E-commerce growth is record-breaking, and experts estimate business-to-consumer e-commerce revenue to reach $3.2 trillion by 2020. That doesn’t even count the mountains of products that are shipped back for recycling, repairs or replacement via reverse logistics. Meanwhile, the value of the business-to-business e-commerce empire to generate double that in the same period. The surge of e-commerce generated more than $85 billion in the transportation industry in 2015, explains John D. Schultz of Logistics Management, and profitability continues to rise. Shippers need to understand the impact of e-commerce on shipping and how e-commerce and LTL team up to provide even stronger profitability than any other mode.
E-Commerce Is More Than Just Parcel
Part of the problem with the growth of e-commerce is about the misconception that all e-commerce transactions exist solely as parcels. While a lion share of e-commerce shipments are sent by parcel, up to 40 million per day, it is not always possible to address all e-commerce shipments this way. Some items are too big, and others may require a transition to LTL shipping and back to parcel to keep freight costs in check. Moreover, assuming e-commerce uses parcel exclusively is folly, and shippers are underestimating the value of business-to-business (B2B) shipping. In today’s world, the variety of products a retailer or other business can offer consumers is directly related to customer satisfaction, and customers that are unable to fulfill all of their shopping needs will turn to other companies, like Amazon or Walmart. Being able to reorder products through LTL shipping for e-commerce retail is essential to success.
[WHITE PAPER] The Current Factors Driving the Less Than Truckload Pricing Market
E-Commerce and LTL Infuse Shipping With New Revenue, Demand, and Ability
As explained by John Paul Hampstead of Freight Waves, the most significant driving force behind Less than truckload demand remains e-commerce. E-commerce growth rates over the past few years indicate a 7.5 percent drop in the last decade, but the growth of e-commerce over the previous year alludes to the possible doubling of e-commerce volume shipped within the next decade. In addition to moving more product, e-commerce also spurs the growth of all carriers, ranging from LTL to Intermodal. Carriers see higher profitability, which can be used to reinvest in technology and other resources to improve operations.
How to Secure LTL Capacity With E-Commerce Growth in Mind
E-commerce is contributing to the capacity crunch, and while shippers and carriers work together to improve capacity, it is always helpful to follow a few tips to secure available LTL capacity. These tips include:
- Treat drivers fairly and adequately. Fair and proper treatment of drivers will help more shippers gain shipper of choice status.
- Offer more than just delivery. More carriers are starting to offer additional services, like installation and setup of products, as part of the push toward final mile services.
- Take advantage of backhauls. Reducing the incidence of empty trailers in backhauls can effectively increase capacity and improve trucker wages.
- Take advantage of drop shipping and other shipping models, including intermodal. New shipping modes and methods can help reduce demand on congested warehouses and yards, ensuring capacity is available when necessary.
- Automate order processing, packaging, and loading. Using robotics and automated systems to streamline the order fulfillment and loading processes will dramatically reduce the amount of time spent waiting in the yard.
- Take advantage of 3PLs. 3PLs and freight brokers can help shippers expand carrier networks and ensure proper handling of transportation management and secure capacity.
- Integrate e-commerce and LTL shipping management, explains Deborah Lockridge of Trucking Info. Integrated systems will further make the process seamless, a vital aspect of a true omnichannel supply chain.
E-commerce growth will continue to spur both full truckload and LTL demand, and as shippers look for innovative ways to tap into more capacity, the best way to secure capacity becomes obvious. Shippers need to take extra care with the treatment of drivers, use of technology and be transparent to customers. In a sense, everything surrounding the e-commerce and LTL conversation is about developing the right strategy to control freight spend and keep customers and carriers happy. We’ll discuss the benefits of combining e-commerce and LTL shipping strategies and how shippers can make the best of the pairing.
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