The Retail Rush: The Impact of Black Friday & Cyber Monday on Shippers
When the weather cools down, the retail industry heats up. There is a supply chain flurry that happens well in advance of Thanksgiving, as the natural business cycle of the holiday shipping season causes over-the-road (OTR) capacity to tighten. Additionally, the recent substantial growth of e-retailing and direct-to-consumer (DTC) shipping (oftentimes cited as the “Amazon Effect”), has created an expectation for products to be delivered within one to two days.
Because of these reasons, among others, the holidays can be a stressful time for supply chain professionals. So, what can shippers do to mitigate potential holiday supply chain troubles? Let’s unwrap the current retail landscape and share some tips for effective winter season operations.
2018 Projected Holiday Spending
The current economy is healthy, and an equilibrium of supply and demand has made 2018 one of the most challenging and unique years in recent memory for shippers. But this also means there is an enormous number of products being shipped around the country, and as long as the economy remains strong, this will continue. This year, the National Retail Federation (NRF) is expecting holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 4.3% and 4.8% compared to last year, totaling around $717-$720 billion.
Peak Season for the Retail Industry and Beyond
For most retailers, their distribution center shelves are stocked with products weeks or even months in advance of Black Friday and Cyber Monday; and after these notable Thanksgiving shopping days strip away all of that inventory, retailers make another large push to prepare for the December holidays heading into the new year.
This end of year spike causes an OTR capacity grab for supply chains in the retail space and in other industries such as CPG and manufacturing. And, this year in particular, many big-box retailers have offered two-day free shipping and other delivery incentives to entice the end consumer – meaning that the peak season capacity crunch is expected to affect supply chains more this year than ever before, and can be expected to continue to have a larger impact in 2019 and beyond.
The Driver Shortage and Scheduling Challenges
Currently, the ATA predicts that the driver shortage stands at 50,000 and will go up to 175,000 drivers by 2026. This has made it more important than ever for carriers to support their driver base – and in response, carriers have created driver retention programs to keep their valuable employees and recruit new ones, providing incentives including pay increases, newer equipment and better facilities.
It’s also important for shippers to know that, during the holidays, many drivers also want to be able to shift their schedules to have some time home with their families. Therefore, carriers will exhaust their efforts to reposition their assets so that their drivers can have that time – and as capacity tightens, it becomes increasingly more difficult for carriers to balance their drivers’ schedules.
How Can You Prepare Your Operations for the End of the Year?
With all of these factors impacting shippers during this holiday shipping rush, it’s important to actively prepare in order to mitigate any potential disruptions. Some of the ways to avoid supply chain troubles this time of year and beyond include:
- Increase communication throughout your supply chain to improve efficiency. Effective collaboration and a productive flow of information throughout any organization can reduce operational waste. Sharing information – such as unexpected changes in data, manufacturing processes adjustments and receivers’ open/close hours – with operations facilities, carrier facilities and logistics partners is critical for success.
- Actively forecast your business to help anticipate operational changes. Create a plan before, during and after the holidays to project demand and calculate required capacity. The use of data analytics from multiple sources, including a transportation management system (TMS), can help create a holistic view of your operations and ensure maximum supply chain operational success.
- Stay the course and focus on organizational goals despite the seasonal obstacles. During the peak holiday season, there is certainly a lot of buzz surrounding shipping and the challenges that come along with it. However, even with the hype and the holiday noise, it’s also important for an organization to stay focused on their core business. By continuing to work with their partners to solve ongoing logistic challenges, shippers can keep transportation costs down during the holidays and beyond.
How is your supply chain preparing for the end of year retail rush?