Demand for small parcel delivery has exploded in recent years, driven primarily by the meteoric growth of e-commerce. That demand has a knock-on effect on costs and complexity, making it harder than ever for shippers to find the capacity they need at a rate that squares with their bottom line. And it’s not just direct-to-consumer sellers that are feeling the burn. Shippers of all shapes and sizes are finding themselves faced with an increasingly challenging small parcel market that threatens their profitability, reputation, and growth.
The small parcel landscape is evolving fast, and keeping pace is vital. Here are a few trends that will shape small parcel delivery this year and beyond—and what logistics providers can do to help shippers retain their competitive edge.
Speed and visibility are not a luxury—they’re a priority
As e-commerce giants like Amazon compete to be the best and the fastest, customer perceptions of speed are changing. Not too long ago, the idea of next- or same-day delivery was virtually unheard of. Now, it’s no longer a bonus if parcels arrive quickly—it’s the bare minimum that customers expect from any company with which they do business.
The ability to offer a fast delivery time may not be a major differentiator anymore, but that doesn’t make it any less important. Ensuring on-time delivery is essential if shippers want to preserve their reputation and secure repeat business.
Providers can support shippers by providing accurate event management tracking, especially when it comes to last-mile delivery. Shippers need complete, real-time visibility if they’re going to offer meaningful updates to customers and ensure they’re fulfilling increasingly demanding requests, like narrow delivery windows.
If a customer calls and the shipper can’t tell them exactly where their package is and when it’s anticipated to arrive, this will rapidly erode trust. Similarly, if there is a potential for delay, shippers need to know the details as soon as possible to update their customer and, where necessary, make alternative arrangements.
Costs are going to keep rising as the market speeds up
Thanks to the avalanche of packages being shipped every day, small parcel delivery costs have been rising steadily for years—and things are only going to get worse. Thanks to e-commerce, it’s estimated that package volume will double by 2026.
The need for speed also comes at a high premium, and with customers expecting shorter and shorter delivery times, costs are on the verge of skyrocketing.
To protect their bottom line, shippers need robust spend management tools. Leading logistics providers should offer advanced freight audit and payment solutions—from cost allocation to reporting—to ensure their customers aren’t paying a cent more than they need to. Benchmarking will also be critical, enabling shippers to evaluate their standing in the market and make strategic adjustments to stay competitive.
Amazon is gearing up for a logistics revolution, and shippers should be watchful
Like it or not, Amazon is a trendsetter in the logistics space—and it might be on the verge of triggering another major shakeup. Not content with setting a precedent for same-day delivery, the company seems to have bigger plans.
This became especially apparent last year during multiple clashes with FedEx. In June, FedEx severed its U.S. package-delivery contract with Amazon following the company’s increased use of Amazon Air, its own parcel carrier. Later that month, Amazon unveiled a new program aimed at helping entrepreneurs run their own local delivery networks—bolstering its last-mile delivery service. And in December, Amazon blocked its sellers from using FedEx’s ground delivery network for Prime shipments, supposedly following a decline in performance.
So what does this mean for shippers? More disruption is on the horizon—and it’s likely to be huge. Now more than ever, logistics providers need to keep one eye on Amazon at all times to ensure they’re aware of its plans and helping their clients respond accordingly.
A big impact on small parcel shipping
At CTSI-Global, we’re dedicated to helping our clients navigate the shifting small parcel landscape effectively. From parcel analysis and benchmarking to RFP management, spend management, and event management tracking, we offer a wide range of solutions to help shippers minimize costs—and increase profitability.
Don’t let small parcels lead to big problems. Contact us today.