Stephen Beard, Scmr.org, September 13, 2023
With the right strategies in place surrounding transportation, brands have the power to not only increase profitability but also drive forward the sustainability agenda
Long gone are the days when a brand would put out a request for proposal (RFP), choose a carrier based on the best rates, and then have their transportation taken care of for the next three years as a result. Over the last decade, transportation as an industry has been turned on its head, making it more complex than ever to understand, let alone keep up with.
Following the rapid and intense growth of e-commerce over the last 10 years, which saw a combined annual growth rate of close to 18% in the U.S., the industry has been faced with a massive capacity crunch, with more and more parcels entering the supply chain. Even before the COVID-19 pandemic, the peak of 2020 – known as ‘shipageddon’ – saw millions of e-commerce orders fail to be delivered in time for Christmas as capacity problems boiled to a head.
With industry growth showing no signs of slowing down and pivotal events causing national carriers to change their approach, cherry-picking business based on profitability and higher margins, rather than quantity, has become commonplace. Such a change and shift in leverage to the carriers, which has resulted in brands being faced with surcharges and volume caps, has meant that it is no longer viable to put all your eggs in one basket when choosing a carrier. In fact, as demand continues to outstrip supply, smaller regional carriers that were once overlooked have now become a necessity to guarantee capacity and the key to success is defining a strategy.
Playing by the new rules
There is no denying that this direction of travel has added additional layers of intricacy to the landscape. Rather than handing all volume to one carrier, brands must now have multiple carriers in their network to ensure all orders can be fulfilled on time. This makes defining and executing a robust and strategic approach to transportation more important than ever.