Tire Tracks: Driving the Logistics Industry

The Impact of Parcel Shipping on Freight with ProShip’s Bill Schroeder | Episode 47

Banyan Technology Episode 47

Tune in for episode 47 of Banyan Technology's Tire Tracks® podcast as Bill Schroeder, President of multi-carrier shipping software provider ProShip, delves into the evolving state of Parcel shipping and its impact on the broader freight industry. 

Bill discusses the transformation driven by e-commerce growth, competitive dynamics among Carriers, and how new technologies are making freight decisions more data-driven than ever before. Learn how Shippers can navigate this shifting landscape, the strategic use of Parcel shipping versus LTL, and the role of AI and real-time analytics in optimizing shipping strategies. 

Don't miss a minute!


Links Mentioned in Todays Episode:

Bill Schroeder: https://www.linkedin.com/in/bill-schroeder1/

ProShip: https://proshipinc.com/

Banyan Technology: https://banyantechnology.com/

Banyan Technology on ‌LinkedIn: https://www.linkedin.com/company/banyan-technology

Banyan Technology on Facebook: https://www.facebook.com/banyantechnology

Banyan Technology on X: https://twitter.com/BanyanTech

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Hey, everybody. It's Patrick Escolas with another Banyan Technology's Tire Track. We're here live at Connect 24 in downtown tropical Cleveland. I'm here with Bill Schroeder, President of ProShip. How are you doing, Bill?

 

Doing great. It's wonderful to be back here in Cleveland again.

 

Hey, and it is sunny and beautiful out, which only happens for about two or three months here. Bill, ProShip has become an integral partner within the Banyan platform and has allowed us to really offer robust function for the parcel game. But for anyone that doesn't know what ProShip is, give me a breakdown, who is ProShip, what do you do?


Yes. ProShip is an enterprise multi-carrier shipping solution. The primary role it plays within anybody's logistics space is to shop multiple carriers, find the most optimized way to deliver a package to the end customer or to the business where it's being delivered in a cost-effective and efficient manner.

 

It sounds really familiar, because it's a lot of what we do on the LTL side.

 

It is exactly what you do on the LTL side, except, instead of a pallet with 100 boxes, we do 100 boxes.

 

I like that. Now, as you know, it wasn't just an idea to offer more modes on the screen, which Banyan is always trying to have more options and integrations. But recently, parcel has become much more of an emphasis in the freight world for people that strategically or historically have lived in the freight from LTL perspective or even truckload. Where does that come from and what do you think about that?

 

If you go back a few years, shipping parcel was distinctly different than shipping pallets, parcel truckloads or full truckloads. And as the parcel market has evolved post COVID, and with the e-commerce boom.

 

Oh, yes, Amazon.

 

Yeah, Amazon has changed a number of things. So, within the last few years, Amazon has actually become the third largest carrier in the market by volume. If you compare that to which was essentially a duopoly between FedEx and UPS, now, there's FedEx, UPS, USPS, and Amazon, all offering parcel services, and a number of newcomers sitting on the horizon very soon. Walmart's going to launch their GoLocal, which is going to be a parcel delivery service for a large part of the population of the US. Opening that logistics capabilities of Walmart to other parcel shippers and other shippers who need to move things.

 

That's really interesting. I guess, coming from a perspective of, Amazon has done this, and Walmart is – not to say that they follow, but they live in that same kind of world there. Now, you talked about it being just the two, and then opening up the doors of Amazon and USPS. What does that mean to somebody executing freight? Is it better I have more options? Is it going to make some of the options be pricier? How does that affect?

 

Yes. So, this is one of the things that in collaboration with Banyan and some of our common customers. We realized a couple of years ago that the innovation and the changes in capacity and offerings in the parcel market created a unique opportunity to actually mode shop between LTL pallets and individual parcels. There's a number of different services that are offered by the carriers now. They've been changing and accelerating the ground network in particular. As they've optimized the ground network, as they've sped it up and also are experiencing the price pressures of multiple competitors in the space, suddenly, there are opportunities where 100 boxes on a pallet may be cheaper as a hundred individual packages going to the same destination versus one pallet with those same boxes on it going on an LTL shipment. So, it opens up a whole new area of optimization, algorithms to search and say, "Hey, which way is actually cheaper?"

