The post-pandemic economy will be heavily reliant on e-commerce and will contribute to the tremendous growth of the trucking and transportation industry in the coming months. The impact of e-commerce on trucking and particularly LTL freight shipping is massive. In other words, the rise in the online shopping trend has had great ramifications throughout the entire transportation and logistics industry and particularly on less-than-truckload services. To quote DHL’s President of E-commerce in North America, “E-commerce is fundamentally reshaping our customers’ supply chains, challenging them to redesign their transportation and warehousing networks in order to accommodate customer demand across multiple channels, address changes in trade and inventory flows, and be more responsive to the market.” In today’s blog, we are going to discuss how e-commerce is boosting the LTL freight shipping market.
The correlation of e-commerce and LTL freight shipping
Online shopping has created a huge restriction on the shipping capacity because of the upsurge in demand. Additionally, it has irrevocably altered the way in which parcels are transported via distribution networks. E-commerce has also changed customer expectations. For example, customers these days expect free and fast delivery. Moreover, some e-commerce companies like Amazon are even offering same-day delivery services. To keep up with the client’s expectations, the shipping industry is finally changing the old ways of moving and distributing shipments.
The LTL freight shipping sector is one of the greatest beneficiaries of the e-commerce boom. Just 5 years back, e-commerce constituted just 7.5% of the net retail sales in the US generating around $91 billion. In the second quarter of this year, e-commerce in the US is bringing in more than $211.7 billion. Shipments that earlier relied on FTL are now being divided into several moves. A larger regional distribution pattern is a major factor behind the increasing use of LTL freight. LTL shipping is presently playing a massive and ever-increasing role in e-commerce logistics mainly because of its network flexibility and agility.
How the LTL shipping sector is adapting for better serving the e-commerce sector
The rise of LTL demands is prompting the existing service providers to expand their operations to cope with the surge in demand. Moreover, we can also see an increase in the number of small carriers and 3rd party service providers. While the new players in the market will obviously help to deal with the capacity crunch, they need to provide services at a nominal rate to better compete with the established players.
Increased focus on small parcels
The LTL shipping sector is quickly adapting to the new demands of e-commerce. To begin with, several LTL carriers are providing last-mile delivery services. In fact, they are even delivering bulkier shipments to the home or business addresses of the customers. Before the advent of e-commerce, retailers used to get bulk shipments on a regular basis. They stored the excess stock in the warehouses until it reached the shelves. However, these days the customers are making repeated small purchases that directly move from the online store to the customer’s residence.
In other words, there are presently a greater number of frequent small shipments instead of the large cargoes on a pallet. These small parcels do not fill up an entire truck which explains the increased dependence on LTL shipment. Moreover, other than the e-commerce multinationals, there are many small entrants to the market. The increase in the number of small and mid-sized e-commerce companies will have a direct effect on the increasing use of LTL shipments.
Delivery to remote locations
Previously, the bulk of the cargo first reached the retailer’s warehouse. These days the parcels have become more frequent and they need to to be delivered to diverse locations. Many of the shipment destinations are remote and lack infrastructural facilities like loading docks. The LTL carriers are now adapting to this by optimizing their last-mile delivery.
Increased focus on quick delivery
Yet another way in which the LTL shipping sector is dealing with the demands of e-commerce is by speeding up the delivery process. Online shoppers are used to free and fast deliveries. Free shipping service is one of the major reasons why so many consumers prefer to shop online. Therefore, the forwarders are now restructuring their operations to accelerate the delivery process. Shipping companies are now operating distribution centres that are situated near important urban zones. Keeping the shipments closer to the delivery market and the use of LTL shipping are allowing shippers to ensure expedited deliveries.
How the e-commerce sector is benefiting from LTL freight shipping
One of the most important advantages of LTL freight for the e-commerce sector is the reduced shipping expenses. Shared truck space obviously entails a lesser cost than paying for an entire truck. Additionally, storing all the inventory of the FTL freight at the final destination is a costly affair unless the shipment is fulfilled quickly.
Palletized shipments minimize cargo damage
LTL freight utilizes palletized shipment. Securing the cargo with a crate allows for more stability for all the shipment units in the truck. This is an important factor that helps to prevent in-transit damage of shipment.
Shipment tracking facilities
Shipment tracking facilities have become almost imperative for e-commerce service providers. All the multinationals in the e-commerce sector allow their customers to learn the exact shipment status at any given time. Therefore, LTL freight carriers are now providing the clients with cargo status updates until the shipment reaches its final destination.
In conclusion, we can say that the e-commerce boom has brought forth immense opportunities for the growth of small and mid-sized players in this sector. It is prompting freight forwarders to make the best use of LTL freight shipping for the timely movement of cargo. Therefore, it’s high time that freight forwarders should start offering more flexible, and dynamic services to retain and grow their existing customer base.