Reevaluating sourcing options is an important topic today. Many shippers who have come to rely on UPS and FedEx are feeling a bit handcuffed.
The carrier networks are completely overwhelmed right now because of the market changes related to Covid-19. We've seen a huge shift in package characteristics. Prior to March, for example, a UPS or a FedEx driver would be able to pull up to a building and make 100 commercial deliveries efficiently and quickly.
But all the people in our building, and many other buildings across the country, are working from home right now. And they have been since March. So now, those 100 packages that could have been delivered in one stop are being delivered to 100 different locations -- residential locations, in many cases.
Shifting Package Characteristics
We're also seeing a shift in package characteristics, such as package and delivery density. And we're also seeing certain industries, eCommerce being a good example, do a lot more business right now. We're seeing an increase in overall package volume, so there is a change in characteristics as well as an increase in package volume, which means the carrier networks are overwhelmed right now.
What does this mean for shippers? We’ve spoken to shippers who are dealing with packages not arriving on time, pickups not happening when they should be, and service guarantees taken off the table.
Also, there are no repercussions when late packages are delivered now. We're seeing both carriers tell their customers that they don't want any more package volume. In some cases, they've actually rolled out fees to penalize those who are shipping more right now in the natural course of their business and their role in the pandemic.
A lot of shippers are feeling helpless right now because they’re trapped by limited options.
Customers who rely on just one carrier or the other oftentimes think that carrier is the only option for their business. Maybe they had a bad experience with the other carrier years ago, for example. For whatever reason, however, they have preconceived notions or perceptions about a given carrier. They believe that the one they're using is their only option. And if their only option is struggling to pick up and deliver packages on time, it’s hard to continue getting packages out the door and keep the business afloat.
Reevaluating Sourcing to Regain Control of Your Shipping
What can a shipper do in today's landscape to alleviate some of that lack of control that they're feeling?
Several variables contribute to this issue, all of which can be accounted for in Lojistic's platform. That said, we've established that shippers have had to relinquish a lot of control to carriers over the past several months due to COVID.
To alleviate some of that lack of control, setting up new relationships with either regional carriers or USPS may be a good place to start. Those alternatives’ ability to make up for the shortfalls of UPS and FedEx, however, will be limited in today's environment.
Reset Customer Expectations
The most important thing for shippers is to communicate with their customers and set appropriate expectations around delivery times and time-in-transit commitments. Unfortunately, establishing new relationships and finding alternatives to UPS and FedEx can be difficult and take time.
The best course of action for shippers, long term, is to start looking at the variables at play for improving in the future. Right now so much is unknown that a ‘wait-and-see’ approach might be prudent. Once the dust settles you can put a plan into action to save some cash in the future.
A lot of shippers who were around in the late '90s when UPS went on strike have said this feels like a similar environment.
For those who don’t remember, there was a period of time during which UPS wasn't delivering packages. FedEx was picking up a lot of that business, but they reached a point where they couldn’t take anymore. For the first time, we actually saw UPS and FedEx tell customers that they didn’t want any more new business from existing customers.
Reevaluating Sourcing to Prepare for Future Disruptions
We’re in a unique situation, but this is a reminder that reevaluating sourcing is important when you’re planning for the future.
A lot of shippers have put all of their eggs in one basket by relying on a single-source model. They're relying on either UPS or FedEx to ensure that their packages get delivered. While that has worked for many years, 2020 was an example of how that can potentially negatively impact a shipper's business in times like these.
Shippers that are planning for the future can use our experience as an example. Pre-COVID, like a lot of businesses, we had a work-in-the-office model. Prior to COVID, we never would have considered a work-from-home or a hybrid model. We essentially pivoted overnight, however, as many other companies did. We went from an in-the-office model to a 100% work-from-home model didn't really skip a beat.
Now, as we plan for our future office needs, we’ve had to reevaluate. Is working in the office the best model moving forward?
Had this not happened, we'd have never considered work-from-home or a hybrid model for our staff. And in the same regard, as it relates to shippers, this is an opportunity. You can look at what you're doing and ask, "Is this the best option moving forward?"
Going Beyond the Single-Source Model
As we mentioned above, a lot of shippers use a single-source model, either with UPS or FedEx, which can work fine. But you shouldn’t overlook this opportunity to consider other options, such as regional carriers or USPS whenever possible. Even 3PL relationships or zone skipping options could be useful in this environment.
Shippers haven't considered many of these creative distribution opportunities because they were never forced to. As shippers plan for the future, however, it’s important to explore all of those options.
There are many ways that a shipper can get packages out the door. But those options today may look different than your current system. And reevaluating sourcing is all about being open-minded toward some of the other options that are available to shippers.
Contact Lojistic now to learn more about managing and minimizing your shipping costs.