerce returns creates a significant
challenge for a 3PL that uses a single carrier. Some carriers are
better than others at reverse shipping. Carriers that are proficient
at both outbound shipping and returns may not offer the lowest rates.
A multi carrier strategy allows 3PLs to get the best service and
lowest costs for both outbound and reverse shipping.
A multi carrier strategy offers logistics providers better
flexibility. This also enables a 3PL to reduce both risk and cost,
plus meet the requirements of each customer and shipment. In addition,
a 3PL can leverage better rates, faster routes and more service
options wherever they ship.
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MINUTE EXPLAINER: MULTI CARRIER SHIPPING SOFTWARE AND 3PLS
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