2019 Outlook for Parcel Shipping: Consumers Will Continue to Expect Fast, Reliable Delivery

It’s that time of year again.  “Best of,” “top 10,” and “roundup” lists highlighting the previous year’s biggest and most memorable moments are making headlines everywhere… and the parcel delivery industry is no exception.  It too has its fair share of these end-of-the-year lists, and for 2018, a frequently cited trend on said lists is the increasing emphasis consumers place on fast, reliable delivery when making a purchase decision.

Consumers value fast, flexible and reliable delivery service—for free

In its 2018 Global Consumer Insights Survey, PwC asked approximately 22,000 shoppers worldwide to weigh in on their shipping preferences – from deliveries to returns. Not surprising, survey results revealed popular e-tailers such as Amazon and Alibaba have raised shoppers’ expectations about their product shipments: for one-third of those Amazon customers who use the company’s Prime service, the most important benefit cited was unlimited free delivery (mentioned by 72% of Prime users). And it doesn’t seem likely these expectations will lessen any time soon.  On the contrary, they may actually increase: one-quarter of Prime users say they prize Prime’s free two-hour delivery option as well.

Product shipments remain one of the hardest problems to solve

Despite mainstream adoption of these delivery expectations, however, product shipments remain one of the hardest problems for manufacturers and retailers to solve.  The sector is under severe (and mounting) pressure to deliver increasingly better service at a lower and lower cost.

With an exhausting holiday delivery season in the rear-view mirror, many leading companies are now re-evaluating everything from caps on the number of packages shipped to pricing schemes in an attempt to decrease distribution costs in 2019.  But with an ever-increasing product selection at consumers’ fingertips, threatening consumer loyalty with unwanted limits on shipping could be unwise.

Instinctively, many manufacturers and retailers may therefore look to renegotiate shipping carrier rates in their favor.  But similar to caps and pricing schemes, while carrier rate negotiations may provide short-term benefits, they lack long-term viability. As carriers foot the bill for rising labor costs and historically high shipping volumes due to the e-commerce explosion, their rates stand to increase, not decrease, and their willingness to negotiate supplier-friendly discounts will lessen.

Transportation Management Systems: A Winning Solution

The good news is that there is ample opportunity for winning solutions to emerge – one of which is a Transportation Management System for parcel shipping.  With a Transportation Management System in play, companies can reduce shipping costs while still meeting customers’ delivery expectations by boosting efficiency, choice and visibility for the entire delivery process.  Specifically, Transportation Management Systems enable manufacturers and retailers to:

  • Manage multiple carriers in a single platform. With today’s Transportation Management technology, companies can quickly onboard new carriers and perform “what if” analyses to identify lower-cost delivery services and shift shipping volumes accordingly.
  • Improve carrier contract negotiations. With all carrier contracts in a single system, manufacturers and retailers gain easy access to a real-time, accurate transportation data stream.  Armed with insight on everything from carrier performance to rate positioning, Procurement teams can ensure savings aren’t “left on the table” during carrier rate negotiations.
  • Remove labor-intensive steps in end-to-end order fulfillment. Transportation Management technology eliminates manual transport order booking and uses business logic to identify “best value” carriers. The result is a dual benefit: companies save time in the order fulfillment process and they also save money in terms of both shipping and labor costs.
  • Proactively address errors to maintain consumer loyalty. In a labor-intensive shipping environment, the more a company ships, the higher the potential for mistakes. This is bad news in a competitive retail environment, where the smallest slip in service can lose a customer forever.  Transportation Management solutions, however, can change this equation. With the right Transportation Management technology, companies can automatically identify errors such as a shipment delay and through AI, automatically respond to the error.  Perhaps even better: Customer Service teams are armed with alerts and information to proactively communicate with a customer regarding their shipment status, reinforcing brand value and maintaining the consumer relationship.

Fast, Reliable Delivery: Join the Revolution in 2019

The prevalence of “fast, reliable delivery” on so many “top trends of 2018” lists is evidence we are truly in the midst of a shipping revolution.  Companies and retailers looking to foster long-term customer loyalty will have no choice but to accommodate consumer preferences for shipping and prepare for companies like Amazon and Alibaba to continue to set new standards for delivery expectations.

Download our white paper: The Other Half of your Net Landed Cost of Goods to learn more about how you can improve parcel shipping while controlling your costs.