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The State of “Fast and Free” Delivery: What Retailers and Parcel Carriers Should Know

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The State of “Fast and Free” Delivery: What Retailers and Parcel Carriers Should Know

Thanks primarily to Amazon (and the explosive growth of Amazon Prime), consumers in 2020 are conditioned to expect that virtually anything bought online can be shipped for free. That’s true for small orders like prescriptions and batteries, and for huge items like appliances and tires. If it means a shopper has to buy an annual subscription, or spend a little more to meet a free-shipping minimum, most people would consider that a low bar to meet.

But as every retailer and ecommerce seller knows, shipping is never free. Today’s multi-billion-dollar parcel carriers are getting paid. They moved nearly a billion parcels this past peak season. That shipping cost is being ultimately absorbed by sellers and is reflected in the price buyers are paying for products.

And parcel volume growth isn’t slowing down – it’s accelerating. According to the Pitney Bowes Parcel Shipping Index, global parcel shipping volume grew 70% from 2014 to 2017, to 74.4 billion parcels. The index projects global parcel volume to rise at a rate of 17% to 28% from 2018 to 2020, surpassing 100 billion parcels this year.

Handling increasing parcel volume isn’t just about figuring out how to do more of the same. The process of getting things where they need to go is under a transformation. In a recent report, Gartner found that transportation is the largest portion of delivery costs, due to a shift from carriers handling bulk freight to small parcels.

[Parcel and last-mile delivery will] continue to be the fastest-growing shipment segments due to increases in multichannel retail, eCommerce in B2B and same-day delivery offerings.

Gartner also observed what many companies are feeling. As volume continues to grow, companies only have time to react instead of plan. That means many are missing opportunities to revolutionize parcel logistics with innovation and alternative delivery models.

How fast does “fast” need to be?

According to research from Freightwaves, consumers unsurprisingly still have an appetite for fast delivery, with 60% of shoppers saying they’ve abandoned an online purchase because of slow delivery times. With record volumes to handle – and so much at stake with consumer expectations – efficiency, on-time consistency, and flexibility are key for parcel delivery services, whether it’s same-day, next-day or deferred.

This year’s U.S. peak shipping season saw about a billion package deliveries (up 4.5% from 2018). Retailers are offering more same-day options, which increases demand and the need for trucks, local delivery vehicles, drivers, warehouses and warehouse workers.

This year, the challenge was also complicated by a shorter selling season (the holiday season was six days shorter in 2019 than is typical), new restrictions on driver hours of service, and the December 16 implementation of new rules for Electronic Logging Devices in commercial trucks. All of these factors impact capacity and the ability of networks to deliver fast and on time.

Emerging shift in consumer behaviors

On the flip side of the “freer and faster” coin is Gartner research analyst Tom Enright. He’s counseled retailers on their supply chain and fulfillment strategies for more than a decade.

In a groundbreaking report published in November 2019, he detected an emerging shift in consumer behavior: “Consumers are starting to express increased concern about the environmental impact of retailer’s shipping practices, and are seeking slower, more sustainable options.”

Consumers are now defining convenience as order fulfillment on their terms, and they’re expressing more and more concerns about the environmental impact of fast, one-off deliveries.

It’s a conflict between three consumer choices:

-The desire for instant gratification

-The price reduction they can get for waiting longer for a delivery

-The impact fulfillment speed has on transportation, packaging and other environmental issues.

According to Enright, for retailers, these shifting demands are driving the emergence of two new requirements that are somewhat at odds with current models:

-Retailers must be more environmentally sustainable in order fulfillment operations.

-Retailers must offer a wide range of shipping speeds and prices, especially if incentives or other benefits are included in the offering.

Considerations for retailers and parcel carriers

That means retailers – and their parcel delivery partners – need to consider more flexible fulfillment options. These will need to be able to satisfy a consumer who wants a totally different delivery than currently exists. Companies will need to consolidate multiple online purchases from different retailers, have them combined using less packaging and have it delivered as one shipment a week from Tuesday. That’s instead of three separate shipments expedited for delivery tomorrow – or even same-day.

Major retailers like Amazon, Walmart, Target, and The Home Depot are doubling down on offering same-day delivery options. And for parcel delivery providers, it remains a highly fluid and exciting market. New network models are not only welcome, but will be required to meet the ever-evolving demands of shippers.

The explosive growth of package volumes, and consumers’ desire for next-day and, increasingly, same-day delivery, aren’t likely to wane anytime soon. And retailers and parcel carriers will need to pursue creative, innovative ways to keep up with those expectations and meet that demand.

