It is that time of year again when we at Cerasis take a global view of what trends to expect in supply chain management throughout the remainder of the year. We will delve into what will set third-party logistics providers apart in the coming year, and what to expect as e-commerce continues to merge with brick-and-mortar retail. We will turn over each stone and consider how innovative technology will shape the future of shipping and logistics. Of course, the best plans depend on the actions of yesterday. So, let us reflect on the peak shipping season trends we saw at the close of 2018 and how those trends will affect the industry now and throughout 2019.
Amazon’s Dominion Grew Through Whole Foods, Brick-and-Mortar Space
Amazon was a clear frontrunner in the 2018 peak shipping season, and a significant portion of their sales can be attributed to the rise of Amazon in the brick-and-mortar space. According to Steve Banker via Forbes, Amazon’s purchase of Whole Foods positioned the company to corner the omnichannel area, and Amazon went a step further. The e-commerce giant announced patents for robotic arms and ultrasonic sound pulses that would track employee movements. It might sound like something from a Hollywood film, but Amazon’s sales grew in response. According to Business Insider, Amazon saw the biggest Black Friday and Cyber Monday ever with more than $7.8 billion in sales.
The Uberization of Trucking Continued
Another defining factor in the peak shipping season goes back to the Uberization of trucking.
As explained by TalkBusiness.net, the American Trucking Associations’ Tonnage index declined in late-summer, but rates rose well before the peak shipping season. Spot rates rose 9 percent, but some were as high as 12 percent. Isolated instances of higher rates existed, and in the weeks leading up to Christmas, prices soared. Meanwhile, inventory levels rose 3.6 percent, but it was still insufficient to meet demand with many consumers not receiving packages on-time.
The Move to LTL Digital Shipping
Retailers Embraced Rapid Delivery
The rise of Amazon required a change in most retailers, shifting away from traditional, standard, and lengthy delivery to rapid deliveries. Walmart, Target, and Amazon all offered rapid delivery to meet the demand of peak shipping season, and smaller retailers followed as well.
Labor Costs Increased in Tandem With Economic Gains
The strong economy, before the Shutdown, hinted at increased labor costs for logistics. Labor costs rose at least 5 percent, but some areas saw gains exceeding 20 percent. This is before costs calculated for overtime. Actual costs could quickly rise above 33 percent.
Remodeling Drew in the Crowds for Peak Shipping Season
Remodeling of shopping stores, like Target, drew in record crowds for the peak shopping season, and a heightened number of brick-and-mortar shoppers translated into higher e-commerce purchases. This the result of more purchases completed online following an in-store promotion, but it proves the value of the brick-and-mortar location in pushing e-commerce sales higher. As a result, more retailers will look to remodeling to stay competitive with Amazon at the beginning of 2019.
Imported Goods Pushed Ports to Their Limits
The rate of imported goods increased in peak shipping season too. According to MoreThanShipping.com, goods represented a considerable change in shipping standards. Although this has always been a peak season for imported goods, more than 17,000 TEUs entered the Port of Oakland in the fall, which is a sum far more significant than data from 2017. Also, higher-than-expected imports were a result of both higher demand and preparation against future fears for new tariffs under the current administration.
Consumers Returned to Brick-and-Mortar Stores
National Returns Day Occurred Before Christmas!
As few as 44 percent of retailers offer free returns shipping, notes the Washington Post, but the day with the highest returns rates arrived in mid-December. UPS processed more than 1.5 million shipments before Christmas, and on January 3, 2019, UPS processed an estimated 1.3 million returns, reports the Washington Post. It all alludes to a greater focus on effective, fast returns management, so look for logistics coordinators and shippers trying to streamline returns management in the coming year.
Shippers Put the Box to Work
A final lesson from the 2018 holiday peak shipping season is about the box. The cardboard boxes packages arrive in serve as a valuable marketing tool. Walmart, Target and other major retailers took advantage of packaging space to promote buy-online pickup in store (BOPIS) delivery models and encourage consumers to look online for their products. Also, they noted store policies on boxes in some stores. For instance, a Walmart in Texas had printed “Discounts may apply,” on boxes picked up in-store in Lubbock, Texas for online purchases. The exact rate of such advertising is not known, but at least one box caught the attention of a shopper in the South Plains.
The Big Picture
Knowing the evolution of shipping in response to the most significant and most extensive peak shipping season in history empowers shippers. It offers an opportunity to learn from the issues that arose and develop new strategies to tackle the expectations of 2019. Retail saw the most significant season in decades, and carriers were hard pressed to find available capacity. If gains continue, the peak shipping season for 2019 could break records once again. Shippers need to take note of the peak season trends for 2019; trends shape strategic decision making. This series of trends will delve into the top 20 corners of shipping trends, and knowing the past is only the beginning. Future posts to look forward to in the next weeks include:
- Broad logistics trends.
- Consolidation of logistics’ trends.
- Automation trends.
- Logistics capabilities.
- Blockchain in the supply chain.
- Freight data use.
- State of logistics.
- LTL and FT trends.
- Shipper-carrier relationships.
- Freight claims management practices.
- White-glove logistics.
- Data in trucking.
- Regulations and governance.
- Inbound logistics.
- Reverse logistics.
- Shipping technology integration, and more.
- Stay tuned!