eCommerce demand is causing parcel rates to increase at more than twice the rate of inflation as smaller and more frequent shipments are shipped directly to customers’ doorsteps. Amazon has firmly established free shipping as the new normal, even though it loses $7b/year on outbound transportation. If your parcel management strategy still consists of using a carrier-supplied system that does little more than print labels, you are missing out on opportunities to control costs and sharpen your competitive edge.
The pace of parcel industry change is accelerating and becoming more complex and challenging:
- eCommerce businesses to extend free shipping and premium services, including same-day and Sunday delivery
- Regional and new crowd-sourced carriers’ delivery services are becoming more viable
- Kiosks, hold-at-location, and lockers provide urban customers with more secure pickup options
- Drone delivery is emerging as a real thing and is gaining traction in rural areas
- Less-than-Truck-Load (LTL) carriers are now offering last-mile, over-the-threshold delivery
- It’s all going global
- Parcel planning in the face of tight order to delivery windows
- Shipping execution with enterprise level controls
- Analyzing all shipping data for spending patterns, productivity, and carrier performance
- Enterprise shipping administration to build cost-savings and operational advantages
No single carrier has the capacity to keep up with the demand for the wide range of delivery services consumers expect. More carriers and service choices mean more complexity. Point shipping solutions don’t cut it anymore.
Multi-carrier Parcel Shipping Systems are Evolving into Parcel Transportation Management Systems (Parcel TMS)
The latest generation of parcel transportation management system technology provides shippers with all the enterprise controls they need to optimize cost-effective decisions and execution processes, without compromising sky-high customer delivery expectations. Controlling transportation spend in the current environment requires careful planning, decision support, and process automation well upstream of the point of label creation.
The Freight Transportation Management Systems (TMS) evolved out of the same situation. Freight transportation planning involves aggregating orders into loads, figuring out the most cost-effective way to ship to a centralized warehouse and from there to a store or local depot with the goal of shifting from LTL to full truckload (TL). Execution involved rating and electronic interchange processes that followed. Analytics provided management with the insights they needed to make better decisions.
Parcel is the “Wild West” of the transportation industry. Each parcel carrier defines its own compliance requirements, rules and standards for rating, labeling, shipping, tracking, and billing. Parcel spend is growing at almost 10 times the rate of other freight modes and the need to manage it has never been greater. Industry experts are starting to focus on parcel as a distinct segment.
Parcel TMS platforms, like the freight TMS ancestors that came before them, recognize the need to take an enterprise approach to managing transportation planning, execution, reconciliation, and analytics - involving the entire organization from purchasing, through order entry, shopping carts, fulfillment, customer service to finance.
It Takes an Enterprise to Control Parcel Spending
Stay tuned as Parcel Insights explores the 4 key functions of enterprise parcel transportation management in this continuing blog series:
- Parcel planning in the face of tight order to delivery windows
- Shipping execution with enterprise level controls
- Analyzing all shipping data for spending patterns, productivity, and carrier performance
- Enterprise shipping administration to build cost-savings and operational advantages
Download the “It Takes an Enterprise to Control Parcel Spending” white paper to learn how to improve transportation planning, execution, and decision-making across your extended enterprise.