Welcome to Parcelconsulting
Welcome to Parcelconsulting
Has your ecommerce business experienced an increase in shipping costs or delayed transit times? If so, you aren’t alone.
Today, UPS, FedEx, and USPS are all seeing transit delays for some of their most common service levels. For many of our clients, these carrier delays have created a customer service nightmare and caused many to seek out new carrier relationships.
This has especially impacted clients who use FedEx and USPS as primary carriers. In April, USPS adjusted service level commitments on Priority Mail and First Class Package services from the normal 2-3 day transit commitment, to 3-4 day transit times for both services.
Earlier this year, FedEx started integrating Express and Ground networks, to increase package density and reduce last-mile vehicles. This has only added to the frustration amongst the FedEx contractor network, who saw a decrease in per-package revenue and the addition of Sunday delivery, before COVID-19 caused an additional surge in packages.
Although the ecommerce market has seen consistent growth over the last decade, this year has presented major hurdles for carriers and ecommerce vendors alike. The COVID-19 pandemic has created a surge in online orders and logistics networks are now struggling to keep up.
At Parcel Consulting, we have become accustomed to receiving daily calls with concerns from customers across the US, ranging from transit time issues, reports of delayed tracking visibility, and nearly all clients have reported an increase in shipping-related customer service calls.
In most cases, we were able to introduce a new carrier option that offered better transit times, better tracking and almost every time, we even reduced the average cost per shipment.
How were these clients able to reduce shipping costs at the same time carriers are struggling to keep up? Here are a few trends that we’ve noticed.
Increases in daily shipments. With more customers choosing to buy online rather than visit a local retailer, many companies have seen as much as a 30% increase in daily shipments. This is a substantial increase in orders and makes it a great time to renegotiate with your current carrier. In some cases, your current carrier contract may have incentive tiers that improve as your volume increases, but that still doesn’t mean you’re getting the best deal.
Product Type. Many companies have pivoted away from their traditional inventory and are now manufacturing or selling masks, hand sanitizer, or other new products. This introduction of new inventory has changed your company’s shipping profile, and your current discounts may not be effective on your new products.
Daily Capacity Limits. We normally don’t hear reports of daily capacity restrictions until peak-season, and even then they aren’t typical. This year, we’ve already received half-a-dozen calls where a client who normally requires 3-4 trucks per day, is limited to 1-2 trucks. This tends to happen most with oversized or bulky items, as they require a manual sortation process, but it can also occur if you see a large increase in daily shipments. In most cases, our clients need to add another carrier option, just to make sure shipments go out the door.
Lane Performance. Not all carriers are strained in all territories. All of the major carriers are experiencing delays in transit time, but this varies greatly by territory. We have helped clients in Phoenix transition from USPS to DHL and see improved delivery times, but in Los Angeles, USPS may perform better than DHL if you use the right partner.
Customer Service. The cost you pay per shipment is not the only path to find savings. With delayed transit times and in some cases, poor tracking visibility, we have numerous reports of increased customer service calls. This is a drain on internal resources and is likely costing you more in labor than you realize. By switching to a carrier that can assist with better tracking and delivery performance, you can decrease customer service calls and increase customer satisfaction. Remember, the post-checkout customer experience includes the performance of your carrier(s).
Local Delivery Solutions. These are faster and oftentimes, more affordable. Continuing a growth trend seen even in pre-COVID times, the demand for local delivery has increased exponentially. Both traditional retailers and eCommerce merchants should explore local delivery options, wherever possible. Adding a local, same-day, or next-day delivery option is a great way to capture new business and decrease costs at the same time. The biggest hurdles are finding a reliable local delivery partner and meeting the volume requirements for a local delivery service. Luckily, the team at Parcel Consulting has created a database of local delivery and last-mile courier options.
If your company has seen delays in transit times, increased shipping costs, or if you need a second carrier to ensure daily capacity, Parcel Consulting can help. In most cases, we already know which carriers are performing well in your city and on your shipping lanes. If not, we provide a free parcel analysis and will also provide multiple pricing options, saving you the time and hassle of contacting multiple companies for quotes.
Fee Increases. Following other delivery providers, FedEx placed a temporary surcharge on domestic deliveries being made using their SmartPost service. Businesses exceeding a certain volume will also be subject to surcharges on residential deliveries using FedEx Ground and FedEx Express. SmartPost packages will cost an additional $0.40 to ship, and oversize packages will cost an additional $30 to ship. Companies will also be surcharged $0.30 per package when using FedEx Ground or Express if their shipping volume surpasses 120% of pre-COVID volume in a given week.
Surging Packages – Strain on Logistics. The global pandemic shut down brick-and-mortar businesses overnight, causing ecommerce demand to skyrocket. What was once only a small percentage of total consumer spend became the only option for many households. Even Amazon had a hard time keeping up with deliveries. The result is a strained logistics industry full of delays and longer delivery times. These, in turn, impact customer satisfaction. With (some) lost sales due to unhappy customers, it’s especially important to optimize your spend on your shipping costs.
USPS Bogged Down with Delays. The United States Postal Service has been hit hard during the pandemic. Consistent backlogs and staffing shortages have contributed to the significant delays seen by both online retailers and their customers. USPS users have reported packages not being scanned or disappearing altogether, and delivery time has quadrupled. At the same time, thousands of USPS employees have contracted the virus, and 60+ have died from it.
COVID-19 Impact on UPS and FedEx. Coronavirus is impacting UPS and FedEx just as much as it is USPS. The carriers are operating according to current restrictions and have implemented additional safety measures for employees and customers. Sanitization and handwashing are mandatory steps of each team member, and contactless delivery is now an option. With consumers continually concerned about contracting the virus, contactless delivery is a new feature to look for when researching shipping carriers.
FedEx Strains Opening Doors for UPS. As demand for deliveries surged, it quickly became clear that FedEx was ill-equipped to handle the sharp increase in shipping volume. Its response was to cap the number of packages each customer could send, forcing high volume customers to look elsewhere. UPS has a single package network that is better suited to scale in unexpected scenarios like a pandemic, so many ecommerce sellers are making the switch.
eBay Protecting Sellers from USPS Delays. eBay sellers, there’s some good news. If you’ve experienced shipping defects due to carrier delays, eBay will remove them to protect sellers from late shipment penalties. Sellers simply have to provide valid tracking information to indicate they are sending out orders on time. Even with late shipments, you can still qualify as a Top Seller.
UPS/FedEx Guaranteed Service Suspended. If you’re paying a premium for on-time delivery guarantees, you’re overpaying for shipping. UPS and FedEx both suspended their guaranteed service policies due to global supply chain complications from the novel coronavirus. These are indefinite suspensions. Now is the time to make the switch to a carrier with better rates—if the shipments are going to arrive late anyway, it is worth saving money.
ecommerce Revenue 2020. The eCommerce industry is only growing, and it’s never too early to get prepared. Revenue in the United States alone is projected to surpass $374 million and reach $476 million by 2024. With increasing demand and so much growth forecasted for the next few years, it’s the perfect time to find better shipping rates. Your bottom line will thank you for it.
Parcel Consulting has aggregated and partnered with the best options for same-day, next-day local delivery in the United States and Canada. We work with businesses of all types and sizes to provide the best tailored local delivery options and technology for their needs.
We’ve been preparing for this for more than a decade and we’re here to help! Give us a ring to discuss your options at: 833-PARCEL-1 (833-727-2351).
