On the heels of a global pandemic and an unprecedented peak season, the parcel shipping industry will continue to undergo transformation in 2021. Scarred by shipping capacity strain and carrier surcharges and under pressure to meet changing customer demands, many companies are thinking about how they can better fortify their supply chains to withstand future disruptions. Digital transformation across supply, returns, and cross-border e-commerce will be key to improving the delivery experience while pivoting to new business models that reduce cost and realize growth. Expect the following five parcel shipping trends to emerge in the coming months:
1. Omnichannel distribution will become the new normal.
Predicts Greg Petro, founder of First Insight and Forbes Contributor, “The consumer will not lose interest in online purchasing and will likely maintain the same or perhaps higher levels of online purchasing forevermore. They surely will return to a store on ‘occasion’ to have the in-store experience, but it will be far less than retailers expect. The link (and key) between the two channels (online and in-store) is omnichannel strategies like BOPIS and curbside.”
For many shippers, how rapidly and efficiently omnichannel distribution can be accomplished depends on how well mission-critical fulfillment technologies have been integrated within the supply chain. Shippers using standalone systems in their supply chains will confront more challenges. Without connected systems working as one, shippers incur more costs and require more manual labor to fulfill orders. Lacking the inventory visibility and other controls afforded by integrated systems, these shippers cannot deliver the same level of customer service as their high-functioning, agile competitors.
On the other end of the spectrum, shippers with supply chains that are fully integrated benefit from inventory visibility and controls throughout the organization and can quickly augment omnichannel capabilities with specialty software. These merchants require little or no human involvement to deliver hundreds of thousands of parcels daily from either a single distribution center or by deploying ship-from-store, buy-online-pick-up-in-store, and other innovative fulfillment strategies.
2. Reverse logistics will be in the spotlight.
With e-commerce on the rise, retailers will be forced to focus on reverse logistics strategies. According to Dotcom Distribution’s 2020 e-commerce consumer survey, 76 percent of shoppers reported returning up to a quarter of their online purchases, and 56 percent said learning a company didn’t have a free returns policy has prevented them from making an online purchase. But how can parcel shippers manage returns costs while also making returns quick, easy, and hassle-free for customers?
Some companies will avoid returns altogether, including many luxury brands, who will continue to choose to skip the expense and improve customer service in one motion. E-tailers (sellers with no brick-and-mortar stores) are now increasingly following suit, sometimes telling customers to keep incorrect products and avoid the cost of returns.
For those companies committed to handling returns, they will mitigate returns costs by implementing a multi-carrier strategy. Equipping fulfilment teams with multiple carrier services from which to choose and technology that facilitates rate shopping across carrier services will keep costs low and empower teams to work around any carrier service delays or disruptions.
Furthermore, the priority will be convenience and all efforts will be made to breed customer loyalty. Forward-thinking organizations who put the customer experience first will simplify returns, using dual-use labels (labels that serve the purpose of both the outbound shipment and return) or peel-off labels (where the outbound label easily peels off to expose a return label) and accepting returns of online orders in stores. This last approach is popular among omnichannel retailers that have both online and physical stores, but it was also adopted by Amazon, who has partnered with large retail chains to accept, process, and ship returns at no cost to the customer.
3. Business Intelligence will improve parcel shipping execution.
Optimizing the ecommerce delivery experience while controlling transportation costs will be more important than ever for online retailers in 2021, and we’re likely to see increased use of data analytics and Business Intelligence (BI) to address these objectives. One particularly exciting area is the potential for external data feeds to augment BI data within parcel Transportation Management Systems (TMS), which many retailers use to track and provide analytics on the delivery performance of their parcel carriers.
In addition, it will soon be possible to incorporate weather and traffic data feeds into a parcel TMS to provide early notification (and with use of AI to predict the likely impact) of major weather events and road traffic incidents. There is even experimentation under way to see if analyzing unusual social media activity in a location might point to an exceptional disruptive event (a protest march or accident, for example) that could impact parcel deliveries.
4. Shippers will expand their use of cloud technology.
E-commerce growth rates accelerated in 2020, requiring organizations to fulfill unprecedented order volumes. Shippers will turn to cloud-based shipping technology to enhance the speed, scalability, connectivity, and flexibility of their supply chains, empowering fulfillment teams to execute, track, and analyze parcel shipping processes in a single solution and offering them the agility to onboard more carrier services quickly – improving reaction time, collaboration, and decision-making accuracy when the unexpected occurs.
5. Shippers will grow their carrier network.
In 2020, parcel shippers discovered that UPS, FedEx, and DHL, etc. can implement capacity limits and turn away shipments. Companies that already had multiple carrier contracts in place and shipping technology to rate and rate shop across their carrier network, fared better. In 2021, shippers will look to grow their carrier networks to include local and regional carriers to prevent future disruptions. And as companies increasingly ship orders from stores rather than from central distribution centers, there will also be growth in courier services that deliver parcels from stores to local customers.
Leverage 2021 Shipping Trends and Partner with Logistyx
Continuing to take a rigid approach to parcel shipping is no longer effective for most supply chain teams. Supply chain leaders instead need to adopt a more agile approach, one that allows them to anticipate, adapt, and prioritize within shorter time frames in response to everything from changing market dynamics to carrier capacity issues. Companies that were successful in 2020 were those that have been able to optimize order fulfillment strategies on the fly, quickly comparing order fulfillment scenarios and making smart decisions to adapt to ongoing shifts in consumer demand, mitigate on-time delivery risk, and stay ahead of the competition.
There’s no better time for supply chain leaders to prepare to thrive in a new era of strategic supply chain planning. Learn more about how your organization can effectively plan for 2021 in this e-book: React, Recover, Prepare: Future-Proofing Supply Chain Management.