The e-commerce landscape in the United States continues to rapidly evolve, requiring retailers to be flexible and adaptable to keep a competitive edge. Consumer expectations for fast and reliable deliveries are creating additional pressure on e-commerce companies, which must look into expanding their offerings from utilizing a larger network of delivery carriers to strategically leveraging air cargo options. Recent data from Statista highlights the need to diversify, projecting e-commerce revenue will reach $1.2 trillion in 2024 alone.
More e-commerce shipments create more parcel shipments. Pitney Bowes projects that by 2025, parcel volumes in the U.S. will reach 23 billion, rising to 35 billion parcels per year by 2029, according to its recent Shipping Index forecast. The report notes that four carriers handle the lion’s share of those shipments: the U.S. Postal Service, Amazon, UPS and Fedex. In terms of revenue, UPS and Fedex have a firm grip on last-mile deliveries for small parcel shipments, but with this size come risks of delays or service disruptions.
Instead of relying on one or two major parcel carriers, e-commerce companies should consider diversifying their networks to boost reliability, cost savings, reach and scalability. Additionally, overreliance on a single carrier can mean paying extra fees, depending on the location and item being shipped. Parcel carriers tack on extra surcharges and accessorials if the packages are going to a remote location or out of their network. One way to avoid this “death by a thousand surcharges” is to consider a strategy of adding alternative delivery carriers into the routing guide.
Alternative delivery networks: More speed for less cost
When considering alternative delivery networks, they can include regional carriers, gig workers, freight forwarders, courier services and niche carriers. For DeliverDirect, an important feature that ADNs offer is zone skipping.
Zone skipping reduces costs and transit times through bypassing intermediate shipping zones frequented by many large ground carriers in the U.S. For example, when using a traditional carrier via ground transportation, the parcel freight is first consolidated based on its regional destination, then as the parcel reaches the hub, it must be transferred to the spoke before it reaches its final destination. The hub-and-spoke method frequently used by less-than-truckload and parcel carriers is a benefit for their network but not for e-commerce retailers hoping to reduce costs.
To avoid the haphazard pinball method, Delta Cargo partnered with DeliverDirect to use passenger aircraft to zone skip these hubs and ship directly to the targeted region. This avoids the traditional accessorial fees and general rate increases, and it incurs only a small fuel surcharge compared to traditional ground networks. An added benefit is an increase in shipping speed compared to ground transportation networks. Speed is an added benefit for DeliverDirect. It offers an estimated two-day coast-to-coast time and transit compared to traditional ground-based parcel freight, which can take five to seven days.
The trickle-down effect of faster and cheaper shipping options also extends to reducing operational costs related to inventory and capital expenditures related to leasing or building additional distribution centers in the U.S. Leveraging DeliverDirect allows customers to maintain leaner inventory levels, reducing warehouse needs and improving customer satisfaction. Less warehouse space required creates additional savings from utility costs, property taxes, insurance and labor, which are tied into inventory management and order fulfillment.
Small parcel options from airplanes to zone skipping
When evaluating options for small parcel delivery, two options to consider are the zone skipping method or using an airline like Delta Cargo DeliverDirect, which contracts for space within airlines. For some customers, owning the aircraft gives the highest level of control and flexibility but is often limited to airlines that manage the operational complexity of an air fleet. Partnering with a provider that has contracts with airlines provides greater control over routing, cargo handling and the potential for long-term cost savings.
A more affordable option is utilizing cargo space on passenger planes, a cost-effective method that uses existing passenger flight networks. Scalability is an added benefit, as companies can adjust their shipping volumes through booking space as needed, scaling operations up or down depending on demand.
If buying an aircraft or using passenger planes isn’t an option, buying space on dedicated cargo planes is a balanced approach, though it comes with added challenges. Cost is one factor. While cheaper than owning an aircraft, it is more expensive than using passenger plane space. Availability is another challenge, as cargo flights may require booking in advance and capacity can be limited depending on the route and demand.
Thinking outside the box
As the U.S. e-commerce market continues to expand, rethinking traditional delivery methods is key to staying ahead of the changing consumer landscape. Expanding the network of existing delivery carriers into ADNs is an attractive option, especially for those routes that may be outside the network of existing ground-based parcel carriers. Higher costs through accessorial fees and surcharges to out-of-network regions remain a pain point for e-commerce retailers when working with the largest parcel carriers.
E-commerce companies can remain competitive in the fulfillment and delivery logistics space by diversifying their carriers and delivery networks.
To learn more, visit deliverdirect.com.
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