The world has entered the era of e-commerce, and companies around the globe are struggling to keep up with the trend. Innovative last-mile delivery options have been created, such as concierge services, the app, Doorman, Amazon Key and more. For shippers, the best way to handle the e-commerce logistics surge lies in e-commerce freight consolidation and deconsolidation.
E-Commerce Growth Is Incompatible With Stagnate Freight Shipping Strategies
E-commerce growth can boggle the mind. According to Trucking Info.com, e-commerce growth exceeded 38 percent for the third quarter of 2017, and projections for the next five years indicate growth to remain at or above 19 percent per year. Unfortunately, shippers using traditional freight shipping strategies, including limited use of Intermodal freight shipping, will result in added expenses and delays in moving e-commerce freight.
E-Commerce Freight Consolidation Increases Available Capacity
E-commerce freight consolidation has a direct bearing on available capacity. As the trucking shortage and capacity crunch come to a head, shippers will need to turn to out-of-the-box options for moving product. One of the solutions is to consolidate small shipments into larger shipments, which has the added effect of offering these benefits:
- Increased consistency with the supply chain.
- Lowered fuel costs and reduced diesel emissions.
- Faster delivery and decreased freight spend.
How Surface Mode Shippers Can Compete in E-Commerce Logistics
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How to Use Intermodal Freight Shipping and Consolidation for Success
Shippers leveraging Intermodal freight shipping consolidation should follow these best practices:
- Consolidate e-commerce freight into the largest shipments possible. Effective e-commerce freight consolidation is more than just combining shipments together; shippers need to combine shipments into the lowest-cost mode of transportation. This may include both LTL and FT shipments.
- Expedite long-haul shipments. The greatest value in e-commerce freight consolidation and deconsolidation derives from long-haul shipments. The further our products can move in a consolidated state, the lower overall freight costs for the shipment will be. As a result, shippers should expedite processes for consolidating freight shipments moving larger distances.
- Track inventory in real time. Since freight consolidation increases the amount of risk for packages, resulting from an increased number of touch points in the shipping journey, shippers need to track inventory location in real time. This may be achieved through the use of automated freight tracking systems, including those used to track trailer location, as well as radio frequency identification (RFID), automated identification and data capture (AIDC), Bluetooth technologies, and the Internet of Things (IoT).
- Diversify use of modes of transportation. Into this may arise when consolidation is not possible or inefficient to meet consumers’ expectations. This means shippers must diversify the use of modes of transportation, allowing customers the option to send a package via parcel when time is of the essence. Obviously, time is of the essence for all e-commerce shipments, but customers that are willing to pay a premium for faster shipping should take priority.
- Determine the lowest carrier cost for modes before consolidation. Even the most robust freight consolidation programs are ineffective for carriers that do not determine the lowest carrier cost for different modes of transportation before consolidation. It would be impractical to consolidate freight to achieve one cost when sending freight in a different mode would be more cost-effective.
- Consider deconsolidation costs versus benefits. Any freight consolidation program will incur additional costs in the deconsolidation process. Consider the added costs of deconsolidation before choosing to consolidate e-commerce freight versus its benefits for time and overall freight spend.
- Use technology to optimize routes. Since freight consolidation and deconsolidation depend on transportation routes, shippers should leverage technology to optimize routes. This will also be an effective tool in reducing delays and costs associated with adverse events, such as high-density traffic and weather.
- Hold drivers accountable. Chances are good, some shippers will continue to use in-house trucks and delivery modes, but even when using outsourced services, shippers should hold drivers accountable for their actions. This includes maintaining strict HOS adherence and utilizing an electronic locking device (ELD). Although the ELD mandate is in effect, some drivers may still be operating without it. Verifying ELD use and driver condition before shipping can reduce delays.
- Be transparent and reasonable with delivery windows. Overpromising delivery to consumers will only serve to decrease brand value and increase hostility and aggression among customers. Shippers should be transparent and reasonable when making delivery promises to consumers, and this applies to offering expedited shipping at a premium cost for consumers who may not want to wait for shipments that are sent via consolidated freight.
- Remember to include returns management costs in freight spend projections. Since returns management takes a bigger chunk of overall freight spend in e-commerce, which may involve up to 30 percent of all purchases, shippers should include returns management costs in freight spend projections when developing and implementing a freight consolidation and deconsolidation program.
Putting It All Together
E-commerce freight consolidation and deconsolidation are integral steps in leveraging the value of Intermodal freight shipping for e-commerce logistics and managing freight spend. Shippers that take the time to understand how consolidated freight can save time, money and headache can position their organizations for success in the digital age.