The State of Parcel Retail Shipping

Cloud-based TMS provides tools needed to achieve transportation optimization
The upcoming parcel retail shipping season appears slight in terms of growth in comparison to last year. With that in mind, retailers must not underestimate the value of an effective strategy in the coming months. Failure to develop a proactive and strategic plan can lead to unnecessary delays, increased freight spend, and unhappy customers. The upcoming season will push the limits of existing shippers as the industry is projected to gain $5 billion in value, notes Supply & Demand Chain Executive. Those that have not yet prepared holiday shipping strategies need to understand the expected demand, why growth continues, and how a well-rooted plan will shape success.

Parcel Retail Shipping Will Continue to Grow, Despite Slower Than Expected Demand During the Upcoming Peak Season

Parcel retail stands apart from less-than-truckload (LTL) and full truckload (FT) during peak season more than any other time of the year. Unlike larger shipments, parcel shipments tend to increase faster than any other mode and put added strain on the industry. This is the result of growing demand for e-commerce purchases. According to Business Insider, the market for automated parcel delivery terminals will swell to $1.9 billion by 2025. Since most shippers continue to rely on older capabilities, this represents only a fraction of the potential size and growth.
Meanwhile, the upcoming season is expected to fall short of the strong growth seen in peak season last year. However, overall sales will still increase between 1.5% and 2%. Paired with the demand for more technology and faster processing, shippers will push the limits of logistics service providers (LSPs), ranging from third-party servicer providers to carriers.

The Driving Forces of Strong Parcel Demand

The driving forces of strong parcel retail shipping demand come from the fundamental changes in the industry to meet e-commerce demand. These include:
  • More delivery options, including lockers. This goes back to automated parcel delivery terminals and is a subject that continues to garner more interest. Within the last two years, Amazon created Amazon Key, giving the company authorization to enter consumer homes and has plans to add vehicles with automated systems. As technology evolves, the number and volume of automatic delivery options will continue to grow.
  • SKU proliferation via third-party services. Since e-commerce gives customers across the globe the ability to shop anytime and anywhere, companies have taken on the challenge of delivering more products and diversifying their inventory. While SKU proliferation enables more competition and profitability, it comes with higher carrying costs and increased inventory management demands. As a result, shippers must take an even closer look at all available inventory, including inventory sitting in trailers, located on loading docks, and even in manufacturing facilities.
  • Increased demand for “smart delivery.” Continuing on the theme of end-to-end visibility and tracking, consumers increasingly want more and smarter delivery options. This includes providing detailed information about shipment status, location, and expected delivery. It is no longer enough to scan the package at touchpoints.

How Parcel Demand Will Shape Your 2019 Peak Season Strategy

Parcel demand is growing, and shippers must act now to secure available capacity and meet customer expectations. An effective parcel retail shipping strategy must have these key characteristics:
  • Integrated with your TMS, WMS, and WES platforms.
  • Accepted and used among your carriers.
  • Ability to leverage data and analytics to gain insights and better predict demand.
  • Metrics to track the performance and responsiveness of your supply chain.
  • Ongoing improvements through applied analytics and a dedicated TMS that handles all your needs through automated processes.
These characteristics are not necessarily a complete list, but it’s a great place to start. Your systems vary widely, and as the number of loads and deliveries increase, shippers will need to manage workloads more efficiently than ever to avoid the costs of lulls and peaks year-round. Moreover, automated systems can add value by bringing technology into the customer service equation, building positive, productive relationships across all seasons. Technology and automation can free up your workers, enabling them to perform more strategic tasks and engage with customers. While technology and automation is great, it is often still the human factor and personalized service that wins the hearts and minds of the customer.

Get a Jump on the New Year With an Easy-to-Use, Intuitive TMS

While it may not be realistic to implement and launch a new TMS by Black Friday and Cyber Monday, year-round readiness is key to success. Focus on your priorities–recognizing what you need for success–and kick start the process for selecting and implementing a new TMS now.

Submit Your Queries To MercuryGate Online, And Remember That The Best-Prepared Shippers Attract And Retain More Customers.

Phil Melton
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