 

Right, and with that, obviously, we both talk to each other in our companies and organizations from a technological kind of integration. If someone doesn't have something like that, what kind of steps will they go through to get that exact, "Hey, here's what it's going to cost me to do LTL."

 

Oh goodness.

 

"Here's what it's going to cost me to do parcel." And that's just one parcel carrier, let and you know, two or three that I might have accounts with.

 

The answer is nobody would do it. Nobody's going to go to multiple different portals for multiple carriers and go, "Okay, a hundred boxes with UPS is this much, a hundred boxes with FedEx is this much." Some, you might try it on a spreadsheet and find a few places where that works for you, and then repeat that every time. But parcel pricing and LTL pricing are very dynamic. So, you've got to be able to do this systemically, quickly. You've got to compare hundreds of different options to each other to meet your service commitment. And in order to do that, you really need an intelligent system, a lot of data, do all of the what-if calculations, and then just give you the optimized results. What are they?

 

That makes a lot of sense. I think you're spot on that you're not going to. No one's going to do that by hand. One of the things that comes to mind with, as you're looking at this, and I think parcel versus LTL, there's a lot of different service levels within the parcel game. Whereas LTL, I might have a guaranteed, and it might just be – or volume or my LTL shipment. But if I get FedEx, I get seven or eight different levels from next day to next day air. Is that affecting where the current trends are within parcel? Are we seeing more service levels or are they condensing those?

 

Nope. There are more and more service options with little features that are added to them, money back guarantee or not. Is it a time definite or is it a service guide, service general?

 

A window.

 

We normally get there on this day, normally it's five days. So, the number of services has actually multiplied significantly and changed significantly. SmartPost used to be offered by FedEx. They no longer offer SmartPost, they have ground economy. The post office consolidated several different services into one, Ground Advantage.

 

Yes, I've heard of that recently.

 

Ground Advantage is extremely competitively priced, and it uses the same delivery mechanism, final mile by the post office, little blue truck. We all know them and we see them every single day. 

 

Your dog's barking at them. 

 

Yes, exactly. Now, they're putting parcels into that network too. Now, they're price optimized for a very specific kind of parcel. If you think about their trucks compared to the UPS truck or the FedEx truck, they're not designed to carry really large boxes. You don't ship beanbags via USPS, right?

 

Sure.

 

Not a good choice. And they priced it that way, too.

 

Bill, do you get a lot of beanbags? Do you get a lot of shipping in beanbags?

 

One of those beanbag manufacturers, you see their advertisements on TV, they happen to be one of our customers. So, we do ship a lot of beanbags. I don't personally get a lot of them delivered, but it is an interesting mechanism.

 

I got nothing against it. My kids got them in the basement, so I know, it was an interesting –

 

Oversized beanbag.

 

Interesting example that you came up with there. No, but that makes sense. But sorry, you're not going to send a beanbag with USPS, but, you know, when they have that small niche. Is that where a lot of the carriers are going to go? Kind of find their niche and carve it out? Or is it – some of them going to diversify and try to get anything that you got to send?

 

Nobody wants everything and anything. So, the actual physical operations of the different carriers vary from carrier to carrier. What kind of trucks they have, what kind of sort facilities, where their hubs are, and where is it most efficient for them to deliver packages? For example, USPS post office with their Ground Advantage product has really targeted zones two through five and packages up to about 20 pounds. Now, you can ship things that are up to 70 pounds, but their sweet spot for pricing competitively to other carriers really falls in that zone two to five and up to 20-pound range. So, UPS and FedEx may not want those same packages from the same origin and destination. Comparing all these things, all these variables that makes the LTL versus parcel comparison valid.

