In the past week, chances are pretty good that you have made a purchase online. There is an increasing likelihood that you completed that purchase on your mobile phone or device. In a recent survey, the Pew Research Center found that roughly 80% of all individuals in the United States had used some form of online shopping, with almost half of all people having completed a transaction on their phone. When that same survey was taken in the year 2000, only 22% of individuals had made a purchase online.
What the Pew survey demonstrates is that online shopping and e-commerce are becoming an increasingly common fixture in our daily lives. Rather than rely on the internet for hard-to-find items, we now routinely turn to online shopping portals first before exploring brick-and-mortar retail locations. While online shopping has given consumers access to a wider variety of goods at more competitive prices, it has also been shaping the way that the products we buy are moved between manufacturers and distributors, and from retailers to the customer’s door.
The ramifications of the growth of e-commerce on shipping, and in particular less-than truckload (LTL) freight have been immense. Not only have large changes already occurred, but given the fact that e-commerce is becoming more popular every year, the freight industry will continue to experience changes for years to come.
Understanding the effect that the rising popularity of e-commerce has had on the LTL freight shipping industry is essential for gaining an accurate picture of the current challenges facing the shipping industry. The truth is, the shipping industry as a whole is struggling to keep up with demand. E-commerce has not only produced a huge constraint on shipping capacity through a surge in demand, but it has also fundamentally changed the way that products move through distribution networks.
E-commerce has also helped shape consumer expectations, as consumers are more likely today to expect free, expedited shipping options with three, two, or even same-day delivery. To meet these expectations both individual distributors and the shipping industry as a whole has changed the way that they move and distribute goods through shipping networks.
More Frequent, Smaller Shipments
One of the most significant ways that e-commerce is changing the shipping industry as a whole, and LTL freight companies, in particular, is by reducing the size of shipments and increasing their frequency. Prior to the age of online retail giants like Amazon, brick-and-mortar retailers would receive large shipments at regular intervals. The extra stock would be stored in a warehouse before it was placed on the shelves. Now, shoppers are making small, frequent purchases that go directly from the online retailer to consumer. This means much more frequent shipments that are smaller in size, as opposed to large, static shipments on a pallet. These smaller shipments aren’t enough for truckload (TL) shipments, so increasingly retailers are relying on LTL to get their products to their destination. This is compounded by the fact that while there are monolithic online retailers like Amazon, there are many more small businesses that must also move their products through the same shipping channels. As more and more small and medium-sized businesses grow in the online sphere, reliance on LTL shipments will continue to increase.
Faster Delivery Speeds
Another way that e-commerce is shaping the shipping industry as a whole is an increasing demand for faster shipping speeds. Most consumers today expect products to be delivered within a couple of days. On top of this, these shipping methods are expected to be offered for free. While online retailers have experienced explosive growth as a result of free-shipping offers, shippers themselves are having to reorganize in order to deliver on these expectations. Specifically, shippers today are operating distribution centers that are located closer to each other, and close to major urban areas. By staging goods closer to the delivery market, shippers are able to more efficiently meet the expectation for fast, expedited delivery.
In the past, most shipments went directly to a retailer’s warehouse where it was unloaded and stored. This isn’t the case any longer. Today’s shipments are more frequent, smaller, and more likely to be delivered to a wide variety of different destinations. Increasingly, these destinations lack infrastructure such as loading docks. Carriers are adapting to this by changing the types of trucks that they use to delivery shipments, particularly in urban areas where final-mile delivery is an important factor affecting shipping costs. By using smaller trucks equipped with load gates, carriers are able to safely access and provide services for a large number of small businesses entering the e-commerce fray.
One of the challenges that e-commerce has brought for LTL freight shipping has been changing delivery expectations. In the past, deliveries were typically made on a static schedule to a warehouse facility. Today, these shipments are smaller and more frequent. At the same time, delivery windows are now more exact. Retailers have less warehouse space to store goods if a delivery is made early, and late deliveries are never acceptable. To accommodate this change, LTL freight carriers are having to run on tighter delivery schedules and smaller delivery and pickup windows.
Although e-commerce has brought some enormous changes to the shipping industry as it’s popularity has grown, it has also brought immense opportunities. In response to the rise of e-commerce, carriers are becoming more resilient, more flexible, and more dynamic. They are better able to meet consumer demands and are capable of meeting increasingly fast delivery expectations. In response to the rise of online shopping, shipping carriers have had to reorganize how they store, move, and distribute goods throughout their networks. They have brought distribution centers closer together and staged them closer to urban cores. They have also begun investing in final-mile delivery networks to increase efficiency in residential deliveries. As e-commerce continues to become more popular, small and medium-sized businesses will increasingly rely on LTL freight to move their products.