Jason Smith, relationship manager with U.S. Bank, lists the "Five Cs" of the parcel business, and tells which one is the most important to carriers today.
The “Five Cs” of the parcel business are customers, carriers, consistency, capacity and cost, Smith says. But it’s that last element — cost — that takes precedence for many shippers and carriers today. “In the post-pandemic environment, the cost of everything has gone up,” he says, “and the logistics industry is not immune to that. Carriers have to pay drivers more, and buy trucks that are more expensive.”
Those additional expenses are passed on to the shipper in the form of higher freight rates, even as many e-tailers still offer pricey free shipping as a means of attracting fickle shoppers.
Prior to the pandemic, parcel companies and retailers placed more emphasis on heightening the customer experience. And they still give lip service to that metric. But in a time of rising inflation and uncertain economy, it gives way to practical considerations of the bottom line.
That said, e-commerce customers are more demanding than ever about getting good service and timely delivery of their orders. Many won’t do business again with a retailer that fails to live up to expectations. Balancing promises to customers with cost control becomes the “secret sauce” for retailers’ success.
Smith says there are things retailers can do to achieve that balance, or at least approach it. Part of the answer lies in accurate forecasting of demand through data modeling. Retailers need to be able to tell carriers how much business they expect to do, and the capacity they need to fulfill it. “Carriers appreciate that transparency,” Smith says. “It enhances the relationship, gives the shipper more negotiating power, and increases the willingness of carriers to adjust freight rates.”
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