Guest Commentary: The ABC’s of Managing Parcel with Freight

As the Internet has weaved its web into our daily lives over the past 15 years or so, parcel shipping has been quietly doing the same. The growing popularity of e-commerce means that more people than ever are purchasing goods online (39% more than just five years ago, according to comScore) than going to physical stores. This relatively dramatic shift is forcing shippers to adapt their supply chains to the new ways in which we consumers buy goods.

Traditionally, parcel shipping has been a beast that most companies keep isolated, managed separately from other modes and types of freight. It’s the old “rule of thumb” routing guide: if under 150 lbs, then ship via parcel carrier; if over 150 lbs, then ship via freight or common carrier. This concept still works for many smaller shippers because of its simplicity and efficiency. For them, it has proven safe and reliable (but often not economical) to keep parcel packages and processes separate from other transportation modes.

However, the explosive growth in demand for parcel delivery via online vendors has changed the landscape of freight management. This landscape is different today because it rejects the old “rule of thumb” when it comes to the traditional divisions between parcel and non-parcel freight. Spreadsheets and routing guides might get the job done, but they cannot optimize a supply chain given the infinite number of variables that exist for large volume shippers.

The technology sector noticed years ago the potential benefits of using technology to integrate parcel with traditional freight management. Today we are at a crossroads where many more shippers can successfully execute this concept thanks to:

• Affordability: Despite the prevailing concern that a multi-modal, enterprise-level transportation management system (TMS) is generally cost prohibitive, cloud-based solutions have opened new doors to affordability.
• Better Technology: With a best-of-breed enterprise TMS, classic optimization techniques can now be merged with advanced data analytics to break down the walls that once existed between parcel and other modes.
• Competition: When the same product offered by different vendors hits a pricing “floor,” consumers can choose where they purchase an item based on the next lowest part of the total price equation — shipping costs.
• Defragmentation: Shippers can manage an entire transportation chain using a single platform.
• Economics: The recent economic turbulence has created an atmosphere of robust competition and is squeezing profit margins for shippers like never before.
• Fast and Future Results: Not only can shippers achieve a rapid ROI (immediate hard savings), they can also realize improvements in areas such as labor reassignment, strategic inventory management and partner collaboration.

Advancements in TMS technology are essentially changing the game of logistics and supply chain optimization. While companies know this, they often don’t realize the extent to which parcel freight can now be integrated with other freight modes to enable mode consolidation and end-to-end transportation management. If parcel shipments are part of your freight mix, take a few minutes to research the possibilities and the benefits a market-leading enterprise TMS can bring your company. You may find that the low cost of entry, rapid time to market, improvement in efficiencies, overall cost savings and the competitive edge a global, multi-modal enterprise TMS brings to your company is well worth your time.

Daniel Vertachnik is responsible for global sales & marketing at MercuryGate and for the company’s international expansion and growth. Prior to joining MercuryGate, Dan served in senior leadership positions in the technology sector, with RMI, Red Prairie and i2 Technologies, and in the carrier and 3PL sector, with companies such as NFI/National Freight, Inc., and The Dart Group. Dan has extensive experience leading all aspects of Supply Chain Execution and Transportation Software business groups, including, sales, marketing, R&D, consulting services and strategic acquisitions. He has a business degree from Duquesne University in Pittsburgh, PA.