With Black Friday and Cyber Monday just a couple of weeks away, the holiday shipping season is about to begin. In fact, for many retailers the peak season rush has already started. Pre-holiday deals have been offered by several leading online retailers since September, while DC’s across the globe are stuffed to the rafters with products waiting to be shipped to holiday doorsteps, after record-setting container ship traffic and trailer orders in August and September.
It’s too soon to predict what the final sales tally for Cyber Monday 2017 will be or which will be this year’s most popular products. However, one prediction that’s safe to make is that we’ll see higher volumes of online orders and higher parcel volumes than ever before. 2016 marked the first time that online shopping outpaced shopping in stores on Cyber Monday, topping $3.45 billion compared to $3 billion spent in stores, a trend that has only accelerated over the past year.
This means that shippers everywhere should brace themselves for what’s likely to be the biggest parcel shipping season on record. Is your business ready to cope with the challenges of Cyber Monday and peak season shipping? If not, here are three ways that PRECISION Multi Carrier Shipping software can help.
The holiday season has always been the biggest season for parcel shipping and for retail. But while it used to be consumers that sent the majority of parcels over the holidays, it’s now the retail industry sending those packages—and in greater numbers than ever before.
As parcel volumes exceed carriers’ ability to handle them, it creates a business challenge for retailers needing to ship packages. In fact, it’s a challenge for anyone who needs to ship parcels anywhere during the holiday season.
Carrier overcapacity has become somewhat of a holiday tradition in recent years, and most experts agree that the tradition will continue in 2017. Parcel volumes are predicted to grow 20% by 2018, with holiday shipments comprising a big part of that growth. UPS and FedEx are both expecting their largest season on record and are hiring thousands of seasonal employees to handle increased volumes. Yet, it’s likely that parcel volumes driven by online and mobile orders will still outstrip carriers’ ability to handle them all.
For retailers, carrier overcapacity impacts response times. Shipping speeds suffer, along with customer satisfaction. Today’s customers expect fast, cheap and on-time delivery; when a carrier fails to deliver it’s the retailer, not the carrier, that is held ultimately responsible in the eyes of the customer. Retail shippers that are dependent on a single carrier are left without alternatives if their carrier is unable to handle excess capacity, putting customer relationships and repeat business at risk.
With PRECISION Multi Carrier Shipping software, retail shippers can meet customer delivery expectations, while reducing the risk of late deliveries and unhappy customers due to carrier overcapacity. The solution provides visibility into carrier performance and rates, and delivers flexibility to quickly and easily route parcel shipments to other reliable carriers that can still meet promised delivery dates without additional cost or delays.
UPS has announced that it will once again be charging a peak season surcharge between .27 and .97 cents per package in 2017. The surcharge will cover the cost of hiring additional workers and outsourcing their excess shipment capacity to third party contract carriers. Several other carriers have made similar announcements, hoping to boost on-time performance without affecting their bottom line by passing their cost through to shippers.
The increasing prevalence of this practice leaves retail shippers that depend on these carriers with few options. Retailers can absorb the additional cost of the surcharge; this impacts profitability and is an obviously unattractive option. Another option is to pass the surcharge on to their customers, but this may cause orders to be lost if shipping costs are too high.
A third option is to find another carrier that can deliver the package without the surcharge. With PRECISION Multi Carrier Shipping software, retail shippers can access multiple carriers that can meet targeted delivery dates without the extra surcharge for delivery during peak season.
Avoiding surcharges isn’t the only way PRECISION can help you reduce costs during peak season. This is the season when you’re most likely to have multiple shipments headed to a single destination or region. With PRECISION Multi Carrier Shipping software, you can consolidate those shipments and minimize costs.
Retailers can also reduce costs with PRECISION Freight Bill, Audit, Pay (FBAP). Freight audits can help organizations save 5% to 7% off their logistics costs; many retail organizations outsource these audits to a third party to find all the errors and overcharges in their freight billing that are adding unnecessary cost to their logistics. FBAP provides intelligence and reporting that allows retailers to move this review process in-house, while ensuring that opportunities to reduce excess cost are not missed.
One of the biggest challenges facing carriers during peak shipping season is predicting exactly where demand will be highest and then preparing for that demand. They may make predictions based on past demand, but regional demand can fluctuate and it takes time to recognize the problem and respond—time that carriers simply don’t have during peak season. If demand is higher than expected in a certain region, carriers can’t hire people fast enough to move the excess packages. This leads to regional bottlenecks that slow delivery performance.
These challenges also impact retailers that rely on a single carrier to deliver packages during the peak shipping season. Carrier performance is perhaps the most important part of the fulfillment process, since it directly touches the customer. Yet, it’s the part of the customer experience that retailers don’t directly control. When demand in a specific region leads to a delivery bottleneck, you will have happy customers in some regions and very unhappy customers in others.
PRECISION Multi Carrier Shipping software is uniquely suited to help retailers solve this challenge. PRECISION allows retail and other shippers affected by regional bottlenecks to analyze on-time delivery data not just by carrier, but by region. That means you can quickly spot where your carriers are underperforming and adjust right away. You can route around those bottlenecks by selecting a regional or other carrier whose performance in that region isn’t suffering to pick up the slack.
This flexibility allows you to not only preserve high levels of customer satisfaction on every order. It also saves time on each shipment since you won’t have to worry about re-routing orders or fielding angry calls when packages don’t arrive on time.
If past years are any indication, Cyber Monday 2017 is going to be a busier kickoff to the peak shipping season than ever. Surcharges, overcapacity, missed delivery dates and other holiday shipping problems will likely continue to be a major source of risk for shippers everywhere. Visibility into carrier cost and performance along with the flexibility to select between multiple carriers is the key to reducing risk, lowering shipping costs and improving customer satisfaction. Shippers can do all this and more with PRECISION.