Watch Now


Holiday season in peril: Disruptions could leave shoppers, retailers disappointed

More Americans are shopping earlier this year, but supply chain disruptions could mute sales

As more Americans begin their holiday shopping earlier than ever, port backups and worker shortages could result in fewer items under trees and brands with excess inventory in January after supply chain issues smooth out. (Photo: Matthew Henry/Burst)

As supply chain disruptions have gone mainstream in 2021, it has had an immediate impact on the shopping plans of Americans heading into the holidays. A recent parcelLab survey found that 50% of U.S. consumers plan to have their 2021 holiday shopping completed by Cyber Monday – the unofficial kickoff of the e-commerce holiday shopping season.

The Holiday 2021: Consumer Preferences and Expectations survey, conducted in partnership with third-party research firm YouGov, also found that 5% had already completed their shopping; 12% said shopping would be done by Halloween; and 33% would be finished by Cyber Monday.

For retailers and brands, that means the push to get product into stores and warehouses has never been greater, but with record number of cargo ships sitting offshore at U.S. ports, that merchandise may be without homes this holiday season.

“Yesterday the U.S. set a record for having 65 container ships waiting to be unloaded at the ports of Los Angeles and Long Beach, which is causing more strain and stress for the U.S. supply chain,” Pat Penfield, Syracuse University professor of supply chain management, said in mid-September as the ships backed up. “One-third of shipments to the U.S. flow through those two ports and we are seeing a 25- to 30-day delay in just trying to clear these shipments from the docks. Many retailers will be struggling to fill their shelves for the holiday season. Hard-to-find items will include sneakers and anything coming from places like China and Malaysia.”


Christmas in January

Penfield said he expects the port backup to ease, but it may take until next year for all the goods on those ships to make their way into the U.S. supply chain.

“There will be some amazing deals once the shipping containers are unloaded, but that may not come until January or February or March,” he said.

“Brands and shipping carriers alike took last year’s holiday season by storm — and not in a good way. Almost 1-in-5 consumers (19%) have started shopping earlier this year because they’re worried about shipping delays, and another 42% said their package was delayed by at least a day,” said Tobias Buxhoidt, co-founder and CEO of parcelLab. “These delays are extremely disappointing during the high-stakes holiday gifting season. This proves why brands must manage expectations and communicate proactively throughout each experience.”


Read: For warehouse operators, e-commerce ‘is the biggest problem in the world’

Read: Why you should do your winter holiday shopping today


Jason Traff, president and co-founder of Shipwell, said the impacts have already been felt in the supply chain and consumers will ultimately be the ones to pay.


“Holiday season has been starting earlier and earlier,” he told Modern Shipper. “We are already there, and we saw this happening in July and August. What we’re seeing across supply chains is now supply expectations are higher.”

On Sept. 30, Bed Bath & Beyond warned that supply chain issues were “pervasive” and getting inventory into stores and to customers was problematic.

“Unprecedented supply chain challenges have been impacting the industry pervasively, and we saw steeper cost inflation escalating by month, especially later in the quarter, beyond the significant increases that we had already anticipated. This outpaced our plans to offset these headwinds. These factors impacted sales and gross margin,” Mark Tritton, president and CEO, said on the company’s fiscal Q2 earnings call last week.

Port backup

The port congestion is a big part of the problem, resulting in lead times going from “days to sometimes weeks or months and there is not realistically a near-time relief to that,” Traff noted.

“The hard part for [shippers] is the planning,” he added. “Sometimes things can go out and sit off the coast for a month. Not only are you paying two to three times what you used to pay, but now [it’s sitting there].”

The congestion will impact last-mile delivery as well, Traff said.

“The hard part for [shippers] is the planning. Sometimes things can go out and sit off the coast for a month. Not only are you paying two to three times what you used to pay, but now [it’s sitting there].”

jASON TRAFF, PRESIDENT AND CO-FOUNDER OF SHIPWELL

“Even if we can get past the port problem, there will still be all these other ripple effects,” he noted, pointing out that while most major parcel carriers are on “on a two-day pickup and delivery cycle” now, last year that spiked to “as much as five days.”

It could be worse this year for some if the Occupational Safety and Health Administration COVID-19 vaccine rules for larger employers, issued through executive order by President Joe Biden, go into effect, leading some workers in delivery and warehouses to quit rather than be vaccinated.


“I think that is very real and we are seeing it play out with regional carriers, even large carriers, as OSHA starts to formulate these rules,” Traff said.

