From Rate Shopping to Returns: How a TMS for Parcel Shipping Decreases Transportation Spend
With surging e-commerce volumes and under increasing pressure to pivot to an omnichannel distribution strategy that includes ship-from-store, ship-to-store, courier delivery, and more, supply chain leaders have a full plate these days. Yet despite all the changes that have taken place within supply chains of late, one of supply chain leaders’ biggest priorities remains: managing transportation costs. The good news is that technology, and in particular a Transportation Management System (TMS) for parcel shipping, has given supply chain leaders the capabilities they need to not only infuse order fulfillment strategies with some much-needed agility, but also to better control transportation spend.
Leveraging Multi-Carrier Rate Shopping
A TMS for parcel shipping allows a shipper to deploy a multi-carrier strategy. The shipper can contract with multiple global, regional, domestic, and international carriers to build a transportation network. Then, the system rate shops across this network, switching between carriers to continually optimize each shipment to achieve the lowest cost delivery based on point of origin, point of destination, delivery timeframe, parcel weight, parcel dimension, and any applicable business rules.
Negotiating Carrier Contracts
With a multi-carrier transportation network in place, shippers are better prepared to negotiate with their carriers. Because the shipper always has access to the best carrier rates for any given shipment, carriers have to work harder to earn the shipper’s business and are therefore incentivized to offer better rates.
Shippers can augment cost savings by using a TMS for parcel shipping to consolidate shipments heading to the same region or country and leveraging LTL rates rather than parcel rates. Referred to as “zone skipping” or “zone jumping,” companies can save as much as 30-50%. In addition to the cost savings, shippers distributing products internationally also benefit from fewer regulatory headaches, since a consolidated shipment requires only one customs declaration.
Shippers engaged in e-commerce know consumers return online purchases at much higher rates than in-store purchases. And high returns volumes can be challenging, especially for shippers using a single carrier. It’s important to remember that just because a carrier’s core strength is outbound shipping does not mean its reverse logistics are equally strong, nor does it imply the carrier offers the most cost-effective rates. To secure the best rates for both outbound and reverse shipping, it is recommended shippers deploy a multi-carrier strategy, and the number of carriers in the network may grow significantly for shippers executing outbound and inbound shipping to multiple locations internationally.
In addition to managing multiple carriers, it’s important to note a TMS for parcel shipping also enables shippers to use data analytics and Business Intelligence to optimize inbound distribution strategies, making sure products are returned as quickly as possible to the right distribution center, warehouse, or store to achieve a quick turnaround time for resale.
Maintaining Carrier Compliance
Each carrier has unique requirements for labeling and electronic communications, which they must strictly enforce in order to successfully process high volumes of parcels. Remaining compliant with multiple carriers’ requirements can be complicated, particularly for shippers shipping from numerous distribution centers, warehouses, and/or stores. However, a TMS for parcel shipping ensures each shipment, regardless of whether it is shipping domestically or internationally, is compliant with the designated carrier’s requirements, including accounting for import tariffs, packaging specifications, and customs rules and regulations – helping shippers avoid additional fees and delivery delays.
Improving Customer Service
Some shippers, particularly those shipping B2B, may have to adhere to their customers’ requirements for carrier selection. For example, a B2B customer may ask their supplier to ship parcels on their account. Shippers that only use a single carrier will be unable to accommodate this request, but shippers with a multi-carrier shipping strategy and a TMS for parcel shipping can easily meet this need.
In addition, a TMS for parcel shipping empowers shippers to proactively address errors to maintain customer loyalty. It stands to reason that in a high-volume shipping environment, there’s a higher potential for mistakes. This is bad news in a competitive retail environment in particular, where the smallest slip in service can lose a customer forever. Parcel TMS solutions, however, can change this equation. With a TMS for parcel shipping that includes a Control Tower, shippers can automatically identify errors such as a shipment delay and respond to the error. Customer Service teams are armed with alerts and information to proactively communicate with a customer regarding their shipment status, reinforcing brand value, protecting the customer relationship, and earning those repeat purchase dollars.
Reduce Transportation Spend With The Right TMS for Parcel Shipping
2020 reinforced for everyone how wide-spread the implications of an unexpected supply chain disruption can be. Savvy supply chain leaders will use their takeaways from 2020 to create more flexible and cost-resilient parcel shipping operations by partnering with a sophisticated parcel TMS provider. To learn more about how Logistyx reduces transportation spend for some of the world’s biggest manufacturers, retailers, and 3PLs, watch our expert video: The Logistyx Shipping Quadrant.