Understanding the differences between small parcel and freight shipping allows fast growing eCommerce sellers to reduce shipping costs and maximize profitability.
In today’s anything, anytime world, delivery speed and cost have become a make-or-break part of the business. Thanks to Amazon Prime, shoppers expect inexpensive 1-2-day nationwide delivery from all stores, regardless of size, and consumer data also shows merchants that prioritize fast shipping have a distinct advantage over rivals.
But how can SMBs deliver on these high expectations without negatively impacting the bottom line?
While other areas of the business such as working capital optimization and return on advertising spend traditionally receive more attention, reducing delivery costs goes a long way towards increasing profitability.
One way to minimize shipping costs is understanding the differences between small parcel and freight delivery.
Also referred to as light freight or parcel package delivery, small parcel shipments usually weigh less than 70 pounds, can be lifted without assistance, and are shipped in businesses’ own packaging or carrier-supplied boxes.
Small parcel shipping usually also has the following characteristics:
Generally reserved for larger shipments, freight shipping is much more complex and requires more management than small parcel delivery. Freight is packaged on pallets or in sturdy cargo containers and moved long distances by multiple modes of transportation like rail, ship, airplane, and truck.
The complexity of freight includes evaluating freight consolidation, transloading, cross-docking, and other strategies to reduce the cost of getting goods to customers. Further, with freight shipping, logistics managers must consider whether to utilize full truckload (FTL) or less-than-truckload (LTL) shipments to reach warehouses or retailers.
Unlike small parcel delivery, the sizes and quantities of cargo in freight are far too large to stack in the back of a UPS truck to reach the end destination. This is why freight shipping is the best value for safely forward stocking heavy and bulky inventory to guarantee 1-2-day nationwide delivery.
Check out our Freight Logistics Guide.
Many modes of transportation can be used in freight shipping, and freight is moved across every link of the supply chain, from importing to final mile:
Ocean – Ocean freight is ideal for shipping bulky and large quantities of product because it’s much less expensive than air. As such, ocean is often a better option for international transit than air.
Air – Goods arrive at the end of their journey in the shortest amount of time, which is why air is the most expensive shipping option.
Ground – Ground shipping is an inexpensive way to transport wares across the country. Full truckload (FTL), also known as TL, is ideal for customers moving enough inventory to fill an entire truck, while less than truckload (LTL) shipments are too small en masse to require a full truck. As a result, FTL shipments are regularly priced with a flat rate and less expensive than LTL, along with offering added security because goods aren’t repacked. Plus, with fewer stops, FTL transit is faster.
FTL works well for big companies transporting large volumes, whereas LTL is suitable for fast growing eCommerce companies with smaller shipments. In LTL, packages are combined with other companies’ cargo traveling along the same route, so the cost of transportation is shared. This makes LTL a more cost-efficient option than FTL; however, LTL takes longer to arrive than FTL due to multiple stops and repacking requirements.
Small parcel shipping is an economical option for merchants sending a few smaller, lightweight packages to several disparate locations. It works best for residential and small-to-medium-sized retail businesses that handle fulfillment in-house and aren’t moving enough volume to make freight a move cost-effective option.
Normally, small parcel delivery makes the most financial sense until shipments exceed a certain number of packages and DIM weight.
For instance, an online direct-to-consumer t-shirt store should rely on small parcel delivery to send four packages from Atlanta to Philadelphia next-day to consumers, who have a higher expectation for orders to arrive quickly and on time. However, if the same shop needed to mail 20 large boxes of t-shirts weighing 330 pounds from Atlanta to Philadelphia to a wholesale partner within one week, LTL is the better option.
Ware2Go is a 4PL created by UPS to help fast growing eCommerce shops across many industries offer affordable 1-2-day delivery coverage. To learn more about how Ware2Go can help you utilize small parcel shipping effectively, please reach out to one of our fulfillment experts.
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