Top Five Takeaways From This Holiday Shipping Season

It’s the season of shopping — and shipping — when retailers and carriers face their peak period.   This year, however, appears to be like few others.

Costs for things like groceries and fuel are reaching highs not seen in decades. Interest rates continue to rise. Mortgage rates remain high. It all points to a challenging and unpredictable holiday season.

Here are our top five takeaways from this year’s holiday shipping season: 

1) This holiday is going to be different

The economy dictates everything right now, and it’s causing a lot of uncertainty. Inflation, interest rates, and lingering slowdowns in the supply chain are all cooling consumer spending.

It has put many businesses in delicate positions and left them, in some cases, with too much inventory.

Unloading that excess product is a major priority, which is impacting the freight industry and affecting everything from rates to delivery schedules.Typically, summer shipping activity can predict demand during the holidays.  But this year, there are concerning signs. 

“Historically, when you look at past years, the summer is very a strong shipping period for a lot of holiday items,” says Steve Hartsell, Senior VP of Field Sales at Old Dominion Freight Line. “But this year, it was not as heavy as it has been in a long time.”

With this, many companies are adopting a wait and see approach with consumers.  So, expect a lot more caution and a softening of the marketplace this holiday. 

2) Delivery windows are shrinking.

Even as orders soften and quality of service faces constraints, demand continues to grow for tighter delivery windows.  Customers expect product within days - not weeks.

During the pandemic with supply chains disrupted, debates were raised within the transportation industry over the viability of ‘just-in-time’ (JIT) delivery.  Experts argued whether businesses were reverting to the ‘just-in-case’ model of maintaining higher inventory loads to ensure operations. Certainly, many companies are building more cushion into their supply lines.  And yet, moving away from the impulses of JIT remains difficult.

It’s critical for shippers to fully evaluate logistics and plan carefully to ensure they have a strategy that meets ever-shrinking deadlines. 

3) It has to be ‘On Time, In Full.’

As delivery windows shrink and expectations rise, many retailers continue to impose tighter standards on their suppliers and carriers.

The trend is still moving towards embracing the ‘on time, in full’ model (OTIF), which demands shippers deliver goods during a very specific timeframe — not too early or late — otherwise they face a stiff penalty. However, persistent supply chain disruptions have made meeting those requirements more important and challenging.

“You look at some carriers out there, they may deliver one pallet today and another pallet tomorrow,” Hartsell points out. “Customers want their shipments delivered complete and on time. We pride ourselves on making sure that happens.”

Shippers must now work extremely close with carriers to guarantee fulfillment expectations.  Companies should be prepared to analyze every possible influence, no matter how small, to meet changing needs during the holiday season.

4) Constant Communication is Critical.

One way to meet changing needs and rising expectations is embracing constant communication.  Customers depend on frequent updates, and they shouldn’t have to call their carrier to get them. Technology is more central than ever to offer tracking and visibility.

Real-time shipment updates affect the bottom line; they give shippers flexibility and options to handle any unforeseen fluctuations. Much of the transportation and logistics industry still relies on manual operations, so it’s critical to ensure your transportation provider is pursuing innovation.

Take note of how frequently the carrier transmits status updates through the transport management system (TMS), Application Program Interface (API) or electronic data interchange (EDI).  If it’s not to your liking, discuss how to increase reporting.

5) Choose your carrier carefully.

All this change and uneasiness impacts carriers, prices, and delivery schedules.

 “When you have so many people trying to move that extra inventory, plus the holiday rush, then guess what?  It puts a strain on the system,” Hartsell says. “It creates a backlog.”

All of this puts an increased emphasis on choosing the right transportation partner – one that has the capacity and expertise in navigating the complexities of shipping to your retail customers. Attributes like reliability and on-time service are more valuable in today’s macro environment.

Customer expectations are growing, even as economic stress factors remain. It’s critical to carefully choose a carrier that can meet the rising needs of constant communication and tighter delivery timeframes.  Overall, collaboration remains the central priority for Old Dominion to ensure products are delivered on time, in full, and in perfect shape – no matter the season.