Record fuel prices, increasing e-commerce demand, and salary lags in relation to inflation are all a recipe for a challenging peak season for shippers come December. The home-delivery spike caused by the COVID-19 pandemic is beginning to slow down, but shipping costs remain high, and major carriers are focused on prioritizing the most profitable shipments. That leaves smaller businesses in the dust looking for capacity.
According to Container xChange Industry Pulse Survey of 200 industry professionals, 51% expect the 2022 peak season to be worse than 2021, while 26% say it will be “less chaotic,” and 22% expect about the same level of “chaos” as last year.
Despite the pandemonium, there are ways to reduce risk as peak season approaches. By better utilizing assets, increasing inventory, and scaling up and down appropriately, both shippers and carriers will be better positioned to handle whatever peaks season throws their way. Following are some key steps to take.
Deploy additional click-and-collect fulfillment options. The pandemic spurred a greater interest in the click-and-collect fulfillment model, making it easy for consumers to shop online and pickup in the store, including via curbside delivery. The interest in this type of shopping style hasn’t waned since the pandemic began, and is one way for retailers to optimize fulfillment without incurring higher transportation costs. A model whereby nearby stores share inventory avoids additional transportation spend, while relocating stock from existing storefronts is a win for everybody.
Implementing click-and-collect technology can also lead to better customer retention because it allows the consumer to shop online, while reducing package porch theft, last-mile delivery cost, and even environmental damage. Customers also enjoy the ability to choose a convenient time and date for them to pick up their package.
Plant inventory geographically closer to end-customers. Click-and-collect places product closer to the end customer, lessening the need for traditional transportation. However, that also means managing transfers between stores, distribution centers, urban fulfillment centers and microhubs. Utilizing a middle-mile carrier that can move your freight without delays, and provides service to all these types of locations, is important to consider.
Launch a drop-trailer program. Transfers between the above don’t have to be a headache if you’re able to implement a drop-trailer program. It allows drivers to leave a trailer at a shipper’s facility for unloading or loading at the receiver’s convenience, then pick up the loaded trailers at a specific time. A parking lot, yard or other large-enough area enables flexibility and elasticity for both drivers and those managing receiving and loading at a specific site. Ultimately, this allows for more pickups and deliveries.
Diversity your network. Shippers are better positioned to handle the wild swings in demand when they diversify their networks. Carrier diversification means greater capacity and flexibility for shippers, faster delivery and on-time performance, and cost savings by avoiding peak surcharges from national carriers. Regional carriers that utilize a mix of the right technology and high-touch customer service are positioned to sort and send shipments faster. Offering higher volume to a carrier doesn’t mean you’ll automatically get more bang for your buck. If delivery volume is greater than a carrier’s capacity, it might be more expensive to ship product in that region. Most carriers aren’t willing to reposition their trucks at the origin or destination to convenience the shipper.
Employ cross-docking. This piece of the peak-season puzzle pulls all the above together. In cross-docking, shippers temporarily store goods for a short period of time from an inbound truck for loading onto an outbound truck at the same dock. Cross-docking services allows shippers to arrange their truckloads more efficiently, consolidate their products into a single trailer, and deliver them directly to customers, instead of having multiple trucks make multiple deliveries. When used effectively, cross-docks can dramatically reduce the need for additional warehouse space. In addition, for shippers that don’t have the wherewithal to invest in drones, electric vehicles or microhubs, cross-docking can serve as an option to reduce overall final-mile delivery distance.
Peak season will always be uncertain, but the truth is that in a post-COVID world uncertainty seems to be the status quo year-round. A flexible middle-mile strategy, along with a strategic partner that helps you approach peak season with a well-designed plan, can help ease anxiety around the busiest time of the year.
Daniel Sokolovsky is chief executive officer and co-founder of WARP.
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