The global pandemic has had a significant impact on how and what
we shop. In this QAD Precision Report we look at these changes and
why multi carrier parcel shipping is more important than ever before
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 this
year. However, the global Covid-19 pandemic is likely to impact that
growth. According to payments company, ACI Worldwide, online
sales surged 74 percent this March compared to the same
month last year.
Store closures mean that shopping in bricks-and-mortar outlets is, of
course, not possible at this time. Furthermore, social distancing
guidelines, along with the possibility of contracting the virus or
infecting others, has meant that many people are avoiding essential
businesses, and turning to online shopping for everyday necessities too.
What we are buying online is also changing. Gardening tools and DIY
products skyrocketed in March — 163 and 136 percent respectively
compared to March 2019. Electronics and online games also saw large
increases. With millions of people effectively barred from leaving
their homes, many of us have purchased products to keep ourselves and
our families busy during this time.
That is not to say that e-commerce will continue to experience rapid
growth as the year goes on. However, the pandemic has speeded up a
process that was already underway — the rapid growth of e-commerce,
and the change in distribution models required to fulfill online sales.
How E-Commerce Has Impacted Logistics
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 logistics providers 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, and 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 this year.
As a result of the e-commerce boom, 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,
shipping has become ever more important to help 3PLs manage
these carrier relationships, remain compliant with carrier standards,
and control parcel shipping costs.
Why 3PLs Need Multi Carrier Parcel Shipping Software
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. Brand
loyalty depends on getting e-commerce orders fulfilled quickly and
correctly. Last year’s Third Party
Logistics Study found that 3PLs need to be able to rapidly
respond to 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 —
no easy task. Let’s take a look at how multi carrier parcel shipping
software can help 3PLs meet these demands.
BETTER RATES, MORE ROUTES AND DELIVERY OPTIONS
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.
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 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.
MITIGATE SERVICE DISRUPTIONS
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.
MEET CUSTOMER DEMANDS
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 due to
the huge amount of packages they ship. Under such circumstances, these
customers will 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. Indeed, it is also possible that your 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, even with some
digitization, 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 that has a comprehensive
multi carrier shipping solution can manage all these accounts, for all
modes of transportation, in one system.
It is a fact of e-commerce that 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. As a result, 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 3PL that wants the best service and lowest costs for both outbound
and reverse shipping often finds that a multi carrier strategy is the
best way to achieve this.
A multi carrier strategy offers logistics providers better
flexibility. This in turn enables a 3PL to reduce both risk and cost,
meet the requirements of each customer and each shipment, and leverage
better rates, faster routes and more service options wherever they ship.
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About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision, a division of QAD Inc., provides industry-leading global
trade compliance, and multi carrier transportation
execution solutions from a single, integrated platform. An
ISO-certified company, QAD Precision assists companies to streamline
and transportation operations, optimize deliveries, and increase
logistics ROI. QAD Precision’s scalable and extensible solution easily
integrates with existing ERP and WMS solutions. Industry leaders in
every region of the world rely on QAD Precision’s global support
centers to leverage thousands of carrier services and manage millions
of global trade and shipping transactions every day. For more
information about QAD Precision, visit www.qadprecision.com.