Last year parcel volumes skyrocketed in response to the
coronavirus pandemic. Shippers and carriers struggled to cope with
demand. In this QAD Precision Report we look at the benefits of
multi carrier shipping and parcel consolidation.
How well is your parcel shipping strategy working? For many, many
companies small parcel shipping traditionally made up a small
percentage of their overall freight costs.
This has been changing for years. The global Covid-19 crisis has
accelerated the adoption of e-commerce. With many retail outlets
closed and huge numbers of people working from home, parcel volumes skyrocketed.
More and more companies across a variety of industries are shipping
direct-to-consumer (DTC). This huge growth in parcel shipping is not
exclusive to retailers. Instead, across a variety of industries,
parcel shipping has become increasingly important. Not that long ago
it would have been unthinkable to purchase items such as medicine or
car parts online. These days, this is common.
For manufacturers there are both challenges and opportunities selling
DTC. On the plus side, DTC gives companies access to important
customer data. This includes spending patterns and purchasing habits.
This data offers valuable insight that can be leveraged when the
company is launching a new product.
On the downside, different capabilities are needed when you sell
single items to individual customers, rather than bulk orders to
distributors. Traditional transportation management systems were not
designed to handle large volumes of parcel shipments.
Done right, however, and e-commerce operations can engender customer
loyalty and repeat business as well as increase gross margins.
Companies who were able to tap into e-commerce channels were better
able to navigate the coronavirus pandemic. Those solely reliant on
bricks-and-mortar shopping have seen sales, and profits, plummet.
If your parcel volumes are growing, you may need to rethink your
parcel shipping process. Ideally, you want a strategy to ensure your
parcel shipping spend is being properly controlled and managed. After
all, parcel shipping — especially last mile delivery — is an expensive business.
For many organizations a partnership with a single carrier was
preferable. This exclusive relationship meant that companies could
leverage volume discounts and negotiate favorable rates. As we saw
last peak season, this can be a risky strategy when parcel volumes are high.
One smart way to control costs is by leveraging both multi
carrier shipping software and parcel consolidation. We will look
at how these work together.
Multi carrier shipping solutions offer more flexibility than simply
two or three carriers to choose from. In fact, that would be less
efficient. Staff would need to rate shop by opening different systems
to manually compare carrier prices and services levels.
Shippers using multi carrier shipping software can add as many
providers as makes sense into their carrier mix. For example, this
could include global parcel carriers, such as UPS, FedEx and DHL. But
it could also include postal carriers like USPS, Royal Mail, China
Post and so forth. Regional carriers, LTL carriers, and even bike
couriers can be added to your carrier network.
Best-in-class multi carrier shipping solutions offer automated
routing. This means that your parcels are — well — automatically
routed to the carrier that can meet the delivery promise at the lowest
cost. If every package is delivered at the lowest possible price, high
volume shippers can significantly reduce costs associated with parcel shipping.
The system will also generate and print labels, in accordance with
carrier requirements. Furthermore, the solution will create all
documents needed for international shipping.
Further cost savings can be made with parcel consolidations.
Consolidation is also known as direct injection, zone skipping or hub
induction. Whatever you call it, it is simply bundling multiple
packages together that are bound for the same destination.
Let’s say you have five shipments going from Lisbon to Los Angeles.
You could treat these as five separate shipments and pay shipping
costs for each one individually. However, you can save a significant
amount of money by consolidating these five parcels into a single shipment.
Carriers offer consolidation services. Examples include UPS World
Ease, FedEx IPD, DHL Breakbulk or TNT IDE. However, these services
come with a cost attached.
Consolidating packages on-the-fly, that are going to the same
destination and using the same carrier service has one major benefit.
This ensures that the freight bill is for a single shipment rather
than multiple shipments.
On-the-fly consolidation is particularly beneficial if you are
processing packages going to the same destination throughout the day.
From a billing perspective, the aim here is to present the shipment as
a single movement to the carrier.
Furthermore, by using a carrier’s consolidation services, the carrier
takes responsibility from the first mile to the final delivery.
Alternatively, shippers can manage consolidations in-house by using
the zone-skip functionality available through some multi-carrier
software solutions. Managing consolidations in-house means you can use
different carriers for the first mile and final destination. This will
reduce transportation spend, particularly on the international leg.
Any shippers can achieve significant savings when moving goods
internationally with this method. Once the goods reach the final
country, the consolidated shipment is broken out. The individual
parcels are then injected into a lower cost local carrier’s network
for last-mile delivery.
Consolidated shipments also reduce regulatory headaches. A
consolidated shipment only requires a single customs declaration for
the entire shipment rather than individual declarations for each
Would you like to get more granular details on how consolidation
works? Join our live webinar How Consolidations Save Time, Money and
Customs Headaches on Wednesday 17 February, 3pm GMT /10am EST.
The webinar will cover various consolidation options, including:
Zone skipping consolidation
To attend the webinar, please register here.
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