OneRail

What’s the Problem With Parcel? Breaking Down the Parcel Delivery Problem

Back in the day, getting news of a parcel at the post office brought about an exciting climax to months of anticipation for that brown papered package sealed with twine. Today, parcel shipping describes the mass delivery of small, lightweight packages that can arrive at their destination in just one business day. According to 2021 research, “global parcel volume reached 131.2 billion in 2020, equating to 4160 parcels shipped per second — an increase of 27 percent year-over-year. 34 parcels were generated per person, on average… parcel volume could reach 232 billion or as high as 303 billion by 2026.” Today’s average plane and truck parcel delivery service is far from the original twine-tied parcels that spent weeks and months across the Pony Express. Yet, last-mile parcel shipping has a long way to go, with more packages crossing the U.S. than ever.

The Primary Part of the Last Mile Problem–Lacking Visibility

Across the supply chain, shippers and retailers struggle with consistently knowing where their parcel deliveries are in their journey. From transporting small items on a box truck or the box trucks themselves, lacking real-time visibility is detrimental to business operations. Untrackable shipments can be the driving force behind multiple other parcel shipping issues that center around a change in the schedule without details. 

When a delivery parcel truck gets delayed by half an hour, there are multiple opportunities for error if the new ETA is pushed into a lunch break or outside of working hours. Or when a parcel courier gets a flat tire five miles from the destination? While these two scenarios are relatively mild amidst the supply chain disruptions that have become commonplace over the last two years, when these two scenarios become consistent realities, they hugely impact business operations and customer satisfaction. 

Another Challenge–Finding Quality Last Mile Service Providers

It can only take one bad delivery service to sever a customer’s loyalty in the current economic environment. While many customers have understood disruptions and delays in the past, as the US society moves into a “new normal” after the COVID-19 pandemic, customers are ready to return to previous parcel delivery expectations. From dispatch to delivery, many things go wrong in final-mile capacity procurement. It’s more than just finding the parcel courier capacity; it’s finding a quality network that can consistently deliver on time with communication at every step. A quality last-mile parcel delivery service will also provide pricing upfront with a payment process that is easy and hassle-free. In addition, shippers and retailers must seek out top-notch last-mile solutions that prioritize value-added services such as insurance on parcel deliveries and around-the-clock customer service. 

Multiple Stops With Low Drop Sizes

The closer an item gets to its end customer, the smaller the shipment size. For example, a product manufacturer might receive all raw materials for a product in multiple train box car containers. After emptying the cars, they might fill the same containers, put them on a few trucks, and head to a few different warehouses. As the amount of product transported lessens, shippers and retailers have to choose less efficient but more direct forms of transportation, such as parcel shipping, to get their products to the end customer. With last-mile delivery accounting for 53% of total transportation costs, according to Insider Intelligence, retailers must invest in a last-mile delivery solution to maintain parcel delivery strategy and cost optimization.

Limited Insight Into Areas of Waste

With last-mile delivery operating on a “multiple stops, low drop size” process, the inefficiencies of this form of parcel shipping are more than just time. As the fuel market continues to set records shamelessly, 2022 last-mile deliveries must be as streamlined as possible to minimize waste in fuel, assets, and costs. Retailers and shippers can leverage sustainable strategy in their peak season planning to prioritize actions toward an environmentally friendly supply chain. While some sustainability-focused steps raise the price of shipments, such as purchasing carbon credits, shippers can leverage alternative parcel delivery strategies to minimize low-efficiency fuel usage. 

Higher Costs and Failed Deliveries

As noted by 2021 research, a survey of e-commerce organizations revealed that “24% admit more than one in ten orders aren’t delivered on the first attempt. The costs of failed deliveries are far-reaching. 8% of domestic first-time deliveries fail, costing retailers an average of $17.20 per order or $197,730 per year.” Without carefully managing 3PL performance, these added parcel shipping expenses could really damage a company’s profit margin. Inflation is extending past national borders due to the Russia-Ukraine war that began just as global economies were finally recovering from the pandemic. With high costs on every continent, shippers must prioritize hiring carriers and 3PL providers who routinely produce on-time, in-full last-mile parcel deliveries.

Lack of Routing Optimization

Even though a delivery parcel truck’s entire route often encompasses a window as small as 5 to 10 miles, wasted time on the road is still an issue. In fact, much of last-mile delivery optimization starts on the road. A parcel courier can find consistent success shaving off seconds or minutes of every stop by routing based upon a “right-turn-only” strategy or using dynamic software that can proactively adjust to real-time traffic or construction. However, for parcel shipping to be appropriately optimized, shippers and retailers must be able to understand, calculate and improve their last-mile KPIs.

Unpredictability in Transit

Despite the mundane repetitiveness that may occur for operators of a parcel delivery service who consistently transport freight within small jurisdictions of land across the nation, there is always an opportunity for error and unpredictability. An accidentally released herd of cows might steal an hour from a rural parcel courier, whereas a derailed train could set back an urban parcel shipping service for up to three hours. As climate change indicators across the globe continue to rise in frequency, characteristically sunny areas will continue to see spouts of snow. In contrast, typically wet areas may struggle through heat waves. With all of the unpredictability of parcel delivery, shippers and retailers must prioritize a proper logistics solution to bolster their business resilience when needed most. 

Outdated Tech and Tools

As personal homes continue to be characterized by smart speakers, innovative security systems and streaming entertainment services, the supply chain has been incorporating modern technology at an increasingly slow pace. In 2019, the ELD Final Law introduced new requirements for all applicable drivers to utilize an electronic logging device to guarantee every driver abides by safe drive time mandates. Some last-mile logistics platforms have leveraged this opportunity to upgrade parcel shipping with machine-learning-enabled software, IoT-enabled hardware, or geofence-protected freight yards. Others have followed the adage “don’t fix what isn’t broke.” However, in a fast-paced, costly, tight freight environment, supply chain professionals must leverage modern last-mile delivery solutions to minimize parcel shipping problems at every step.

Streamline Parcel Delivery Management With OneRail

Despite the increased costs and complexities of parcel shipping in today’s market, shippers and retailers must not become complacent with low-quality carriers and 3PLs. In fact, as the increased need for retail freight transportation rises, this is the time to contract with top-notch parcel shipping carriers and logistics providers. 

As shared by Logistics Management, the National Retail Federation forecast for 2022 “is calling for 2022 retail sales [are likely] to see an annual increase between 6%-to-8%, coming in at between $4.86 trillion-to-$4.95 trillion. NRF’s numbers come with the caveat that they do not include sales data from automobile dealers, gasoline stations and restaurants. And it added that non-store and online sales year-over-year, which are included in the total figure, are expected to grow between 11%-to-13%, between $1.17 trillion-to-$1.19 trillion, a tally which continues to rise and has seen major traction even well before the pandemic over the last more than two years.” 

So, how will your business operations be impacted by this increased competition for parcel shipping capacity? OneRail has the robust technology and strong parcel partnerships you need to succeed. Our data-driven visibility platform and coast-to-coast network of over nine million drivers, 335 courier entities, and 115 logistics companies drive our ability to provide competitive pricing (based on aggregate shipments across all customers) and the reliability you deserve. To learn how the experts at OneRail can tie up your parcel shipping problems, request a demo with OneRail today.

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