Businesses relying on shipping vendors may be faced with inconsistent or creeping rates, slow turnaround times, and dissatisfaction from customers regarding deliveries. These challenges can have implications for your business’ revenue and reputation.

With approximately 58 million parcels shipping to homes every day in the United States alone, your business is just one part of a larger ecosystem when it comes to shipping and fulfillment. Your shipping provider, likely one of the big players in the game, is also facing a lot of variables when it comes to transporting goods to your customers. Knowing what challenges they face, and how that might impact your business, is important when developing your shipping and fulfillment strategy.

In this article, we take a look at some pressures facing shipping providers that have the potential to effect on your business’ profitability.

Constant growth means rising demands that are hard to meet.

Since the COVID-19 pandemic, the rapid growth of e-commerce has increased consumer shipping demands, creating a new challenge for shippers to keep up with. With the average consumer ordering 64 parcels a year,  meeting this demand with accuracy and efficiency is a significant challenge. Not to mention that failure to do so, leaves room for an unsatisfied customer and decreased loyalty further down the road.

Labor is always a question.

Growing demand means a rising need for skilled labor. Especially workers who can commit to irregular or undesirable hours. Drivers, warehouse staff, and more are all critical parts of the supply chain, helping to get products and services into consumer hands. To increase efficiency and minimize downtime, providers are turning to automation to meet some of these needs, but not everything can be handled this way. Likewise, implementing and maintaining automation and other technological innovations require substantial investment.

Labor shortages are a challenge for all shippers. Paying attention to which shipping providers are struggling with labor shortages, can give you predictive insight into how your customers’ orders will be fulfilled.

It’s never quite fast enough.

With standards set by giants like Amazon, many customers expect next-day delivery, or at the very least, faster deliveries than they did a few years ago. This makes the entire process harder for the provider to fulfill, from logistics to the real work done by drivers and warehouse staff.

If a carrier is having significant difficulty fulfilling delivery speed expectations – or you operate in an industry where that turnaround time is key – this could be detrimental for your business.

Last-mile delivery proves difficult and costly.

Often, the part of the shipping process that puts the most strain on carriers is the last mile. It is the most expensive and time-consuming step in the journey, with more margin for error than during other steps. This is complicated further by the location of the delivery. Optimizing routes across sparse rural areas, spending time in thick urban congestion, or a driver struggling to find an address and safely deliver it, can be a big cash drain on the provider. Which may translate down the line to your invoice amount.

Sustainability concerns from consumers are rising.

Increasingly, businesses and carriers alike are expected to provide reasonably transparent sustainability metrics, informing consumers of the goals and actions taken on a corporate level. This means it’s become increasing important to balance your budget to ensure maximum reduction of environmental impact.

As a business, if you choose a carrier that isn’t taking this concern seriously, it may have an adverse effect on your brand.

Costs are rising, generally.

Whether its labor, fuel, supplies, technology, or anything else, prices are on the rise; for you and your shipping provider. If you’re not diligent, the extra costs incurred by your provider could end up resulting in rate creep for you.

In conclusion…

Knowing what obstacles your shipping provider faces is important for your own business’ success. After all, the services they offer might make or break your customer satisfaction and reputation, among other things.