1st September 2020
We’re about to wrap up the third quarter of 2020 and COVID-19 continues to wreak havoc on our supply chains. One of the latest manifestation of issues caused by the global pandemic is the capacity struggles of the companies commonly known as the last mile delivery companies.
The logistics networks for the last mile carriers present a completely different set of logistical challenges than those of the long-haul transportation. The exponentially larger number of end points, the complex network of roads and the direct interaction with the end customers are just a subset of those challenges. The morphing customer behavior has a magnifying effect on these challenges and the resulting performance of the last-mile carriers.
In an article published last year, I talked briefly about the status of the parcel delivery industry in the US in comparison to Europe and mentioned that we are seeing a gradual increase in the number of carriers in the US, mostly in response to the e-commerce growth and the desire for shortened delivery times. At that point, however, we had expected a tougher inroad for the new entrants. After all, the incumbents were doing relatively well.
Then came 2020. COVID-19 caused a highly-accelerated trend for e-commerce conversion, a collapse of the number of physical points-of-sale and reduced worker productivity due to illness or safety measures. These and other related factors put a tremendous amount of stress on the logistical networks of the existing carriers resulting in a rise in delivery delays, costs and customer frustrations. This presented new carriers, small carrier and entrepreneurs with an opening that they weren’t going to let by. By offering shippers new options for shipping, they would help them with winning the customers back.
Indeed, while overall volumes have increased, smaller delivery companies have enjoyed much larger increases in their total volumes than the national carriers. Newcomer Frayt (same day delivery company based in Cincinnati, Ohio) for example, announced a volume increase of 250% in the first quarter of 2020. UPS saw an increase of just over 8%.
A recent study quoted by the industry publication, DC Velocity, explains how the growth trend seen by regional and local parcel delivery companies extended into Q2 as more retailer are exploring new ways of getting their products to the customer at faster pace and a lower cost.
The ROI case for implementing a Multi-Carrier Delivery Management System (MCDMS) just got stronger; much stronger.
The case for procuring and implementing a MCDMS depends highly on
While the increase in the options available to shippers adds a level of complexity to the shipping departments charged with taking advantage of these newly available options, MCDMS excel at dealing with this challenge: automating the rate shopping tasks and helping to realize the cost savings at a faster pace.
Consignor takes that even further. First, our industry-leading Scan App enables shippers to expand their fulfillment and shipping options to include setting up a private delivery function that allows them to deliver their own products, powered with all traceability functions enjoyed by major carriers, such as SMS notifications, picture verification and signature-on-glass technologies. Second, since Consignor’s platform is not limited to parcels, shippers are able to consolidate LTL shipments together with parcel shipment processing in a single system, taking advantage of consolidated reporting and of a central shipment traceability control tower.
2020 has been a tough year on most businesses, but a path forward for shippers is starting to emerge. Companies will continue to evolve in all aspects of their business and we are strong believers in that Consignor can make delivery a competitive advantage for those who choose to leverage the new market dynamics.
Text by: Zaid Duwayri, General Manager, Consignor US
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