Understand how carrier capacity can negatively affect e-commerce shipping rates and delivery timelines.
Online retail sales gained traction once again in the first quarter of 2021, up a dramatic 39%. The cause? An uptick in online shopping due to COVID-19. But while the trend may have begun because of shutdowns and store closings, it’s expected to continue into peak season due to convenience – even as stores reopen their doors.
Unfortunately for e-commerce retailers, this demand for online shopping may outweigh its rewards. With national carriers at capacity, many retailers aren’t enjoying typical benefits such as discounted rates and shipment pick-up flexibility, largely due to vehicle and manpower shortages.
In this blog, we’ll help you understand how carrier capacity can negatively affect e-commerce shipping rates and delivery timelines as well as outline how a multi-carrier shipping solution can help you surmount carrier capacity issues – setting you on the path to success in 2021 and beyond.
How Carriers at Capacity Affect E-Commerce Retailers
National shipping carriers can’t keep up with the increase in e-commerce demand brought on by the pandemic. Although shipping carriers are trying to expand their capacity as quickly as possible, a lack of workforce and ships, trucks, and planes have left them behind.
The Wall Street Journal stated last month, “Shipping costs have tripled since last year, but merchandise comes in up to 45 days late.” This dynamic has made it difficult for retailers to compete with same-day/next-day delivery behemoths such as Amazon and compromised their customer relationships. Without the ability to meet customers’ demands for “delivery now,” once-loyal customers have instead turned to brands who promise convenience in the form of 2-day shipping and easy returns.
What’s more, carriers aren’t offering the benefits they usually would. For example, an e-commerce retailer may have a warehouse outside their shipping carrier’s typical pick-up range. Traditionally, however, if the retailer is a big customer, the carrier may make an exception and pick up the parcels outside of the range.
But with an increase in demand, the carrier may not have enough trucks or workers to drive an hour out of the way to the retailer’s warehouse without charging extra or taking a long time to pick up the shipment. This either forces the retailer to pay more to ship their goods (which can lead to price inflation) or to look for a new carrier. Either way, customer satisfaction suffers, goods are delayed, and shipping is more expensive.
Though not every e-commerce retailer receives special pick-up benefits from their shipping carriers, almost all have been subjected to substantial surcharges and rate increases over the last 14+ months, as many large national carriers kept their 2020 holiday surcharges in place in early 2021. Even more daunting: many national carriers are already announcing new holiday surcharges.
States FreightWaves about the most recent surcharge announcement from UPS, “The holiday surcharges, which kick in Oct. 31 and run until Jan. 15, will, as they did in the 2020-21 cycle, whack UPS shippers that tender the highest volumes. In extreme cases, surcharges will run as high as $6.15 per package.”
While e-commerce demand may diminish slightly as stores re-open, it’s not expected to get better anytime soon. And even though shipping carriers are increasing their workforce and fleets, it may take time for supply to meet demand – all of which means e-commerce retailers need a way today to find the best shipping options to get their packages to their customers efficiently, and at a low cost.
One answer? A multicarrier solution. Read on for the benefits of this smart shipping strategy.
The Benefits of a Multi-Carrier Shipping Solution
By integrating a multi-carrier e-commerce shipping solution into your supply chain tech stack, you don’t have to ship with just one carrier. Instead, you can tap into an extensive carrier network that includes dozens of regional carriers, making it easier and faster to add and maintain carriers’ rates and services and enabling you to quickly react to carrier capacity limitations, surcharges, and rate increases to better control costs and maintain on-time delivery KPIs.
When you use a multi-carrier shipping solution to compare carriers, you gain visibility into which carrier really works best for each of your shipments, based on:
- Shipping rates
- And more
With this visibility in place, you can see which national, regional — and in some cases last-mile — carriers can help minimize the cost and maximize the speed of your shipment, automatically.
Note: Customers are concerned with convenience. If your e-commerce store has a physical location, consider integrating same-day carriers, like DoorDash or Instacart, as a shipping option. This takes the shipping burden off you and integrates a third party to satisfy your customer faster.
And by adding a multi-carrier shipping solution like Logistyx to your supply chain tech stack, you also:
- Create an agile logistics infrastructure that withstands complex supply chain issues
- Improve transparency and coordination across your supply chain
- Leverage Business Intelligence to make informed business decisions based on your shipping data, such as:
- Change your inventory footprint: Move products from distribution centers to brick-and-mortar stores to better meet delivery timeframes, etc.
- Expand your carrier network: Add new carriers to handle parcel deliveries, be it international or local
- Compare last-mile/regional services against those from major carriers: Which carriers are best suited to meet delivery and cost expectations
- Determine what types of orders can be shipped versus orders that customers can pick up
A multi-carrier shipping solution like Logistyx can minimize the effects of carrier capacity limitations on your business by giving you easy access to several different carrier options and more. To learn more about Logistyx’s solution, download our whitepaper, Simplifying Multi-Carrier Parcel Management for Peak Season and Beyond.