eCommerce Opportunities On The Rise For Trucking Companies

As it becomes easier than ever to purchase whatever you need online (thanks, Amazon Prime…we think?) your LTL trucking company is becoming an integral part of this equation whether you know it or not.

The National Retail Federation “expects that online retail will grow 8-12%, up to three times higher than the growth rate of the wider industry…For context, brick-and-mortar retail, which still comprises the vast majority of sales, is expected to grow at just 2.8%, slower than the average rate of growth for the overall industry.”

Given this growth occurring on-line, the supply chain is now a more integral part of the puzzle than ever before.  If this growth is to succeed, then investment and innovation will have to occur all along the supply chain as well. Just take Amazon as an example, they continue to build out large warehouses and invest in their own transportation companies as they see the writing on the wall. By investing in their own supply chain they can optimize their profits of their eCommerce growth. However, this is also opening up huge opportunities for LTL transportation companies, as shippers are looking for ways to get their products in the hands of consumers faster. As a fleet owner/decision maker there are many ways your company can have a bigger piece of this eCommerce pie. Two options Less-Than-Truckload trucking companies are having success with include investment in last mile strategy and warehousing.

Last Mile Strategy

Traditionally big box eCommerce retailers use USPS, UPS or Fed-Ex to complete their last mile strategy. However, many LTL trucking companies have seen the data, and realize that by delivering freight (that they are already transporting to DC’s) to the end customer they can reap financial benefits. By investing in a smaller fleet of box trucks/medium-duty trucks, you can then handle quick regional delivery in more urban/residential areas. End customers usually do not have a dock, so a fleet with lift gates and decking can make a big difference.  Having these options can be very appealing to a shipper, as their LTL Carrier can now handle their bigger LTL freight shipments as well as their regional last-mile delivery. Shippers want to work with fewer carriers who can handle more services. By becoming a part of the last mile solution you can offer something that many of your LTL competitors cannot.

Warehousing

Many online retailers are searching for partners that offer warehousing as well as last mile delivery. With consumers demanding products within a few days of ordering, shippers need to store inventory closer to population centers. Gone are the days of using one giant warehouse to store all inventory in one place. The new eCommerce strategy requires inventory to be spread out across multiple smaller locations. Traditionally, online retail was reserved for big box retailers selling goods from multiple brands. The future, however, is filled with innovative brands rolling out strategies to sell their product direct to the end consumer, cutting out the middle man and increasing margins. This strategy requires brands to have more options for warehousing and shipping their widgets. The results of Peerless Research Group’s (PRG) 2015 State of Warehouse/DC Equipment Survey show that in current warehousing operations 30-34% of customers buy online and ship straight from DC to end customer.

Brands are not interested in running a warehousing operation, they don’t have the space, the facilities, or access to a reliable warehousing workforce. Additionally, shippers rarely have a reliable Transportation Management System to manage their logistics such as Roadvision. Often times companies hire a 3PL warehouse operation to handle these needs and the 3PL then ships with a carrier partner from their location. However, as an LTL carrier, you are in the advantageous position of being able to offer a warehouse solution as well as the last mile delivery, giving you the unique ability to offer bulk pricing for both services. This streamlined, price competitive model is extremely attractive to these new progressive eCommerce shippers.

For a traditional LTL carrier, you are poised to provide in-demand services in regard to eCommerce and move your business into the future. Warehousing services can be something as simple as storing large freight for a period of time, or as complex as investing in a pick, pack and ship operation. With last mile delivery options it probably makes sense to start small, such as offering the service only for certain customers or specific weight limits. You don’t have to go “all in” right out of the gate, but if you want to not only survive but grow in the LTL industry, you should be doing your best to get into the game. As a small-to-medium LTL trucking company, this may seem like more than you want to take on, however, investing in these strategies should pay off as eCommerce continues to be a bigger part of our economic purchasing choices. Additionally, these strategies can open you up to a potentially large group of new customers. The reality is that your customers and prospects are in need of these services, and if you are not willing to be a part of the solution, someone else is. Strengthen your relationships with your shippers, offer them more services and become a more important and integral part of your customer’s supply chain.