Top Five Parcel Predictions for 2021

January 7, 2021


The year 2020 redefined the parcel market by accelerating trends that were already occurring prior to the COVID-19 pandemic, primarily e-commerce. Digital Commerce 360 estimated that e-commerce sales would reach $839 billion by the end of 2020 a whopping 40.3% year-over-year increase from 2019.

E-commerce will continue to play an important role for retailers and parcel providers alike. How retailers and parcel providers manage such demand and volumes will define 2021.

Below are the top five predicted trends in parcel for 2021 from SME.

1. Diversification of last-mile parcel delivery providers. Capped volumes, equipment limits and higher shipping costs will spur shippers to diversify. They will need to lessen their reliance on FedEx, UPS and USPS by adding additional last-mile parcel delivery providers to ensure capacity and manage shipping costs.

2. Higher shipping costs. Shippers will definitely see an increase in their shipping costs this year. FedEx and UPS continue to announce their annual average rate increase of 4.9% but, as we all know, the increases in surcharges are big. This year is no different as we will see a continuation COVID-19 related peak surcharges introduced earlier last year - but now renamed simply 'peak surcharges' - from both providers. The real question is how long the surcharges will last.

3. Higher parcel volumes. Until the COVID-19 pandemic ends, expect consumers to continue to spend more on goods versus services. Plus, consumer buying habits have likely changed for the long-term as retailers have adapted to the e-commerce model.

4. Returns management. Because of the anticipated increase in parcel volumes, the likelihood of more returns is strong. We expect more solutions for returns to be introduced this year, as well as more alternative drop-off locations and partnerships such as those between Amazon and Kohl’s or Staples and Optoro.

5. More alternative delivery and pick-up locations. FedEx and UPS will continue to expand their retail partnerships such as Michael’s, Dollar General and Walgreens. These alliances undoubtedly help reduce their delivery costs as well as to provide an additional option for consumers to pick-up or drop-off packages.

Remember this quote from Carol Tome, CEO of UPS during the company’s Q3 earnings call:

“It's not about volume share growth. It's about value share growth.”

Shippers will need to take heed and plan accordingly.

To find out how any of these trends could impact your business, contact us at solutions@spendmgmt.com.

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

 

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Top Five Parcel Predictions for 2021

January 7, 2021


The year 2020 redefined the parcel market by accelerating trends that were already occurring prior to the COVID-19 pandemic, primarily e-commerce. Digital Commerce 360 estimated that e-commerce sales would reach $839 billion by the end of 2020 a whopping 40.3% year-over-year increase from 2019. E-commerce will continue to play an important role for retailers and parcel providers alike. How retailers and parcel providers manage such demand and volumes will define 2021.

Below are the top five predicted trends in parcel for 2021 from SME.

1. Diversification of last-mile parcel delivery providers. Capped volumes, equipment limits and higher shipping costs will spur shippers to diversify. They will need to lessen their reliance on FedEx, UPS and USPS by adding additional last-mile parcel delivery providers to ensure capacity and manage shipping costs. 2. Higher shipping costs. Shippers will definitely see an increase in their shipping costs this year. FedEx and UPS continue to announce their annual average rate increase of 4.9% but, as we all know, the increases in surcharges are big. This year is no different as we will see a continuation COVID-19 related peak surcharges introduced earlier last year - but now renamed simply 'peak surcharges' - from both providers. The real question is how long the surcharges will last. 3. Higher parcel volumes. Until the COVID-19 pandemic ends, expect consumers to continue to spend more on goods versus services. Plus, consumer buying habits have likely changed for the long-term as retailers have adapted to the e-commerce model. 4. Returns management. Because of the anticipated increase in parcel volumes, the likelihood of more returns is strong. We expect more solutions for returns to be introduced this year, as well as more alternative drop-off locations and partnerships such as those between Amazon and Kohl’s or Staples and Optoro. 5. More alternative delivery and pick-up locations. FedEx and UPS will continue to expand their retail partnerships such as Michael’s, Dollar General and Walgreens. These alliances undoubtedly help reduce their delivery costs as well as to provide an additional option for consumers to pick-up or drop-off packages. Remember this quote from Carol Tome, CEO of UPS during the company’s Q3 earnings call:

“It's not about volume share growth. It's about value share growth.”

Shippers will need to take heed and plan accordingly. To find out how any of these trends could impact your business, contact us at solutions@spendmgmt.com.  
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.  

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