In our previous blog post we discussed several key changes in the shipping industry that were brought about by a huge shift to adopting eCommerce as a channel for conducting business with other businesses. These changes include: rate changes from big players like FedEx and UPS; the USPS grabbing a piece of the market by partnering with Amazon for their Sunday delivery program; and regional carriers benefiting from same day delivery services.
Now, let’s look at the next five years and how organizations should embrace these trends and prepare for future growth.
The above three trends allow us to create some interesting foresight into the next five years in the shipping industry. The USPS is on track to play a major role in parcel delivery and will most likely take a lot of the market away from FedEx and UPS especially in regards to residential parcel delivery. With the continued growth in eCommerce, the USPS will also benefit from return shipments which are on the rise as well.
Amazon is currently one of the biggest customers for FedEx and UPS, but they are also positioning themselves, with an emergence of distribution centers, to become their own parcel shipping company. Intentional or not, what does this mean for FedEx and UPS? We aren’t quite sure, but it will be interesting to see how it plays out. Imagine Amazon as the main domestic parcel carrier and DHL as the International powerhouse.
Advice for 2014:
To embrace these trends and prepare for future growth in the shipping industry, here are a few things that companies should start doing today.
- There are still a large amount of companies that have data in an automated system such as an ERP or CRM, that have not integrated that data to shipping. The ROI on this integration needs to be analyzed, as it could potentially be six months or less. A multi-carrier solution would be the best option especially with regards to numbers 2 and 3 below.
- Shippers that currently use only one or two carriers should explore the potential savings available through more choices. Now more than ever shippers need to do their homework and explore alternatives to their current methods and rates.
- All shippers should consider software for rate shopping and analytic reporting to make intelligent carrier choices for each shipment. While considering cost, delivery time and daily shipment volume, all companies should analyze their annual freight spend and find ways to improve this number while maintaining a high level of customer service.