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Valerie Metzker is the Head of Business Development at Roadie, a crowdsourced delivery service that works with consumers, small businesses and national companies across virtually every industry to provide a faster, cheaper, more scalable solution for scheduled, same-day and urgent delivery. With over 150,000 verified drivers, Roadie covers 89% of U.S. households — the largest local same-day delivery footprint in the nation.

GSO

Western U.S. package delivery company GSO completes brand conversion to General Logistics Systems US, Inc.

Three years after West Coast package delivery company GSO was acquired by international delivery group GLS, the company has officially changed its name to General Logistics Systems US, Inc. (GLS US).”

“GLS is an international company with 30 years of experience and allows me to proudly say, we now have global experience delivered locally,” said GLS-US CEO, Randall Swart. “Over the past year, GSO has gone through many exciting changes, and we remain committed to providing the best service to our valued customers. In 2020 we will celebrate 25 years doing what we love — delivering packages as an extension of our customers’ businesses.”

Swart said the company looks forward to using the knowledge and experience of the GLS Group to invest in new technologies, new facilities, new vehicles and future growth to support customers’ growing shipping needs. “We are excited about the potential to accelerate our growth and presence in the market,” he said.

GLS US, which serves California, Arizona, Nevada, New Mexico, Oregon, Washington, Idaho, and Utah, is converting all trucks, drop boxes and supplies to GLS.

GLS acquired California-based GSO in October 2016. Since then, the two companies have worked seamlessly to integrate systems. The conversion to GLS reflects shared values between the two companies – reliability, security, transparency, flexibility, and sustainability. Customers started seeing the GLS brand in the Northwest when the company bought Seattle-based Postal Express in 2017 as part of a focused geographic expansion.

GLS US continues to expand and provide unmatched Priority Overnight, Ground and Freight delivery services throughout the Western United States. It has 2,300 U.S. employees, 48 depots, two hubs, and a customer service center to support more than 20,000 customers with a high-quality level of service including later pickup times, earlier deliveries, and proactive package tracking – all at competitive rates.

“Throughout the years, our service offerings and technology have evolved based on the needs of our customers,” Swart said. “We are committed to continue making improvements to ensure the best shipping experience possible. We’re growing quickly and are committed to living up to our reputation of providing all our customers with the same excellent delivery and customer service standards we’ve built over the years.”

GLS US will continue to offer customers an overnight delivery footprint unmatched by the national carriers with significantly reduced transit times across the West Coast using its ground and freight services. “We look forward to the opportunities that lie ahead for our customers and our company,” Swart said.

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GLS, General Logistics Systems B.V. (headquartered in Amsterdam), provides reliable, high-quality deferred parcel services for over 200,000 customers, complemented by logistics and express services. Through organic and inorganic expansion, the Group has grown to provide network coverage of 45 countries via wholly owned and partner companies, and it is globally connected via contractual agreements. Seventy central transshipment points and about 1,400 depots and agencies are at GLS’ disposal. With its ground-based network GLS is one of the leading parcel service providers in Europe. In the financial year 2018/19 GLS achieved revenue of €3.3 billion. For more information about the Western U.S. parcel and freight delivery services offered by GLS, visit www.gls-us.com.

Descartes Announces Acquisition of CORE Transport Technologies for Air Cargo Support

Descartes Systems Group announced this week its acquisition of New-Zealand headquartered company CORE Transport Technologies for an up-front consideration of $21 million in addition to potential performance-based consideration. CORE’s customers – which include commercial airlines and ground handlers, utilize the company’s network to successfully track international mail, parcel and cargo shipments as well as US domestic mail and parcel shipments.

“As US domestic and international ecommerce continues to grow, more demands are being placed on carriers and their partners to deliver efficiently and report events in real-time,” said Ken Wood, EVP of Product Management at Descartes. “The CORE acquisition complements our recent investment in Velocity Mail, helping us to better serve the logistics service provider community working with postal authorities around the world. CORE’s solutions also extend beyond mail and parcel shipment tracking, with air cargo tracking solutions that we can add to our Global Logistics Network.”

CORE boasts ten years of providing global connections with trading partners and government postal authorities for its customers. By integrating automation and utilizing data analytics, CORE supports operational efficiencies and streamlined operations to support customers.

“We continue to look for opportunities to add customers, solutions and content to our Global Logistics Network to help our customers manage the lifecycle of shipments,” said Edward J. Ryan, Descartes’ CEO. “By combining with CORE, we’re strengthening our position in the growing domestic and global ecommerce market. We’re also adding new solutions to our Descartes Global Air Messaging Gateway that we believe will present a compelling opportunity for our global air cargo community to enhance real-time tracking and visibility of air shipments.”

Source: Descartes