We all remember how unpredictable shipping was during the 2020 peak season, with numerous disruptions in the logistics industry arising due to the pandemic. Now, a year later, it appears that 2021 may bring about many of the same holiday shipping delay challenges.
Many industries are still trying to catch up after last year’s major shipping delays while grappling with high consumer demand in 2021. Shippers are already experiencing tight capacities, higher rates, and other market-wide complications as they prepare for a holiday shipping season projected to last even longer than usual. And while peak season may pose more challenges this year, it still remains a crucial time for businesses to deliver.
You can prepare yourself for peak season by learning what to expect during this year and how to stay on top of holiday shipping.
CONTINUED TIGHT CAPACITY
The demand for freight transportation has grown due to the pandemic, resulting in an ongoing tight capacity market and leaving companies with too many loads and not enough trucks or drivers to deliver them. These tight shipping capacities have caused an increase in competition between shippers fighting for truck space, with many carriers becoming more selective of what shippers they’ll service. In turn, carriers can boost their rates.
It’s wise to make it a goal to become a shipper that carriers want to work with, so you can ensure that you get your freight out in time this holiday season. Developing positive relationships with carriers is an excellent way to form strong partnerships and become a shipper of choice.
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LONGER TRANSIT TIMES/DELAYS
You can expect longer transit times and more holiday shipping delays during the peak 2021 season, which can impact your on-time delivery performance.
One way to prevent delays from occurring is by shipping freight as early as possible. You can also manage customer expectations by allowing for flexibility in your projected delivery date, factoring in the extra lead time you’ll likely need to arrange carriers. You may even want to explore alternate shipping solutions.
Longer transit times often lead to terminal congestion, backing up ports, railyards, and warehouses as consumer demands continue to grow. As more and more shipping vessels wait for their turns to dock at marine terminals along the West Coast, shippers resort to sending inventory through East Coast ports, resulting in more delivery delays and higher trucking rates.
A year later, transportation infrastructure is still struggling to recover from previous bottlenecks.
Holiday shipping delays have resulted in a shortage in chassis equipment, creating delivery challenges at yards, terminals, and rail hubs on both the East and West Coasts. These issues have increased trucking lead times and street dwell.
Though the need for chassis equipment has increased, production has hit maximum capacity with no chance of boosting chassis supply.
INCREASED SURCHARGES/SHIPPING RATES
Due to this year’s significant increase in expected shipping volume and the many challenges that will come with it, major freight services like USPS, UPS, FedEx, and DHL are raising their holiday shipping rates. This price increase can be attributed to three primary factors — COVID-19 restrictions, inflated container costs, and the labor shortage.
All of USPS’s shipping rates, aside from international shipping, have risen, with surcharges accounting for package weight and distance shipped. DHL’s surcharges are also dependent on the same factors. Many of FedEx’s key services have also been assigned higher rates, with the company implementing higher handling, unauthorized package, and oversize charges. Shipping fees for UPS services range from $0.11 to $0.34 per pound, along with handling fees that reached $6.00 in October and large package surcharges of $60.00.
Disruptions in the global supply chain have resulted in significant shortages across the logistics industry. Inventory shortages have been especially prominent, with retailers scrambling to replenish consumer goods as quickly as they’re selling them while preparing for spikes in demand during the holidays. As a result, product producers have taken drastic measures to keep up with the rising demand, such as shipping goods on planes instead of boats and even changing where they manufacture them entirely.
Another significant logistics shortage you can expect to see in 2021 is truck driver shortages, which will lead to increased trucking transport demand and greater supply disruptions. Retailers will also experience worker shortages, forcing them to offer incentives like bonuses and education assistance to keep employees on the front lines.
HOW TO PREPARE
As the 2021 holiday shipping season quickly approaches, it’s essential to begin preparing as soon as possible. Though the peak shipping environment may appear daunting, there are ways you can lighten the load for your company and keep your logistics moving.
LOOK AT FORECASTS
Your fourth-quarter forecasts contain valuable information and resources that you can use to brace yourself for the busyness of peak shipping. You can use this historical data to weigh how different situations will impact your company, helping you make the most logical and informed decisions to prepare for them.
For example, if you model what might happen if you decide to make deliveries during the weekends and evenings, you can examine whether home deliveries will remain the same or increase based on your forecasts. Depending on the result, you may decide to implement weekend and evening deliveries during your Q4.
HAVE A PLAN
You can go into the 2021 holiday season confidently when you establish a logical plan of action. Now that you know what to expect from peak shipping season this year, you can better arm yourself against shortages and delays by accounting for and combating these potential setbacks.
You can optimize your holiday shipping plan with the following tips:
- Create contingency plans to account for bottlenecks
- Pause discretionary projects to focus on Q4
- Adjust sales to avoid surcharges
- Keep consumer expectations realistic
- Offer delivery alternatives
Having a plan is futile if you don’t create it soon enough. That’s why it’s vital to plan your logistics, shipments, and cargo bookings as early as possible to avoid rushing to establish a plan at the last minute. You can ensure business success when you organize key factors ahead of time, such as booking carrier capacity, planning additional hiring, and fine-tuning your returns process before holiday shipping begins.