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Changes in the express parcels market in Europe are affecting shippers’ decisions; can transportation management software calm the storm?

Posted on 22nd April 2015 by YmeriHart

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With FedEx making an offer to buy TNT, and UPS announcing an investment of one billion Euros in its European business, it is obvious that the express and logistics market is facing significant changes.

If regulators approve FedEx’s offer for TNT, it will make FedEx the second largest package delivery service in Europe with a 17 percent market share. That would put it ahead of UPS, but still behind Deutsche Post’s DHL which leads with 19 percent of the European market.

This reduces choice for shippers but still leaves almost 50 percent of the European market operated by other suppliers, so hardly an anti-competitive situation – as FedEx will no doubt argue when the European Competition Commission examines its proposed merger plans.

You may remember a similar approach for TNT by UPS which was disallowed a couple of years ago with the European authorities declaring that the creation of such a large parcel group was not in the interests of consumers and shippers. It would lead to “a poor choice for customers and the threat of higher prices”.

So how do shippers ensure that they are able to maintain the best choice among a range of suppliers, especially when one of the major suppliers is likely to be taken out of the market?

Some commentators argue that the prices may go up as competition is reduced; others declare that with the top three all fighting for market share, prices are likely to go down.

But, obviously, express and logistics services are not just, or even primarily, about price, especially for some shippers. For many manufacturers or retailers, what they really need is a logistics supplier with a particular expertise in dealing with their product or in the geographical markets they are targeting.

The tricky bit is finding out that, in order to find that optimum combination of expertise and cost-effectiveness, the best solution is to use a combination of several different carriers.

On the face of it, this can prove quite a barrier for the warehouse or transport team tasked with organising this. Each carrier has its own IT systems, labels, regulations about packaging/pick-ups and Customs clearance etc. and carrier specifications are constantly changing.

As a result, managing carriers internally can be a massive headache for IT. This is why installing the right transportation management software system can help to overcome this barrier very simply.

Choosing a shipping software system that automatically selects the best carrier for them – based on the exact criteria for each shipment – can bring even further value, then the ‘barrier’ transforms into a smooth pathway.

The express market might be in a state of flux as the suppliers jostle for market position, but agile shipping software can help shippers to stay in control.

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