October 27, 2020
Posted by Arthur Ng

Weekly Logistics Report

 

This week's update contains 2 choice article summaries:

  1. Time to look to regional carriers in light of UPS and FedEx surcharges
  2. Is Shopify turning into Amazon?

Nightmare on Parcel Street Opens Historic Window for Regional Carriers

 
Source: American Shipper - read the article here 
 

Summary

  • FedEx and UPS are at capacity and are unable to deliver shipments for some shippers

  • It is time for companies to diversify their carrier mix

  • Shippers may want to consider regional carriers

Commentary

Due to the surge of shipments from the newly booming eCommerce market that COVID has created, the big boy carriers (i.e. FedEx, UPS) are more selective with who they do business with. Some businesses have mentioned that they will wait 10 days for a UPS truck to collect their shipments from the warehouse. According to Richard Metzler, CEO of Lone Star Overnight, “[some companies] were abruptly informed to shed 20% - 30% of their volume.“ If carriers get to pick and choose who to do business with, it’s only fair that our shippers are provided the same option.

Often, shippers are either single-sourcing or shipping with a very limited number of carriers, namely FedEx and/or UPS. They are uninformed of cost benefits that regional carriers such as OnTrac may provide. Some regional carriers are not only a more cost-effective alternative, but they also have the potential for faster shipping and weekend deliveries

To keep up with customer demands in this market, eCommerce businesses need to be able to automatically route shipments to regional carriers if the big boy carriers are too backed up. This way, shippers can ship their orders at a reasonable price point and have orders get to their customers at a reasonable time. The logistics landscape isn’t going to get any easier, and eCommerce companies looking to thrive in the current climate will need to find a shipping option that allows flexibility in their fulfillment operations all while driving down costs by routing shipments intelligently.

 
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Surging Online Sales Drive Growth for Shopify's Fulfillment Service

Source: The Wall Street Journal - read the article here

Summary

  • Shopify launched ‘Shopify Fulfillment Network’ 

  • Companies should invest in expanding eCommerce operations

  • Companies should invest in automated shipping software to remain in control of their fulfillment operation

Commentary

Shopify launched ‘Shopify Fulfillment Network’ to expand into physical distribution. Similar to Amazon, Shopify is now inventory storing, packing, and shipping for their customers. This could really go one way or another, Shopify could either be making this shift to empower customers or they could be turning into another Amazon. Speculations aside, this news piece should give you a good idea of where the retail industry is headed. Big department stores like Neiman Marcus and JC Penney have gone bankrupt. It’s likely we'll see more companies move away from the brick and mortar model and pour efforts into building out their eCommerce operations. 

With the pandemic plaguing the world and the unexpected surge in eCommerce transactions, companies who did not adapt to these changes early enough are now in trouble. One of the prerequisites to running a successful eCommerce business is having a robust fulfillment system in place. Companies who have run their million-dollar fulfillment operations with basic shipping software are now facing challenges when their software cannot effectively process the mass influx of orders. Today, companies are struggling with solutions that aren’t processing orders fast enough, aren’t flexible enough to change with their business, and are preventing them from scaling their business. Unless an automated fulfillment solution is implemented, these challenges aren't going anywhere.  

 
To learn more about fulfillment services that will enable your operation to scale, schedule a call today!
 

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