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With a new focus on parcel carriers and their unique advantage within the transportation industry, the dynamic between shippers and carriers will continue to experience shifts and fluctuations ahead of peak season traffic. Increasing parcel shipping capacity is more important than ever, thanks to increased pressure brought on by a rise in e-commerce delivery and transportation disruptions. Expenses are increasing every year as surcharges continue to escalate, as highlighted by Logistics Management: "In addition to the average annual 4.9% rate increase, shippers are managing hefty increases on many surcharges such as additional handling, large parcels and residential and delivery area surcharge deliveries." In an ever-changing market, the ability to maximize capacity in a competitive market remains critical to achieving future growth and success.
Day-to-day fluctuations often mean available cargo capacity will end up going to whoever is willing to pay the highest rate. Many carriers consider building up inventory with a multimodal approach to increase their capacity and avoid this bidding madness. Knowing when crunches are predicted and staying on top of shifts in the market trends, consumer demands, and buying habits can make it easier to compensate for capacity limits before the situation becomes severely disrupted.
In today's parcel market, capacity crunches are common even beyond periods of peak season demand. This leads to higher shipping and operating costs for both carriers and shippers. To compensate for the additional work and expenses they incur, carriers implement "peak season surcharges." Diversifying national parcel carrier access and utilization can make shipping easier during these trying times.
Parcel shipping capacity's impact falls somewhat by taking advantage of regional parcel carriers and their unique services. Consistent, predictable volume at times can be more valuable than scalability or adaptability. Demand forecasting capabilitiesand inventory monitoring and tracking technologies have become all the more vital for shippers. Carriers are not as worried about filling their trucks and vans, rather their focus is on securing the best price. So, staying with regional carriers can often help sidestep higher rates and give shippers more options to utilize.
Zone Skipping can offer a range of benefits to parcel shippers. The most significant benefit is often a lower per-package price for transportation. Instead of shipping hundreds or even thousands of individual packages across multiple zones, one truckload filled with numerous items and orders heading to the exact general location gets shipped. This streamlines shipments and can lead to significant savings for carriers, retailers, and customers alike.
Another way to increase parcel shipping capacity is through the proper use of SKU rationalization to improve product mix and management of urgent and non-urgent orders. According to a report by UPS, a failure to implement SKU rationalization can lead to chaos in supply chain management when an order needed in two days ends up shipping with items that require delivery in 5-7 days. On the reverse end, poor SKU rationalization can lead to more expensive priority shipping for goods that easily could wait a week and be shipped at a cheaper rate. It's all about figuring out how to mix the right SKUs to avoid issues and streamline shipping.
Improvinglead time accuracycan also help find parcel capacity when dealing with constraints caused by peak season shipping demand. By forecasting customer demand, businesses can more accurately predict what items will experience higher demand at certain times throughout the year. This insight is critical to proper parcel shipping capacity management and utilization. The ability to inform a shipping or carrier partner of anticipated capacity ahead of time is very important for planning and operations of a successful supply chain network in today's volatile economy.
Historically, those businesses that have a maximum cap on what they can pay for transportation rates are affected the most during periods of capacity crunches. Paying outside their planned, budgeted amount to secure capacity adds to their overhead costs and translates to higher customer rates. Building up inventory in advance of peak times and securing more extended contractual partnerships with parcel carriers can help improve access to capacity when needed.
The ability to source capacity from multiple locations and with carriers already lined up and ready to go can help overcome the pressures of parcel shipping capacity crunches during the peak season. To prepare for the coming capacity crunch and plan for the upcoming peak season rush, parcel capacity management and planning must be a top priority. Contact Intelligent Audit today to learn more.
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