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Transportation Execution: Differences Between the EU And US

The geography and demographics of Europe makes parcel shipping across the region more complicated than in the US. In the latest Precision Report, Jack Moloney explains the differences.

Sending a parcel from Austin in Texas to Akron, Ohio is not a big deal. Well, other than the fact that there is nearly 1,400 miles between them — which takes a bit of time to traverse. There’s roughly the same distance between Budapest in Hungary and Bilbao in Spain. Distance is the least of your worries in this scenario. Sending a package between the two is far more complicated since you need to cross a number of borders. Your parcel could go a number of routes, but the most direct one will take it across Slovenia, over the top of Italy and around the south of France.

Sending parcels across borders can be a complex challenge. Traditional distribution channels — and customs clearance operations — were both built around large consignments of freight. E-commerce has made smaller, more frequent shipment of parcels a reality for many industries. B2B shippers have had their distribution models upended — or at least supplemented — by parcel shipping.

There are 50 sovereign states in Europe  and with that, a lot of border. As a result, a European transportation execution system needs different capabilities to a US solution. Geography and demographics demand it.

More than half — 28 — of the countries in Europe are members of the European Union (EU). That number includes the United Kingdom, which is in the process of withdrawing from the bloc. Taken together, the EU member countries form an area that is less than half the size of the US, but with a population that is 50 percent larger. Across this area, there are also 24 official languages.

The EU has brought a level of economic, trade and political standardization to member countries. Despite that, many differences remain. Shippers delivering across the EU must deal with diverse freight rating methods, regulations, infrastructure and carrier networks. This drives a level of complexity in transportation and trade that is not seen within the US domestic marketplace.

No Uniformity, No Universal Freight Rating

European carriers can use an assortment of rate calculation methods when it comes to freight rating. There is no uniform Postal Code system across Europe. As a result, rate-zone definitions differ by carrier, service (i.e., international vs. domestic) and country. These rate zones may be based on a combination of factors such as country postal codes, cities, regions, countries and so forth. This is vastly different from the US. In the US, carriers use one system — the zip code — to define similarly structured rate zones.

Furthermore, although an estimated 75 percent of European freight goes by road, there are no common European-wide tariff structures. Therefore, freight rating is done on a per-carrier basis. This is typically based on zones, weight, volume and distance. However, unique criteria such as load metres (one metre of loading space of a truck’s length) and number of packs may also be factored. All these parameters, along with the use of different currencies, make it complex to calculate and cross-compare rates for different regions.

So Many Countries, So Many Regulations

When you ship across Europe, you are likely to face additional documentation and reporting requirements due to individual country regulations. Just like in the US, “international shipping” adds complexity in terms of documentation and customs requirements. However, goods (in free circulation) transported within the EU can move with a minimum of documentation. In such a case, a Delivery Note or Packing List is generally sufficient.

However, any shipment leaving the EU must be electronically reported to customs. Many member states use their own unique e-customs system and reporting infrastructure versus the US’s single Automated Export System (AES). In addition, shipments need paperwork to travel. This can vary by country of export, country of import, as well as the countries that the goods may pass through on their way to their final destination.

Diverse Carriers, Diverse Ways of Operating

The European carrier market is fragmented. There is still an abundance of country and regional-specific carriers, despite recent mergers over the past several years. Some of the larger carrier organizations have grown by acquisition. As a result, you may deal with a single entity from a contract negotiation basis but work with different carriers from an operations perspective. This is particularly prevalent when shipping from multiple countries — a carrier’s domestic country network may continue to operate in the same manner as they did prior to acquisition. The challenge from an operational perspective is that your transportation execution solution needs to adhere to multiple formats for labeling, documentation and tracking number generation, and integrate with multiple systems for electronic exchange – all for a ‘single’ carrier.

Languages, Currencies and More: Internationalization for Localization

Finally, and by no means unique to transportation execution, is Internationalization (known as I18N), defined by the World Wide Web Consortium (W3C) as follows:

“Internationalization is the design and development of a product, application or document content that enables [sic] easy localization for target audiences that vary in culture, region or language.”

Localization in terms of the user interface as well as outputted documentation and external integrations needs to be supported. That means means multiple languages; different number, date, and time formats; and multiple currencies and units of measure. You need to be able to share this information among multiple parties. However, each party expects you to present this information in their preferred format and language.

Taming the Beast

In summary, a European transportation execution solution must have the flexibility to handle a diverse landscape. It must be able to work with many more unique carrier-, country- and user-specific requirements than that of a US-based solution. This complexity includes a broad range of connectivity to carriers and customs, differing rate structures and international shipping and usage requirements. Couple that with changing regulations and ongoing carrier merger and acquisition activity at any given time and you can see how shipment execution is a different beast to tame across the pond.

About Jack Moloney

Jack Moloney is Transportation Execution/Carrier Manager for Precision Software, a division of QAD Inc. and has over 20 years experience in the Supply Chain Management Industry. Jack joined Precision Software in 1998 as a Software Engineer and subsequently lead the design and development of the company’s parcel carrier integrations. He has also worked on the design/development of the PRECISION solution’s Routing Guide, Freight Management, and SOA integration. Jack has a BSc. in Computer Applications from Dublin City University.

About Precision Software – Trusted Global Trade and Transportation Execution

Precision Software, a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, Precision Software assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. Precision Software’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about Precision Software, visit www.precisionsoftware.com.

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