Editor’s Note: Register here to watch an on-demand replay of Supply Chain Dive’s Sept. 21 virtual event “Insights into the Holiday 2023 season.”
Carriers are improving delivery reliability by consolidating their sortation and delivery terminals into fewer facilities, Vijay Ramachandran, VP of go-to-market enablement and experience at Pitney Bowes, during a Supply Chain Dive panel discussion Thursday.
Carriers have been reporting fewer parcels overall in recent years, despite higher consumer spending patterns, Ramachandran said. Higher free shipping thresholds have prompted more items to be consolidated into a box, resulting in fewer overall packages being shipped.
“When they consolidate, they’re usually consolidating into larger, more automated facilities,” Ramachandran said. “The lower volumes have actually afforded carriers an opportunity to get rid of outdated facilities in their networks, and only focus volumes through the most modernized equipment they have.”
Since volumes are more concentrated, carriers don’t have as great a need to increase their workforces to support the incremental volumes during peak season.
“So I think it’s a more straightforward problem for carriers to solve, because they feel like they can effectively surge support both space and labor resources in time for these peak periods,” Ramachandran said.
The normalization of driver capacity among national carriers and the increase in new service providers is also helping parcel carriers prepare for the holiday season, Carson Krieg, head of industry growth, last mile solutions at project44, said during the panel. From a data analysis standpoint, carriers are also more “in tune with what their demand is going to be, even in a softer demand market.”
As consumers continue to value shipping reliability, companies are looking to cut delivery costs while maintaining quality service.
“How can I create opportunities to offer ground shipping alternatives, not having to focus on express shipping, but still maintain that delivery certainty?” Ramachandran asked.
While carriers are consolidating real estate, retailers and other shippers typically benefit from having inventory closer to the customer, with multiple fulfillment centers allowing for better distribution, he said.
“Diversified fulfillment locations, distributed inventory — that allows any carrier, even your deferred carriers, to create more certainty on the estimated delivery date, because the package doesn’t have to travel [as] far,” Ramachandran said.
