World events have changed rapidly since the holiday season and retailers and eCommerce companies are facing new and different challenges almost daily.
The Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) hit a new high in March, jumping 8.5% annually—its biggest gain dating back to 1981. As a result, inflation has increased costs across industries and sectors, and final-mile logistics is not immune.
A Logistics Management survey published in January showed that 97% of respondents said their supply chain and logistics costs are up annually, and costs have done nothing but climb across the board since then.
Take the cost of filling the tank of delivery trucks, for example.
A look at the fuel pump shows that despite a recent dip, diesel fuel prices are still lingering above $5 per gallon on average in the United States. Carriers are passing along those costs to shippers in increased fuel surcharges as the major carriers adjust their surcharges weekly based on fuel prices.
Of course, surcharges aren’t the only expenses to come with the rise of inflation, and shippers need to work harder than ever to control the costs they can as despite movement by the Fed to ease inflation doesn't mean an immediate end.
The 2021 holiday sales and shipping season was about as busy as all the predictions leading up to it. And, driven by online sales, carriers expected to see increased volume as well.
Overall, holiday spending rose 8.5% compared with a year ago, according to Mastercard SpendingPulse. According to the report, while that narrowly missed the 8.8% increase that Mastercard had predicted, it was the most significant annual increase in 17 years. At the same time, online sales grew by 11% compared to the same period for 2020.
Moreover, retail sales outdistanced pre-pandemic levels, with total sales increasing 10.7% this holiday compared to 2019. While in-store sales grew 2.4%, online sales surged 61.4% versus the two-year-ago period.
Overall, for the entire year, Online sales accounted for 20.9 percent of all retail sales, according to the Mastercard report, up from only 14.6 for the calendar year 2019.
However, while Adobe Analytics reported a slowdown compared to 2020’s COVID-fuelled record growth, consumers still spent more than ever online ($204.5 billion) during the holiday shopping season, an 8.6% jump by its count.
All of this may spell that the eCommerce boom—and strain on carriers—is still something retailers, eCommerce shippers, and the 3PLs and other intermediaries that are increasingly part of the retail omnichannel supply chain need to work to stay ahead of.
2021 Peak Season Shipping Volume Growth
While final 2021 holiday shipping volumes haven’t been released by all major carriers at this writing, with a jump in sales, it is expected that volume will surpass last year’s record pace.
The United States Postal Service (USPS) reported increased overall volume for the 2021 holiday season compared to last year. Between Thanksgiving and New Year’s Eve, USPS accepted more than 13.2 billion letters, cards, flats, and packages for delivery, exceeding 12.7 billion accepted for delivery during the same timeframe in 2020. According to a CNN report, it expected between 850 million and 950 million of those to be packages.
And while they haven’t reported final holiday volume numbers, UPS and FedEx anticipated volume to grow compared with 2020, although UPS hasn’t said what they expected the growth to the total.
According to a CNBC report, FedEx estimated it would deliver 100 million more packages this year than it did from Black Friday to Christmas in pre-pandemic 2019 and 10% more than the record 2020 season.
Getting a Jump on the 2022 Holiday Shipping Season with the Right Technology
While the peak shipping season may have just passed, it’s never too early for retail, eCommerce, and other shippers to start planning for this year’s holidays. Here are three things to look for in your parcel shipping technology to make your final-mile delivery as smooth as possible for the 2022 holiday season:
Cartonization: Despite adding staff, space, and delivery vehicles this past holiday, carriers continue to face a capacity crunch. It is more important than ever to ensure you are packing for profits to help avoid pitfalls from the capacity crunch. Not only could packing poorly add to your costs through dimensional weight (DIM) fees, but it could also keep your parcel from being shipped as carriers turn some shipments away due to lack of space.
Routing: A multi-carrier management system with analytics capabilities that can select carrier services based upon historical performance and then enforce smart routing decisions by applying the best service selection without impacting customer delivery expectations can save you time and costs on your holiday shipping.
Rate shopping: As your carrier network expands to ensure you can get packages to customers’ doorsteps, it is more complicated than ever to control costs if you aren’t using the right multi-carrier shipping solution. Optimizing your shipping rates through data you capture both at the point of shipping and from past carrier invoices by using analytics from your shipping software and expertise from consultants can help optimize your transportation spend improving delivery performance while reducing costs during the holidays.
Having the right shipping technology for the 2022 holiday season in place, such as Transtream multi-carrier management solution, early can help your organization manage shipping costs leading up to and during the holiday rush.