Do shippers benefit when carriers merge like FedEx and TNT or can transportation management software provide a more streamlined service?
Posted on 8th April 2015 by YmeriHart
The news that FedEx is about to acquire TNT Express raises the question – do shippers benefit when logistics suppliers merge? Do mergers dilute competition and therefore drive up rates?
Or does amalgamation of ‘backroom’ functions cut costs and streamline processes – making the suppliers more able to offer cheaper rates?
Of course, the cost-benefit analysis is not just about rates. Many shippers and third party logistics providers (3PLs) find that they need to deal with many different carriers in order to deliver millions of packages to both business and domestic customers all around the world.
Each carrier – from an express company to haulage companies – has its own booking systems and own set of specifications for everything from labelling the consignments to airway bills and packaging.
So maybe one larger carrier would be a better solution?
EU completion authorities obviously disagreed with this when they blocked UPS’s €5.2bn bid for TNT Express a few years ago. They declared 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”.
FedEx says it is sure that it will overcome any objections from the EU or any other regulatory bodies and that the acquisition of TNT will go ahead as planned.
So, for those logistics or warehouse managers who don’t want to deal with just one carrier, how do they deal with multiple carriers in many countries, each with their own unique set of requirements for shipments?
No doubt those who have been in the business for many years have devised all sorts of methods to cope. But for the new generation, they ask: “is there an app for that?”
The answer is maybe not an app – not yet anyway. It’s a highly complex process. But transportation management software is constantly evolving and has been specifically designed to solve the challenges involved in dealing with lots of different carriers, whether express, road, air or sea.
Of course, it needs to be more than a system which manages to automatically produce exactly the right label and documentation for the right parcel for each carrier – as essential as that is. It also needs to provide full supply chain visibility and integrate seamlessly into each shipper’s own shipping systems.
And, ideally, this multi-carrier management software should be flexible enough to add new carriers – and even help the shipper select the best carrier for each particular shipment on each specific route, using that shipper’s business rules.
It might, for instance, know about maximum weights or acceptance of dangerous goods on each proposed route. It might even check that the postcode exists to ensure delivery is not delayed – and then offer systems that make invoice reconciliation easier.
One could argue that this multi-carrier shipping software offers shippers and 3PLs the best option – the flexibility and cost effectiveness of using a variety of carriers without the hassle of running multiple shipping software systems to handle the requirements for each one.
In this way, shippers and 3PLs can avoid the potentially higher costs and more rigid structures associated with using just one carrier, and develop their own bespoke global shipping solution.