This peak season, logistics leaders should expect new challenges to their operations from peak seasons past. According to a recent FedEx survey, the average transit time from China to US destinations rose 83% in 2021, and slowdowns will continue throughout 2022. Even if your logistics operate primarily in the US, transit times and economic changes are sure to impact your peak season.
What to Expect This Peak Season
Post-Pandemic Demand Challenges
Inventory levels are going to pose a unique challenge for retailers and their logistics partners this peak season. Rising e-commerce demand has saddled retailers with higher than usual inventory levels. While demand was previously in alignment with this amount of supply, the current downturn in the economy and consumer demand will leave retailers with an excess of inventory. This means that buying patterns from last season will not be able to predict buying patterns for the current season, making forecasting a bit trickier than usual. Retailers need to leverage AI and data analysis, focusing on what items are selling more this year than they were last year, to determine what items to keep on-hand this peak season in order to optimize inventory levels.
Logistics companies should plan for transportation increases, which will impact how quickly retailers and their customers receive product. While you should consider all modes in your planning, final mile parcel is particularly heavy right now and will present its own challenges. Preparing for those challenges will be the difference between meeting customer expectations or missing the mark.
It can be all too easy for retailers and logistics companies to grow accustomed to the natural rhythms of an annual peak season and miss certain planning opportunities that are critical to success in customer satisfaction and profit. To prepare for the unique challenges that will come with this peak season, logistics leaders should follow our peak season readiness checklist. Checking off each of these tasks will make your operations more flexible against transportation challenges this peak season.
Peak Season Readiness Checklist
· Procure backup carriers for primary lanes – For high volume primary lanes, secure backup carriers to guarantee low cost and avoid having to go to spot market during peak season.
· Ensure updated carrier rates are loaded in your transportation management system (TMS) – Doing this will instill confidence that you will be able to provide the right carrier, right service and right price to meet customer requirements .
· Communicate changes and expectations to carriers – Make sure to communicate with carriers exactly what is expected in terms of lane volume and capacity commitment. This will help ensure accountability among all involved parties.
· Verify holiday schedule for vendors and customers – During the holiday season, you will see an influx in ecommerce orders, which have a much different parcel timeline than other fulfillment methods. Make sure to account for this change in timeline as well as the influx in volume so your parcel deliveries make it to customers on time even amid holiday schedule changes.
· Optimize trailer utilization – Proper trailer utilization is key when there is an influx of product to be moved. Look for ways to accommodate extra product with the right equipment, such as drop trailers or turning trailers more frequently.
While this readiness checklist is not exhaustive of every step involved in peak season planning, it does comprise those final details that will make your operations the most prepared and flexible they can be against any logistics challenges. While peak season planning and analysis is typically a year-long endeavor, these steps are best taken at minimum two months leading up to the expected peak volume. Planning too far in advance can lead to unforeseen market and volume changes for which your operations will not be prepared. But wait too long and you may risk not having the carrier capacity or inventory needed to meet customer demands.
Britain Pavlic is Director, Transportation of enVista.