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[Expert Analysis] Parcel Shipping Insights from the GMT Benchmark Report

Dive into this breakdown of some of the most meaningful parcel industry-related trends and strategies.

Earlier this quarter, Green Mountain Technology released their 2023 Benchmark Report and presented their findings at the GMT Summit in Memphis. The report is a wealth of information and provides a revealing look into the state of the parcel shipping industry from 2022 and into 2023. The three main takeaways GMT emphasizes are:

  • Parcel volume decline 2.0%
  • Carrier revenue increased 6.5%
  • Available carrier capacity

To appreciate where the industry is, it is helpful to think about these main points in combination with each other.

Parcel Volume and Carrier Revenue

One of the first observations to consider is points 1 and 2 taken together. That is, though parcel volume declined, revenue for the parcel carriers (cost to their customers, a.k.a the shippers) simultaneously increased. Such is the nature of parcel shipping, with pricing in the market not as much about supply and demand as it is inflationary pressures as carriers increase rates to cover costs and maximize revenue opportunities. 

Every shipper is used to the obligatory General Rate Increase each year, but the GMT study emphasizes the much more acute squeeze still being felt as an aftereffect of the COIVD-19 pandemic. The global crisis prompted carriers to expand and prolong their surcharge programs. Study respondents identified their number one 2022 peak season challenge as, “Additional and/or unexpected surcharges and/or accessorial fees.” We still have some distance to go before market conditions shift power back into the hands of the buyers, but the other study takeaways reveal some optimism in this regard. And the study unveils that shippers and consumers are already adjusting their purchasing behavior with peak-season usage of express delivery options in 2022 down to just 10% of volume, half of what it was in the previous three years.

Parcel Volume and Carrier Capacity

When we think about takeaways 1 and 3 together, we can consider that parcel volume overall has declined, but there are also carrier players willing to take packages. 

At the height of the pandemic with its corresponding spike in ecommerce volume, shippers found new carriers knocking on their doors seeking a share of their volume, and shippers were willing to entertain their proposals. We are past the crunch of carrier capacity constraints, a time where all shippers were looking for truck space and when we saw the large national carriers fire their least profitable accounts in favor of volumes with better margins. 

The 2023 study states “received a capacity allocation caps from carriers” as only the number three 2022 peak season concern for shippers. While simply shoveling volume out the door to whoever can take it is no longer the concern, shippers are entering a new era of carrier rationalization: how to distribute volumes sensibly across the available capacity of their carrier partners. Some carriers may be more adept at certain categories of deliveries—economy, express, regional, freight, hazmat, etc.—and rationalizing how to implement them for the different segments of your volume is the new challenge. The study reveals 60% of respondents’ 2022 strategies included adding regional carriers (up from 48% in the previous year) and 27% added crowd-sourced alternative carriers indicates this paradigm shift is due or already underway.

Carrier Diversification

Lastly, one of the more pertinent lessons from the GMT study is that carrier diversification is a strategy that is here to stay. In fact, the study makes the point that carrier diversification has been a primary strategy focus for shippers (with a #1 or #2 ranking) since 2020. Pairing points 2 and 3 together paints the picture of skyrocketing costs but alongside an alternative source of supply. We are nowhere close to living in the past when a single carrier strategy was optimal. 

Shippers recognize today that they have more options than ever and are making wise decisions to engineer their outbound supply chains to optimize their freight spend and to mitigate potential disruptions from any mid-year carrier strikes. [Discover the next step in your Carrier Strategy: Carrier Rationalization]

The Green Mountain Technology 2023 Benchmark Report is an excellent set of insights into the current state of parcel shipping. Check out the study for yourself; there is plenty more that it contains. As you learn from the findings and implement a rational and optimal mix of carrier partners for your business, lean on trusted industry partners who can make your plans a reality. ProShip offers a range of multi-carrier shipping solutions to execute your carrier strategy and prepare you for whatever supply chain and logistics challenges may come!

Schedule a discovery call to learn how ProShip can supercharge your parcel shipping strategy today.