The worker shortage is also driving up wages and costs. Traff pointed to a Salesforce survey that found the average store associate made $13 per hour in 2020, but that is going up and retailers could pay $3,000 more per employee in 2021. Salesforce expects the retail industry to pay $223 billion more in the second half of 2021 compared to the second half of 2020 to wages, suppliers and for logistics-related costs.

For Shipwell’s customers, which tend to be mid-market shippers, these added costs are leading to new models for business success.

Worker shortages

“They are more impacted by worker shortages. They are more impacted by 50% wage increases. They are more impacted by having lead times double,” Traff said. “They are starting to embrace best practices that used to be reserved for Fortune 50 companies.”

That means things like diversifying their carrier base and looking for alternative sourcing. At the warehouse level, it is investments in automation.

“We are seeing a lot of investment in fulfillment and automation, whether that has reached the point where it is broadly accessible to [everyone], I’m a little [doubtful] of that,” Traff said. “Amazon for a long time viewed this as a competitive advantage — as a customer experience. There are times that Amazon intelligently knows it needs to ship something in one day to meet the two-day service, and there are a lot of Fortune 500 companies that are not there yet.”


Read: Pick your bottleneck: Ports, chassis, containers, labor

Read: Truckload Carriers warns of vaccine mandate’s ‘far-reaching implications’


Shipwell and other software providers like it are trying to help the mid-market companies navigate these disruptive times with software solutions that provide more visibility and cost controls, including benchmarking.

“Most companies have no concept as to what that looks like [when comparing their carriers against the broader market],” Traff said. “We’ve had instances where customers have taken 10% or 20% of their transportation costs out.”

Technology investments are making this all possible, he said, as supply chains become more connected. Even in a connected world, though, technology can only do so much to alleviate the current situation.

Inventory concerns

According to a Ware2Go survey released last week, 46.4% of retailers said running out of inventory for fulfillment is their top concern this holiday season. Labor shortages (45.6%) and longer lead times (36%) are other top concerns. Most ordered earlier this year, but 19% remain concerned about getting their inventory in time.

“Merchants have significant capital tied up in inventory sitting at the ports right now,” said Steve Denton, CEO of Ware2Go, noting that 44.4% of merchants ordered “more inventory than usual” this year.

“They are more impacted by worker shortages. They are more impacted by 50% wage increases. They are more impacted by having lead times double. They are starting to embrace best practices that used to be reserved for Fortune 50 companies.”

JASON TRAFF, PRESIDENT AND CO-FOUNDER OF SHIPWELL

Still, 75.5% of merchants expect to offer one-day and two-day shipping options this year, Ware2Go found. Those offerings could run up against the reality — and cause retailers to lose customers. ParcelLab’s survey found that 23% of Americans would be unwilling to order from a retailer again after a negative delivery experience. In 2020, 33% of consumers were frustrated with items arriving on time, while 18% had packages that never arrived, parcelLab said. Additionally, 28% of consumers received inaccurate notifications about their packages, and 23% received incorrect items last holiday season.

“This data clearly shows many bad experiences. Yet consumers and brands don’t realize that it could be different. Relevant and proactive communication with an operations experience management platform can transform these operational challenges and complexities into touch points that delight,” Buxhoidt said.

The stakes for brands have never been higher than they are in 2021, but as holiday shoppers prepare to hit the order button, shippers may not be fully prepared for the confluence of events that may result in disappointed customers and a muted holiday season.

“I don’t think we have a doom-and-gloom perspective,” Traff said, “but I’m still not going to wait until Christmas Eve to do my online shopping.”

Click for more articles by Brian Straight.

You may also like:

Drones are flying into weather data deserts. Can they be stopped?

Navigating COVID-19 shipping chaos: Finding capacity and servicing the customer

Need a warehouse? You may have to wait 9 months

2 Comments

  1. Schreiber

    I’am making over $15k a month working online. I kept seeing how some people are able to earn a lot of money online, so I decided to look into it. I had luck to stumble upon something that totally changed my life. After 2 months of searching, last month I received a paycheck for $15376 for just working on the laptop for a few hours weekly. I was amazed how easy it was after I tried it copy below web…

    This is where i started… >> >>>> http://Www.Nowjob1.Com

  2. ytgffhuhy

    I make up to $90 an hour on-line from my home. My story is that I give up operating at walmart to paintings on-line and with a bit strive I with out problem supply in spherical $40h to $86h… someone turned into top to me by way of manner of sharing this hyperlink with me, so now i’m hoping i ought to help a person else accessible through sharing this hyperlink………..­www.smartcash1.com

Comments are closed.

Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and fleetowner.com. Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].