How 2020 Parcel Trends Will Impact 2021
Whether you're sprinting or tripping to the finish line, there's something to be said for still being in the race given the gauntlet small and mid-size businesses (SMBs) endured in 2020. The year also shook up the transportation industry, and many of the challenges will carry into 2021. So as the year closes, shippers should reflect on their operations and build a plan for smoother shipping next year.
To jumpstart your planning, we've put together trends and learnings from 2020 impacting next year's parcel shipping.
The big trends
With all the ups and downs in 2020, parcel shipping trends shaping the next year come down to:
- Volume at all-time highs, further reducing carrier capacity
- Residential delivery dominating carrier operations
After COVID-19, parcel shipping volume is up about 13%.1 We talk to carriers every day and we're hearing that this won't let up even after the peak-season rush – largely due to reverse logistics for holiday returns and restocking inventory on its way from overseas. What do ocean liners have to do with parcel? Freight capacity is so tight that there's a trickle effect: When things get desperate, some shippers break freight down to parcels to keep boxes moving. We're even seeing carriers reject parcel orders. Because tight carrier capacity will continue into 2021, small package shippers need to rethink how and when they book pickups.
Full trucks also mean higher carrier rates. This includes general rate increases (GRI) and surcharges for oversize packages, dimensional weight (DIM), fuel and residential delivery among other assessorials. With business closures, deserted corporate parks and telecommuting became major headlines of 2020, and the swing to residential shipping changed parcel costs as well. Thanks to last-mile logistics, residential delivery is more costly and complex for carriers which creates higher shipper costs.
It's also worth noting that e-commerce shopping is growing ahead of projections because of COVID-19 and the in-store shopping stigma. This trend – which is expected to carry on even after the pandemic is under control – pushes a good chunk of in-store purchases to delivery trucks.
Customers come first
Just like face masks, shipping delays are a part of everyday life now. This makes package management, traceability and customer communication more important to your brand than ever. First and foremost, be proactive in communications. This includes:
- Relaying information proactively to keep customers in the loop
- Offering easy access to updates via online portals, push notifications and email
- Creating a clear line to customer support and resources that make claims simple
It's better to be upfront about issues rather than de-escalating an angry customer. And if the time comes to make good on a botched shipment, offer a shipping label or other concessions to show you're in the customer's corner.
Good questions lead to great opportunities
Full trucks are a good problem for carriers; not so much for shippers. If you can't fulfill orders in a respectable timeframe, customers may look elsewhere. So, what can you do? Start with some basic questions to find opportunities.
- Can you do more to understand the peaks and valleys of your volume?
- Can you build a better process for booking shipments based on consumer trends?
- How far out can you reliably book carriers – factoring shelf life of goods, warehouse or storage space, weather and other logistics?
It's not easy to re-strategize shipping logistics, but neither is an abandoned shopping cart. Whether your shipping department is a receptionist pulling double-duty or a dedicated team, it's time to build more efficiency into your operations.
SMBs looking to mitigate carrier rates and low availability will start with smarter operations. A smarter process may help you book sooner, which offsets low truck availability and potentially reduces costs. Maybe you discover that some customers don't need fast shipping – opening the door for a low-cost program like UPS SurePost®. Look for little changes everywhere and watch the incremental savings pile up. For example, if a package's rate is based on the DIM weight instead of actual weight, you could lower your rate just by using a smaller box.
Typically, a conservative approach to innovation is safe. However, that strategy – specifically the late adoption of e-commerce – hurt many SMBs in 2020. Those that rely solely on brick and mortar are now on the shakiest ground.
Before the pandemic, e-commerce was clearly on the rise. With business-to-consumer (B2C) e-commerce up 17%2, that trend has accelerated. However, with the shipping woes mentioned earlier, customers are looking to receive purchases in any way possible. This leads to omnichannel.
If you have a physical store, it likely took a hit in 2020. However, by blending online and physical storefront experiences, you create a safe shopping environment and faster fulfillment. Many businesses use stores as "mini-warehouses" for speedier shipping too.
Adding resources for added complexity
Unfortunately, shipping complexity as we know it won't disappear when we flip our calendars. That doesn't mean shippers should grind at doing things the old way. The winners will innovate, and the rest will hope things go back to normal before it's too late.
To command better shipping rates and book parcel shipments more efficiently, many SMBs look to a third-party logistics (3PL) partner. 3PLs live, eat and sleep in the transportation industry. Shippers can leverage a 3PL's relationships with carriers for preferred pricing and extra support. Worldwide Express, for example, offers SMBs access to negotiated rates through UPS®, coupled with dedicated support from our specialized operations teams. In addition to carrier connections, we help businesses with strategic initiatives such as adding new systems andomnichannel logistics or even incremental improvements such as cost-efficient packaging.
Be ready for 2021
Many SMBs need to shift mindsets and consider transportation and supply chain as an essential part of growth. It might not be why a business got started, but it's a big reason why it'll stay open. When it's time to build a 2021 strategy, let's build a plan that lets you focus on customers, not trucks.
1, 2 Shipment Stats Continue to Grow During Pandemic, Supply & Demand Chain Executive,
Consignor, April 2020