 

As I'm looking at parcel versus LTL, and I think you've kind of – it would make sense for me to have relationships or accounts with multiple parcel providers. Because like you said, they've each got their own sweet spot, it sounds like. 

 

Yes. Our primary market segment, and if you think about it, it's logical is retailers. Retailers do the most parcel shipping, period, bar none.

 

And no one's going to the mall anymore.

 

Exactly. Exactly. E-commerce has boomed. We're finally, you know, the year 2000,

like bubble for e-commerce that came and went, it's here now. 

 

Yes, it's not a bubble.

 

E-commerce is the way of the world. It's a very predictable market. It works well. After that 3PLs and after that, pharma and manufacturers are getting into the direct-to-consumer piece on an aggressive scale.

 

Where do you see that going beyond that? Because that's where we are or where we've come from a little bit is, are we going to continue to see diversification within the carriers or we continue to see more and more industries go towards parcel that haven't historically? What do you see in the coming year? I won't make really a crystal ball out here, but six to 12 months, which is still a crystal ball.

 

The good thing is, we have a very predictable trajectory that we're on, aside from the little kind of hiccup we had around 2020 with the pandemic, which changed everybody's projections in the market. Year over year, 10% to 13% e-commerce grows. That's total volume in revenue. So, that's going to continue. We don't see that changing anytime soon, and it might, but it's not going to change in the next six months.

 

As the population goes, there's more people buying and getting it from the websites. 

 

Exactly. I think, not only is it an opportunity for visibility to have these different options of parcel and LTL next to each other, but There's a lot of insight looking back at how you made decisions, where decisions to go. Like you were saying, go LTL one day, or maybe split the parcel. How is that something that you've seen organization you've worked for change how they look towards the future with maybe their freight operations or what they try to do with their carrier pool?

 

A typical customer of ours, so somebody who's shipping a lot of parcel has seven to nine carriers that they have contractual agreements with. So, that means, their rate shopping seven to nine different carriers for every parcel that's going to go from one of their origins to one of their destinations. Banyan operates very similarly and that, most of the customers rate shop multiple carriers.

 

I'd say seven to eight is probably that sweet spot. 

 

You take seven or eight parcel carriers and the service offerings that they have. So, that's like seven or eight raised to the seventh power. Different options for how you can set the parcel.

 

Exactly.

 

You multiply that by the LTL options you might have, and suddenly, you're comparing and seeking to find the best method out of tens of thousands of potential choices you could make in service offerings and in the carrier offerings. So, to try going back to our point just a few minutes ago, somebody's going to do that manually. No, no one's going to do that manually. But it's perfect for machine learning, it's perfect for big data crunching and finding optimizations. And then, where do you go from there? Looking back historically, what you did and mining that for intelligence to find opportunities to further optimize your spend, that's where it is. You take that big data, you analyze it, and you come up with – spread it, you come up with strategies for tomorrow.

 

Yes, the actionable data gets you to your next action.

 

Yes, exactly.

 

One of the things I thought about as you're doing this in the LTL or even truckload world, and a routing guide existed. Is that something that used to exist within parcel, or someone says, "Hey, move this lane, FedEx"? 

 

Yes. So, that's fascinating

 

I assume, has that gone to probably kind of the grave, which – as I talked to my clients, a lot of them for the first time will go, "Well, we have a routing guidance. We have live rates coming in day in, shipment to shipment. You don't need that anymore." Is that similar to how parcel transitioned or did that not exist back before the live rates?

 

Yeah, there's actually still too many routing guides out there. And where you find routing guides is with a lot of shippers that are e-commerce houses. They might have their own distributions centers, and they might have their own inventory that they stock, and that they ship. But they also engage tens, hundreds, in some cases, with very large e-commerce names that you're familiar with. Thousands of vendors who actually do the parcel fulfillment or the LTL fulfillment. The routing guide has been replaced with the electronic equivalent. This order, this list of orders, fulfill these.

 

Has to go with.

