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The Benefit of Multi Carrier Shipping Software for Logistics Providers

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 for 3PLs.

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, multi-carrier 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.

FLEXIBLE RETURNS

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 their import, export 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.

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