C-level executives concerned with transportation spend in every size of company are having a bracing Q1. The dramatic, COVID-19 inspired increase in both B2C and B2B purchased online these days is good news for many companies—but it means the percentage of their sales from online commerce may have jumped from 25% to 50% in a single year. That jump across so many industries in a short period of time has created limited carrier capacity in virtually all transportation modes.
Companies who may have thought they were taking the easier, more efficient path by signing a contract with a single carrier have had an especially rude awakening. As transit times have worsened for domestic parcels, many customers are demanding delivery schedules that require air service—which is already maxed out for many carriers, who are not offering much bargaining room.
Meanwhile, the boogeyman of shipping—after-the-fact accessorial charges—not only remains a constant thorn in the side of CFOs wondering why their logistics budgets often go off the rails, but there are new flavors of extra charges. For example, peak season surcharges were always a holiday season reality—but customers paid them for virtually all of 2020. And then they sometimes faced unpredictable and sudden volume limits on how many shipments they could execute on a given day.
The bottom line: Wouldn’t it be a relief to get some predictability in your shipping spend?
Consider these three steps to get there.
First, review your logistics contract in the larger context of your business and customer profile today. If your business has changed (i.e., your online sales have increased from 25 to 50%), assume that is the new normal and look at the contract with fresh eyes. Pick it apart. What is or is not working for you? What are the geographic and time-sensitive sectors of your customer base? Are your customers scattered or are there particular areas you ship mostly to? Where are your most demanding, shipping-time-sensitive customers located? Is your current carrier responsive to your specific needs?
Secondly, let’s talk about value-added services. Are your existing carrier relationships helping you with your technology needs, marketing needs, payment terms, and insurance? Whether you are engaged in digital transformation already or pondering it, you may need transportation execution support that easily works with an online commerce site, marketing services, and financial services like payment terms. Is your transportation partner keeping up with your needs in the new normal?
Finally, not only has your business changed and the capacity of carriers changed, innovators like my company, Inxeption, are challenging old models, effectively changing the rules of the game. Our business model is based on integrating all key business services on one platform where the data from any one business function supports smarter decision-making in every other element. For example, do your sales of camping tents tend to fall off in winter months? What if you could easily target a regional marketing campaign to your existing customers who live in the Sun Belt and rely on a flat, predictable shipping rate so you could price the tents and offer free shipping? Suddenly, new opportunities are both clear and actionable.
At Inxeption, logistics is one of the most critical services we have built into the fabric of our platform and Inxeption’s approach has two critical benefits: First, it is not limited to a single carrier or even a short list of carriers. We work with all the premier logistics providers, which gives our customers flexibility. Most importantly, our business model is based on offering our customers a predictable rate across all shipping modes and eliminating those accessorial surprises and rate changes that can be so deadly to the bottom line.
Even large enterprise partners are finding that carriers aren’t being flexible these days. The good news is you have options like Inxeption I-commerce with integrated logistics and financing to chart a new path forward.