 

Here's how each one of these should be shipped. So, it's not a human decision anymore on the actual shipment side. It's not the 3PL that's doing the fulfillment that's deciding how to send it. It's the e-commerce person who's actually paying the bill.

 

Oh, right. Then they're deciding at that last –

 

And they have to pick how it should be shipped, and they leverage all of their data, all of their contracts with all the carriers they're engaged with to do the electronic equivalent of a routing guide, instead of general apply these choices when you make shipment decisions. It is literally an item-by-item, order by order routing guide equivalent, which is actually just shipment instructions. Here's the shipment instructions. Ship it over to Patrick. He's expecting it on Tuesday. Send it by a FedEx.

 

It's crazy to hear you say that, and me to have never thought of at the last point of any order is, here's where I'm choosing how it moves, and that becomes the new kind of routing guide from a simplified standpoint. Now, with the diversification and kind of that sweet spot where it could go LTL or parcel, do you think, is LTL – and I know that's not from your world, do you think that there will be a shift from the LTL side at that lower piece to compete more with some of the loads they might be losing to parcel that they didn't use to?

 

Yes. So, first of all, in the space of our joint customers, most of them are not e-commerce, B2C shippers.

 

Correct.

 

They're B2B shippers, they're doing restocks, they're doing those kinds of things for stores. So, the decision to ship it via LTL or parcel is really incumbent on the e-commerce ship or recognizing that. Now, where we have the least visibility into it, where shippers have the least visibility into it, is when they are doing those restocks and they've traditionally shipped 20 cartons of a commodity preparing for peak to a retail location. That function inside the business is not usually the same ones that have traditionally done the LTL shipping. Different department, potentially a different budget, a different cost center. Businesses are missing the opportunity there because these things are in their own silo.

 

It's not in a collaborative freight.

 

And they're not talking to each other. Usually, it's Banyan that walks in the door and says, "Hey, you know, you could do this." Then, they all start talking to each other. They're in different offices; they're in different rooms. They have different –

 

They've both been doing it for 10, 15 years and never thought to cross the hall.

 

Exactly, and they never thought to talk to each other. "Hey, could you send these 20 boxes separately cheaper? Or could you put it all on a palette and send it that way cheaper?" It's just kind of fallen into its segment and stayed there.

 

No, that's awesome, because I think that right there is the kind of emphasis of the change policy and using the actionable data to make a really, like you said, kind of collaborative effort within your organization using technology and saying, "Hey, I think we need to do something a little different." Or at the very least, let's look at our options and make sure what we're doing still is the right choice. Now, Bill, thank you so much. I kind of got you. I got a little bit of your crystal ball, I got a little bit of what ProShip does, and we'll wait – I'm still going to try to get a beanbag through the post office and watch the poor guy try to carry that.

 

Squeeze it out the door of the truck.

 

Exactly. Or it won't make it to me and he's just sitting comfortably on a beanbag, and the chair –

 

Got lost.

 

Yes, exactly. So, we've got a great rest of the show here at Connect. What is something you're interested in learning more or figuring out here? What are you excited about for the conference here today and tomorrow? 

 

Just like last year, as long as I've been in the logistics and transportation space, it has been very parcel focused. It has been very operationally and information system focused within the parcel space. I know a lot about that. I actually don't know a lot about LTL shipments, and how it occurs, and all of the different methods, and technology that's out there. So, that's the exciting part of these conferences here, is learning about something I don't already know about, and expanding my realm of knowledge. That's it.

 

That, I can always agree with. That's my favorite part of doing these podcasts, is someone that's only been in the freight world for three or four years and that's come from a technological aspect into LTL. Every time I get to talk to somebody with their different background, or their different execution method, or way that they do processes, another thing to learn. So, Bill, thank you so much for the time today.

 

It's a pleasure. Thank you so much.

 

I really appreciate you having me. For everybody watching, keep watching Banyan Technology's Tire Tracks and we'll send you some more. All right. Bye, everybody.