Trucking Enters Strong but Uncertain Holiday Season
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The trucking industry is heading into a strong but somewhat uncertain peak shipping season with consumer spending expected to remain high even amid a softer economy, according to a survey.
UPS-founded Ware2Go noted in a survey Sept. 12 that 73% of merchants expect holiday sales to be higher than previous years despite the uncertain economic outlook. The study also noted that several years of market disruption have led them to shift strategies, with 93% of respondents noting that they have adjusted their peak planning.
“We’re hearing the interest rates are going up, things are going not as well, everything like that,” said Kelton Kosik, head of supply chain at Ware2Go. “Then you randomly get hit, whatever it was a week or two ago, with consumer spending being up and everyone just keeps spending. So, it’s very bizarre, and it’s made it a challenge and something that we really haven’t seen on a macro scale.”
The National Retail Federation issued a forecast Nov. 2 that holiday spending during November and December will grow between 3% and 4% year-over-year to a record between $957.3 billion and $966.6 billion. NRF Chief Economist Jack Kleinhenz still warns that holiday sales will have “a whole new set of dynamics” to deal with.
“The average household remains on relatively solid financial footing despite pressures from still-high inflation, stringent credit conditions and elevated interest rates,” Kleinhenz said. “Recent revisions to government data indicate that consumers haven’t drawn down as much of their pandemic savings as believed.”
Project44 found in its annual peak season survey Oct. 25 that 54% of consumers plan to buy at least half their gifts online this year. It also found 79% of respondents are confident gifts will arrive on time for the holidays, up from 71% last year. But the report also cautioned that more recent issues, such as inflation and a drought at the Panama Canal, could cause disruptions.
“I think overall, we are actually in for the smoothest peak season that we’ve had since probably COVID,” said Jenna Slagle, senior data analyst at Project44. “The only snafu we might see is if retailers aren’t using smart ETAs and they aren’t adjusting fast enough to delays seen by the Panama Canal. They might face some issues in the middle-mile sector.”
This holiday season presents a unique set of supply chain challenges, but we’re here to arm you with the tools you need to make it a profitable one.
Check out Ware2Go’s ultimate resource hub for retailers and merchants planning toward peak season 2023. https://t.co/KjdO0ktQvj pic.twitter.com/8HhStNFX3r — Ware2Go | Fulfillment Services (@Ware2Go) October 24, 2023
Slagle stressed that she doesn’t want to downplay the impact of the Panama Canal, but she notes that it’s similar to disruptions that would have occurred before the pandemic when multiple issues weren’t compounding together.
“We know that there is going to be the volume spike during peak; there always is,” Kosik said. “When I look at it, to be completely honest, I see somewhat of a normal peak season if we had to look ahead and look in the crystal ball and see what’s actually coming.”
Check out Transport Topics' updated Top 50 list of the largest freight transportation companies in the world and explore how these companies are re-evaluating their supply chains. Tune in above or by going to RoadSigns.ttnews.com.
Kosik also stressed the importance of warehouse providers planning their labor. He has seen a rise in warehouses using temporary labor to handle changes in demand such as holiday shipping. He noted warehouses have long used this technique to adjust to changes in demand, but it is being used more now.
“We’re definitely still going to see a downturn in on-time performance for the last-mile market, especially just because of the increased volume,” Slagle said. “But I’m pretty confident that retailers are set up for a lot more success this year than they have been in past years.”
DHL conducted a survey of small and medium-size enterprises about their holiday shipping season expectations. Supply chain delays was the biggest anticipated challenge heading into peak season at 33% of respondents. That was followed by inflation at 24% and consumer demand levels at 18%. The report also found that most respondents prioritize proactive planning.
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“It wasn’t, to me, entirely surprising in that the key findings were that people are proactively looking at holiday planning. That’s important to them; that people are making sure that they don’t get caught with a supply chain that’s unprepared,” DHL Express U.S. CEO Greg Hewitt said. “The fact that a third said that they already started planning for that, to me, that’s not surprising.”
Hewitt said that a lot of people were caught off guard when the supply chain shortages started a few years ago and that now there is more forward thinking as a result. He was, however, surprised that the survey found that the supply chain was still a top challenge. Hewitt had expected inflation to be the top concern instead of a close second.
“What I was pleased to see was that 70% of the responders believe that there will be an increase or that they’ll surpass 2022 levels,” he said. “I think it shows that e-commerce continues to grow.”
Deutsche Post DHL ranks No. 3 on the Transport Topics Top 50 list of the largest global freight companies. DHL Supply Chain ranks No. 12 on the TT Top 100 list of the largest logistics companies in North America.