Where is the capacity and how do shippers access it?
In 2021, there is no clear-cut answer to either question, but for shippers and retail brands not only moving goods to physical stores but also to end customers through the e-commerce last-mile delivery ecosystem, the answers can’t come soon enough.
“My biggest problem two years ago was keeping the carriers away from me. Now it’s the other way around,” Joe Bobko, vice president of transportation for Boxed.com, told the audience during a session on carrier engagement at last week’s Home Delivery World 2021 conference at the Pennsylvania Convention Center in Philadelphia.
Boxed.com offers direct delivery of oversized and bulk-sized packages.
For craft supply chain Herrschners, though, the problem right now is not only finding capacity but dealing with an ever-increasingly complex level of dimensional surcharges rolled out by the major carriers.
“The squeeze of carrier costs on our business has forced us to do a lot of things we wouldn’t have done four years ago,” Leann Steltenpohl, vice president of operations and supply chain, said.
To combat some of these issues and to deal with the increase in home craft projects during the pandemic, Herrschners added downloadable patterns to its website, but some items still must be shipped, and many of those are light yet oversized.
“Everyone believes shipping is free,” Steltenpohl noted.
Steltenpohl and Bobko were joined on the panel by Bill Catania, CEO of OneRail, Joshua Acosta, senior logistics analyst for Barnes & Noble, and Michaela Wallin, competence lead customer fulfillment for the Americas at H&M. The diverse panel brought various perspectives on the shipper-carrier relationship, but they all face similar challenges navigating the chaos that has prevailed since the onset of COVID-19.
“If you are not saying cost is the No. 1 [pain point] right now, you are not being truthful,” Bobko said, to which the other panelists agreed.
“I ship 36-count Scott tissue. What happens if the customer doesn’t get their 36-count Scott tissue on time? Will the world end? I don’t know, so I still have to service that customer [regardless of cost],” he added.
Wallin agreed, saying that H&M is working on “utilizing the full network” of transportation providers, but peaks are proving problematic and complicated by providers that are not transparent in terms of sustainable options – something that is a key tenet of H&M’s corporate ethos.
“If you’re sitting on a brick-and-mortar setup, it’s key to engage those [delivery] nodes,” she said.
At Barnes & Noble, buy online, pick up in store (BOPIS) is a growing segment of e-commerce, representing 30% of orders, but the book retailer has also been aggressive in incentivizing customers to choose BOPIS, pushing incentives as high as 15% off on orders, Acosta said.
Catania, who operates a service that connects point-of-sale order information to a network of 7.5 million couriers for last-mile delivery, turned the conversation to alternative capacity options, noting the use of drones, autonomous vehicles and 3D printing as possibilities to help solve the ongoing capacity crunch.
“This isn’t going to fix itself in a year,” he cautioned. “We have to unlock core supply and through innovation, I think we can. It’s just going to take some time.”
While Catania noted network service efficiencies could open up some capacity – for instance using the same network to deliver auto parts in the morning and a different product in the evening – the conversation inevitably turned to the topic that is at the forefront for the future of last-mile delivery right now: drones.
“What we’re looking at is how would we implement this,” Wallin said, noting that H&M prefers to identify partners to work with on innovations rather than funding the entire project itself. “There are synergies out there that [the industry] is not exploring.”
Calling drones a “super interesting area,” Wallin did express some reservation surrounding the legal environment for drone delivery. Bobko concurred but added that if drones could deliver “big and heavy stuff,” he would be “interested because of potential efficiencies, cost savings and [the ability to alleviate] driver shortage concerns.”
Bobko added that some cost savings can be achieved by working with local services.
“If you have a local delivery service, maybe you can use thinner cardboard or fewer [packing materials],” he said.
“There is a limit to capacity, but what happens when you reach that limit?” asked Bobko.