Small Parcel’s Future in Logistics

by | Jul 19, 2016

2 min read

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If You Ship Small Parcel, Start Looking 5-10 Years Ahead

When you look 5-10 years ahead, what do you see for your business? Most companies have a plan to account for where they want to go and how they plan to get there, yet many of them overlook the impact of their parcel shipping on their business’s overall bottom line. But as we look ahead to 5-10 years down the road, the landscape of how we ship is going to look very different. Parcel shippers need to be planning for it now if they want to position themselves for success.

First, a little context from a recent SeekingAlpha.com article:

UPS® announced its Q1 2016 results, which showed that its quarterly revenues increased to $14.4 billion, up 3.2% this quarter with a free cash flow of $2.2 Billion. The revenue increase in the domestic market was also part of the news. FedEx® was no different in their third quarter fiscal 2016 (ending on February 29, 2016), with results clocking a 9% growth in revenues to $12.7 billion and good operating income of $1.16 billion. The revenue increased due to an 11% increase in FedEx Ground volume in U.S.

And, according to JOC.com:

“Deutsche Post DHL hailed the ‘strongest quarter’ in its history as operating profit jumped more than 21 percent and net earnings soared almost 30 percent on a strong performance by all four businesses, including the troubled freight forwarding unit.”

In short, UPS, FedEx, and DHL all had great Q1 results. In fact, DHL had their strongest quarter in its history. Experts in the logistics industry are seeing the shift in value from shipping tons to shipping ounces (small parcel) and from shipping long fixed distances to shipping door-to-door.

More small parcels will mean more revenue, as carriers begin emphasizing moving packages door-to-door. A lot of this can be attributed to the rise of e-commerce, but regardless of the cause, things are changing in the world of parcel shipping.

This increase in the number of packages shipped, and the number of ways to ship them, is going to add stress to a company’s shipping operations. That increased stress can lead to inefficiencies, shipping errors, or non-ideal shipping practices. All of this just leads to slower package delivery times and increased spending. The key to controlling these factors and making sure that you’re positioned to scale as efficiently as possible is to be able to take a data-driven approach to continuously optimize your shipping processes.

It seems then, that small or medium-sized parcel shippers with these deep, data-driven insights into their parcel shipping profile stand poised to succeed with where the parcel shipping industry is headed. But it won’t happen on its own—parcel shippers need to play the long game, thinking 5-10 years ahead in order to plan for a new shipping environment that may impact them most.