REDWOOD LOGINREDWOOD PORTAL
The winter season is knocking on the door, and by many estimates, it looks like companies can expect to see an increase in their transportation spend.
During our recent webinar, this rise in transportation spend was examined at length. At one point during the webinar, the presenters highlighted a survey done in partnership with FreightWaves that indicates almost 41% of respondents now pay 1%-25% more in transportation costs than they had in 2020. Furthermore, almost 90% of respondents reported that they are paying more in transportation costs, in general, this year as compared to last.
The major takeaway from these survey results is that you should fully expect to spend more on shipping this winter than you have in past years. But "how can you best prepare for this rise in transportation costs?" is the next question.
Let’s examine some of the best preparatory measures you can take for the rapidly approaching 2021 winter shipping season.
With shortages of a few different types, capacity issues, and a boom in e-commerce resulting in more online shopping than ever before, we can expect to see significant transportation logjams and increased costs. Luckily, with some creativity and thoughtful planning, there are always ways around these problems.
Above all else, the best thing that supply chains, individual businesses, and consumers can do to overcome rising transportation costs and weather the storm this winter is to increase visibility. People respect honesty and more than anything: most consumers just want to know where their item is.
For example, if your customer contacts you asking where their order is that they requested a month ago, they may be upset if you say it’s stuck in transit and won’t arrive for another two weeks. However, if that same customer contacted you and you couldn’t even guess where the package was, they're going to be much more upset and will likely question your competency. This could lead to not only refunding the customer or client, but it could also result in a loss of reputation and potentially losing their business forever.
The same principle applies within supply chains themselves. If a manufacturer has no way of tracking where a shipment is and how long it will take to get to them, they cannot effectively plan or make adjustments.
With better visibility comes better planning ability. Better planning ability, in turn, allows for improved allocation of funds to be used for transportation and other needs.
If you were only going to make one change to your operations with the goal of successfully getting through peak season, improved visibility would be the best practice on which to focus.
If at all possible, encourage your customers to start shopping as soon as possible. The sooner you receive your customers’ holiday orders, the better you’ll be able to manage your shipments and transportation. This is going to be crucial for the 2021 holiday shopping season.
On the surface, this may not seem like it would be that much of an issue. And in previous years, we have all been able to overcome some delays here and there, but that issue has only been growing and in 2021, it looks to be almost at critical mass.
The result if they do not start their shopping earlier than normal this year could be a massive influx of refunds with companies who were unable to get those products out to their customers before the holidays. This means even more planning and money may need to be pushed over to your reverse logistics strategies.
There are numerous creative and simple ideas to help cut costs.
For example, figuring out how to minimize packaging waste on shipments this holiday season may help to cut into some of the predicted increase in transportation spend. For the short-term, this move toward decreased packaging will be a good idea to reduce costs in general, but soon enough, it may be absolutely crucial to implement these practices for sustainability purposes.
Maine recently announced that they plan to start passing the cost of recycling wasted packaging materials onto companies who produce them. If other states start to follow suit, this may lead to a significant cost increase that will need to be dealt with later on, so it's better to get ahead of the issue before it becomes law.
Another consideration for the short-term transportation costs of this winter season is for companies to expand their operating hours. Even keeping the docks open just a few extra hours a day this peak season can allow more deliveries to be completed and may lead to less reliance on transportation as the extremely busy portion of the holiday season approaches.
The more that businesses can do to get orders out now, the better.