Managing the Pitfalls of Parcel: The Importance of Selecting the Right 3PL Provider

Demand for parcel shipping has skyrocketed over the last several years. The rise of e-commerce and surges in retail and direct-to-consumer shipping in conjunction with consumer expectations for fast, reliable delivery timelines has created a great reliance on parcel shipping services. At the same time, parcel shipping has become more costly due to shifting carrier pricing models, and complexity has compounded due to the need to manage increased volumes while meeting expectations for reliable delivery timelines.

There is no question that managing parcel shipping at scale is hard to do, but understanding the challenges upfront and knowing the right questions to ask of potential 3PL providers can help companies select the right partner and alleviate some of the burden.

Why parcel is more complex than it seems

Pricing is one of the more problematic factors associated with parcel shipping. Dynamic pricing models influenced by weight, dimensions, surcharges, fuel costs and even zone-based pricing make it difficult to anticipate what shipping rates will be or how they may change in the future. Hidden fees and unpredictable costs (e.g., peak season fees) due to lack of transparency further complicate the rate structure. The recent UPS Teamsters deal also drove rate increases, which were then reflected by other carriers as well, resulting in dramatic rate spikes across the board.

Service level agreements or contracts can also complicate the parcel shipping process, particularly when they are overly restrictive. Spikes in volume during peak periods, lack of clarity around the terms outlined and unclear expectations that result from poorly written agreements can lead to tension between shippers, carriers and 3PLs. For example, the inability to flex or scale to meet demand due to lack of capacity creates often leads providers to use contracts as leverage for why they can’t meet certain demands rather than working to provide a solution to meet the needs of all parties.

Technology integration issues can be a point of contention as well. In light of heightened customer expectations, shipping delays, unreliable delivery windows and lack of visibility can impact customer satisfaction and erode loyalty, so being able to track shipments and have confidence that they will arrive as expected requires the right tech tools to be in place and connected for a seamless experience.

Choosing the right 3pl partner matters

With customer expectations higher than ever before, companies can’t afford to leave their parcel strategies to chance. Working with the right 3PL provider to manage parcel shipping can help to alleviate operational strain while allowing your parcel business to scale and flex as needed to accommodate business growth or seasonal demand.

When considering a 3PL to manage your parcel freight, ask the following questions to ensure your needs are met:

• Do they offer multi-carrier shipping? Having access to multiple carriers can provide better access to lower rates, reduced delivery timelines and specialized services.
• When they obtain lower rates, do they pass on the savings to customers? Whilereliable partners will work to optimize rates, it’s important to be wary of providers that may achieve cost savings but still increase rates for their customers to improve their own margins.
• Do they integrate with your tech systems? It’s critical to ensure complete visibility on the front end to enable proper tracking and exception handling when it matters most.
• Are they scalable and flexible enough to support peak season volume and business growth? Having access to a broad, reliable network is key when it comes to making sure your partner is able to scale as demand shifts.
• Do they offer dedicated customer support? Sales teams may promise the world to secure a deal, but what does the support process look like once the deal is closed? Getting access to real customer feedback like reviews and testimonials can provide peace of mind that the support will be top-notch after the partnership is solidified.
• Do they offer custom solutions or a one-size-fits-all approach? Abiding by rigid contract terms or set parameters will almost guarantee dissatisfaction with a partnership, but working with a solutions-focused 3PL that will tailor solutions to address your unique business needs can provide assurance that the partnership can flex and scale as your needs change.

People-powered, customer-driven solutions

Working with a reliable 3PL partner can remove the headache from parcel shipping operations while improving efficiency, and asking the right questions upfront is a great start when it comes to selecting the best partner to fit your needs. However, given the complexity of parcel shipping, choosing a partner that aligns with your business goals and creates solutions that are specific to your unique business needs and operations is paramount to forming a successful partnership, and one 3PL that is intentional about this level of customization is NXTPoint Logistics.

With more than 100 years of supply chain experience and a team dedicated to creating tailored solutions to meet the needs of each individual client, the NXTPoint team is a trusted parcel 3PL provider that is committed to our clients’ success.

Our vast owned and partner network also guarantees that you’ll have capacity when you need it and within your budget, even for your most time-sensitive shipments.

If your company is seeking a better parcel experience, you don’t have to settle. Contact our experts today to learn more about how we can customize a parcel strategy to meet your needs.