The approaching holiday season is shining a bright light on transportation operations of retail companies both large and small. The rise of ecommerce has created loftier expectations of modern consumers for faster, on-time, perfect deliveries. Managing the deluge of parcel shipments is a serious challenge and many retailers and their suppliers are already straining to keep up. Global parcel volume in 2017 grew to 74.4 billion parcels, a 17 percent increase over 2016, according to Pitney Bowes.
The numbers around parcel activity are staggering. Every second, 2,300 parcels are being shipped, representing both B2B and B2C activity. Today, more consumers continue to choose the convenience of online shopping. In fact, global online sales reached nearly $2.3 trillion in 2017 with a year-over-year growth rate of 25 percent, according to an Apex Insight report. And, on the B2B side more manufacturers are being asked to ship smaller loads to retailers, who want more just-in-time deliveries versus large truckload orders. In response, shippers are seeking new ways to better manage freight across all modes.
Shifting to a Unified Multimodal Strategy
Many businesses today are still using point solutions for parcel while managing other modes through a Transportation Management System (TMS). A recent DC Velocity survey of parcel shippers found that 61 percent of companies are still managing parcel completely separate from other freight modes. And, 28 percent of respondents said they aren’t using a TMS at all. These fragmented, single-modal approaches may have worked in a different era but shifts in market demands often require new strategies, processes, and tools to stay competitive.
In the same DC Velocity report, nearly half of respondents said that they found parcel shipping difficult due to the complexity of using multiple carrier software interfaces. One key drawback in having disparate systems is the inability to compare options or calculate the trade-offs in selecting different modes. It can be time-consuming switching from one system to another trying to identify the best option.
In today’s new, faster-paced environment, the solution might be found in pulling all freight activity into a single TMS, providing everyone with a holistic view of activity. A more integrated strategy that spans across all modes allows transportation managers to analyze and optimize shipments. It also means greater efficiency and the ability to capture significant savings by selecting the best mode for each shipment.
It’s time to breakdown the siloes and create a more all-encompassing process. Whereas in the past shippers were relegated to purchasing different systems to manage parcel and all other modes another to handle “everything else,” multimodal platforms are allowing companies to consolidate all shipping operations under a single umbrella.
All Your Freight Data in One Place
Having a single platform to track various shipments means having everything in one place; there’s no need for a separate forwarder system or a separate system for parcel. A single platform can help deliver a productivity boost to the entire logistics team and provide a more accurate view of transportation spend. Further, it enables businesses to provide a clearer view for their internal and external customer in terms of origin, destination, and current location of freight. Decisions are based on a wider view of all shipping activity rather than just seeing just one mode.
The right multimodal TMS can help companies with their parcel delivery challenges. Ideally, it’s best to find a platform with system architecture designed to natively support parcel and less-than-truckload (LTL) along with all other modes. A multimodal TMS can help ensure companies are choosing the right mode at the right price point for each shipment.
It’s Not a TMS Without Optimization
Managing complex movements requires a more sophisticated set of transportation tools. A true TMS will have an optimizer to help find the most efficient routes, minimize miles, reduce fuel costs, and decrease backhauls. Today’s optimization tools can take tens or even thousands of shipments and combine them into loads. By combining multiple parcel shipments into one LTL load or several LTL shipments into a single truckload, it can reduce overall transportation spend. Optimization is perhaps even more critical in the US domestic market where trucking and rail capacity is as tight as ever.
Freight optimization also can be used to shift modes to reduces costs, use multi-point optimization, or pooling. It also offers ways to evaluate multi-leg zone-skipping scenarios, advanced rate shipping, and pooling chains. Just the use of zone skipping alone has allowed some businesses to produce transportation savings of 20-30 percent.
With a ‘what-if’ analysis, parcel shippers can test various options to determine the impact of price, transit time, and service level. Imagine taking 600 shipments and consolidating them to 200 carrier loads. On top of having a single system to see everything in one place, optimization is where logistics operations can generate considerable freight savings by implementing a TMS for all modes, including parcel.
The dynamics of global logistics have changed drastically, and such a major shift means that logistics operations have to adapt to survive and win. In the age of the consumer, to keep up with the extreme parcel volumes, shippers and their logistics partners must re-think and, if necessary, start to re-engineer their transportation processes. Managing parcel shipments through fragmented systems or manual processes is no longer sufficient for businesses to operate efficiently and keep costs from spiraling upward.
Karen Sage is MercuryGate’s Chief Marketing Officer (CMO) responsible for the company’s global marketing, communications, sales enablement, and go-to-market efforts. She is a veteran with 20+ years of experience in business-to-business marketing and communications helping several industry leaders launch disruptive new categories, accelerate revenue growth, build leadership brands, and establish marketing organizations that scale globally. She comes to MercuryGate most recently from spend management solution provider, SciQuest. Prior to SciQuest, she was at CA Technologies where she served as vice president of marketing leading rapid growth initiatives. Her experiences leading growth also include multiple leadership roles during a 15-year stint at Cisco. Karen started her career having invented the NETSYS Performance tools at NETSYS Technologies, Inc., which was acquired by Cisco in 1996.