Tag Archives: consumer packaged goods

Consumer Packaged Goods: How Does CPG Shipping Work?

Consumer packaged goods (CPG) are a large part of the retail industry. These products support our daily lives, and proper transportation strategy is crucial for CPG companies to have goods delivered on-time. Shippers struggle with numerous challenges to meet the retailers’ compliances and often suffer supply chain disruptions. It is critical to have a properly planned CPG shipping strategy.

What are consumer packaged goods (CPG)?cpg shipping

CPG stands for consumer packaged goods and means a large group of short shelf-life products like food, beverages, and household goods. These products usually require regular restoring and are widely used by the majority of people. Obviously, the goods are wrapped in the bright and branded packaging to be recognized from a wide variety of market offers. CPG is a $2 trillion worth sector of the U.S. economy. 

Building the CPG Shipping Strategy 

Due to the extremely diverse and saturated market, the consumer packaged goods industry constantly struggles with many issues. The most common challenges include tight capacity, strict compliance rules, deadlines, and rising operational costs. It can become complicated for CPG companies to secure some freight capacity in advance to meet the high demand. The inability to supply the needed products to the retailers on-demand can result in harsh penalties and money losses. The constantly growing market of companies requires shippers to invent and imply new solutions in order to stay in the race. 

According to the Boston Consulting Group, nearly 80 percent of CPG supply chain executives state transportation as their biggest trouble. That’s why outlining the proper logistics strategy for your CPG supply chain is crucial. 

Consumer Packaged Goods Trends 

The latest trends in consumer habits establish shifts in the CPG market. Essentially, this will have a substantial impact on CPG shipping and transportation. Here are a few key trends experts estimate to change the industry in 2020 and beyond: 

  • Multi-channel selling and distribution
  • Rapid digitalization of the CPG industry 
  • The shift towards personalized experiences 

Multi-channel presence and moving to online stores will unload the business of the sector and will let shippers better plan their inventories. However, the problem of capacity and quality service will remain an open issue. Proper organization and collaborative efforts will help companies reach a competitive advantage.

CPG Shipping with PLS Logistics

Learn more about our CPG logistics services!

The 5 Biggest Trends in Consumer Packaged Goods Shipping

It has been another tough year for consumer packaged goods (CPG) shippers. In 2015, CPG shippers were hurt by the same trends that affected the industry last year, despite increased efforts to cut logistics costs and improve service.  Data collected from 2014 sheds light on what affected CPG shippers in 2015. Here are 5 trends that continue to affect consumer packaged goods shippers:

CPG transportation is the most important aspect of logistics

In a recent study, 83% of supply chain leaders said transportation is their greatest concern. This is a drastic change from an identical study done two years ago, where transportation was never mentioned as a top priority. The main obstacles in transportation are rising line haul rates and the difficulty of securing capacity. These obstacles are driven, among many factors, by the increasing driver shortage and infrastructure-related problems. The bad news for consumer packaged goods shippers is that these are systemic problems with no resolutions in sight and they will continue to drive up linehaul rates and worsen the driver shortage.

CPG transportation networks require a redesign

Network redesign is the second highest concern of supply chain leaders in 2015, with 72% saying it was one of their top priorities. With the rising costs of transportation, the need for more carrier-friendly routes, and the emergence of new and fast-growing channels, CPG shippers realize that networks cannot be static in today’s supply chain environment.

Consumer Packaged Goods

To achieve strategic objectives, networks must be frequently analyzed and adjusted to provide consistent service levels and keep up with fluctuating demand. A network redesign can be difficult, requiring long-term thinking about company goals and the market outlook, but it is a necessary step to take for CPG shippers.

CPG inventory size is growing despite lean efforts

Approximately 70% of ambient CPG shippers experienced an increase in inventory in 2015, despite improvements in demand and transportation forecasting. There are a few straightforward reasons for inventory increases: inventory is backed up due to road congestion and last-mile delivery obstacles, shippers have accumulated safety stock while redesigning transportation networks, and limited capacity has left some inventory unable to be moved. Only 60% of temperature-controlled CPG shippers experienced inventory increases because temperature-controlled shippers often have long-term, mutually beneficial relationships with carriers, which highlights the need for better partnerships.

CPG freight costs continue to rise

Median freight costs have risen by 14% for temperature-controlled shipping. CPG shippers have historically enjoyed competitive pricing, but tightening capacity is increasing rates. CPG shippers usually ship transactional freight for convenience, but now, capacity is scarce and costs are high, CPG shippers are trying to move to long-term relationships with 3PLs and carriers to lock in reasonable freight rates. Looking ahead, 83% of supply chain leaders in the CPG industry expect transportation costs to continue to increase. Increasing rates mean now is the time for CPG shippers to find long-term solutions.

CPG service levels are declining

CPG shipping service levels have slowly declined over the past few years. The main reasons for declining service are transportation related: the driver shortage and tight capacity, congestion along routes and at delivery points that create significant shipping delays. Amazingly, 96% of CPG shippers did not meet their requested arrival date (RAD) goals for the year, with only about 85% of shipments arriving on time industry-wide. Consistency in freight transportation is difficult for CPG shippers fighting for transactional freight while operating insufficient transportation networks. These statistics highlight the serious shortage of capacity and infrastructure problems that the industry faces.

Transportation is the biggest obstacle for CPG shippers and moving goods will only get more expensive and more complex. Industry leaders choose to outsource to a 3PL to save time and money while gaining expertise from a long-term solutions partner. 3PLs provide custom, technology-enabled transportation solutions that CPG shippers need to navigate today’s logistics environment.

Want to learn about CPG shipping solutions? Read more here.