Shippers continue to face pandemic-related headwinds as they enter the 2021 peak season. Severely strained capacity and elevated rates have created a challenging environment for shippers, in part, due to the increased level of spending and ongoing consumer shift toward e-commerce. Carrier network imbalances and capacity fragmentation have made the capacity available less accessible. While these trends existed before COVID-19, the pandemic only accelerated these challenges and behavior changes.
With demand outpacing supply all year, much of 2021 has mirrored peak season conditions. “Expect to see capacity constraints and equipment and driver shortages provide resistance to downward rate trends,” says Arrive Logistics’ director of business intelligence, David Spencer.
“We will likely see typical seasonal trends this time of year, which would include increased tender rejections and market tightness, particularly in the weeks leading up to Thanksgiving and Christmas.”
Even though demand tends to wane after Thanksgiving, Spencer says drivers typically take vacation in December, leading to additional capacity challenges and constraints. “As we enter this time of year, shippers need clear expectations of their transportation provider.”
Although there has been wide speculation in the media around how well our supply chain will function during the holiday season, Spencer believes that most commodities will be available. “For example, if someone is looking to find a jacket, you’ll certainly be able to find jackets on the rack, but may have trouble finding the specific one you want,” Spencer said.
Despite these challenges ahead of the holiday season, there are low-cost solutions and long-term investments shippers can apply to improve operations throughout this peak season.
Businesses are under a tremendous amount of pressure this peak season, which can make resorting to tried-and-true management methods – a pricing event, provider rationalization and measures of on-time performance – tempting. While these techniques are valuable, Todd Birman, senior vice president of enterprise partnerships at Arrive Logistics, suggests that shippers shift their attention from chaotic external forces, instead focusing on controllable internal operations. Shifting their focus in this way gives shippers a higher level of control, and it gives them the opportunity to manage their supply chains from the inside out.
“Peak season, specifically, creates volatility in demand, potentially creating a pressure cooker scenario,” Blair Blake, vice president of carrier strategy at Arrive Logistics, said. “Now more than ever, it is critical to get products in stores to minimize the high risk of elongated delays. Shippers can improve their probability of securing capacity through expanded lead time, accommodating drivers with facility perks and prioritizing consistency within their supply chain needs.”
While making investments during a volatile time may seem counterintuitive, investing in pricing tools may enable shippers to rebase peak season costs, utilize pricing data for real-time market trends and set expectations with vendors for getting products on shelves responsibly.
Increasing transparency through curating – and enabling access to – data analytics will also support greater reliability in the supply chain by keeping expectations realistic and making it easier to spot potential problems before they occur.
“Potential areas to analyze include ERP master data, warehouse protocols, minimum order quantities and material procurement. Deeper dives might include TMS technology, the freight bill audit and payment process, and even distribution locations,” Birman said. “Under ‘normal’ market circumstances, companies might look at these initiatives and kick the can down the road due to up-front costs, lack of resources or unclear return on investment. But it is in precisely these areas that investments are required to bolster supply chains for any further market turbulence.”
Birman shared that it’s likely networks will increasingly place higher value on visibility, flexibility and transparency to supplement established just-in-time, low-cost and low-inventory principles. “While the timing for internal analysis and optimization is admittedly challenging, organizations which put resources toward creating more nimble versions of themselves are more likely to thrive now and into the future,” Birman said.
Continuing this conversation further, David Spencer will join Aaron Galer, Arrive Logistics’ senior vice president of strategic accounts, in the company’s upcoming Metrics That Matter webinar on Wednesday, November 17th at 11:30am CST. The webinar will provide an analysis of peak season market conditions and actionable tips shippers can take away. The webinar will also feature a Q&A segment, allowing attendees to interact directly with the experts.
For additional market insights and takeaways, check out Arrive’s monthly Market Update, which will be released this Friday, November 5 at www.arrivelogistics.com/arriveinsights.