In today’s ever changing e-commerce landscape, transportation has become more complex than ever before. Gone are the days when selecting a carrier solely based on the best rates guaranteed smooth sailing for your business. The growth of e-commerce, especially in recent years, has led to a capacity crunch in the industry, creating a host of new challenges for brands and retailers alike. Navigating transportation in e-commerce can be confusing, especially with it’s unstable nature. We’ll delve into the intricacies of e-commerce transportation and discuss why building a diverse carrier network and partnering with the right 3PL (Third-Party Logistics) provider are crucial steps in ensuring your business’s success and sustainability.

The E-commerce Boom and Capacity Crunch

The e-commerce sector has experienced explosive growth, with a combined annual growth rate of nearly 18% in the United States alone over the last decade. This growth has led to a significant increase in the volume of parcels entering the supply chain, causing what’s often referred to as ‘shipageddon.’ This term was coined during the peak of 2020 when millions of e-commerce orders failed to meet Christmas delivery deadlines due to capacity issues.

To adapt to this changing landscape, national carriers have shifted their approach, prioritizing profitability and higher margins over quantity. This shift has resulted in brands facing surcharges and volume caps, highlighting the need to diversify their carrier network and develop a strategic approach to transportation.

The New Rules of Transportation

In this complex environment, relying on a single carrier is no longer viable. Brands must now establish relationships with multiple carriers to ensure timely order fulfillment. This necessitates a well-thought-out and strategic approach to transportation, which can be challenging for many mid-size brands that lack the in-house resources to keep up.

Even larger enterprises are grappling with the rapid changes in the industry, making it essential to have individuals well-versed in transportation trends and challenges. Knowledge is power in this scenario, allowing businesses to anticipate and navigate potential risks that may threaten their operations.

Building a Diverse Carrier Network

The recent UPS strikes serve as a stark reminder of the risks associated with single-sourcing within transportation. Alternative carriers have become more specialized, offering unique advantages for brands that can leverage their specializations effectively. However, selecting the right carriers has become a daunting task, as rate cards now hide various hidden costs, including fuel surcharges, address corrections, and extended area zip codes.

The Role of Technology

While technology, such as Transportation Management Systems (TMS), can aid in managing transportation operations, it is not a one-size-fits-all solution. The suitability of a transportation solution depends on various factors that must be considered to achieve the desired benefits. Technology can support and inform your strategy, but it cannot replace the need for a well-defined and expertly executed transportation strategy.

Sustainability in Transportation

Transportation strategies also have a direct impact on sustainability. By optimizing transportation networks and reducing last-mile delivery through multi-node fulfillment, brands can simultaneously increase profitability and reduce carbon emissions. Leveraging capacity on passenger planes for cargo transportation is another sustainable approach that requires carrier diversity and optimization.

The Insourcing vs. Outsourcing Debate

There is a valid concern about relinquishing control over transportation when outsourcing to a third-party logistics provider (3PL). Brands may worry about a lack of knowledge and vulnerability. However, the key to success lies in selecting the right 3PL partner. Trust is essential in this partnership, and the right 3PL should proactively address transportation challenges and collaborate with brands to ensure smooth operations.