As the weather grows cooler, everyone starts to prepare for the winter and holiday season. For some, this time of year provides an opportunity to relax with family and friends, and to give thanks for all that life has to offer.
However, for those involved in the supply chain and responsible for moving time-sensitive packages, this time of year is often the most chaotic. In 2021 especially, the upcoming peak parcel season is shaping up to be particularly stressful for many.
With all of the rumors and opinions on what supply chains should expect, it can be hard to separate accurate predictions from wishful thinking. In this article, we’ll take a look at the potential challenges you should expect during the 2021 parcel peak season.
Transportation Costs Will Remain High
In a survey conducted by FreightWaves and Redwood, nearly 90% of businesses reported that they are paying more in transportation costs than they were in 2020. This trend is not expected to go away, and in fact, prices may continue to increase as time goes by. Especially before this upcoming parcel peak season, companies need determine ways to overcome this hurdle of increased transportation costs if they are to stay afloat.
Further complicating the present supply chain issues, is the ongoing logjam on the shores of California. Bloomberg reports that the average wait to unload in Los Angeles has climbed to a lengthy 11 days or longer, eclipsing the previous high of 8 days from last spring. These backups wreak havoc on supply chains by putting a stop to companies’ operations.
Parcel Peak Season is Expected to Last Longer than Usual
Due to labor shortages and other supply chain issues, many deliveries will take longer than usual to reach their destinations this holiday season. For this reason, it’s predicted that the peak holiday shipping season will stretch at least a month longer than it has in past years.
It would not be unreasonable to assume that some holiday gifts may not make their way to customers’ doorsteps until as late as February. Our recent and on-demand webinar discusses this in more detail.
Margins May Get Tighter For A While
Two of the ways in which many shippers are overcoming rising transportation costs is by:
Passing the cost onto consumers.
Narrowing their margins.
To a certain degree, both of these strategies are viable options for navigating the issue of rising transport costs. However, consumers will only agree to pay more up to a certain point. Likewise, businesses (especially small businesses with limited resources) only have a small amount of wiggle room with regard to their margins. Any unexpected disturbances or extra costs could be ruinous for a business that is operating on razor-thin margins.
There’s Good News Out of the White House
On October 13, 2021, President Biden announced a plan to address some of the current supply chain issues. For one, the federal government reached a deal with the port of Los Angeles. Essentially, Los Angeles will be following the lead of the port of Long Beach and remaining open for shipments all day, every day.
The president acknowledged this move to 24/7 operations only solves part of the problem. The issue of getting those goods from the port to their final destinations still remains.
Luckily, we are seeing some encouraging signs on this front. As reported by NBC News, Walmart, UPS, and FedEx will all expand their hours so that they are operating 24/7.
With the west coast ports, the largest retailer, and two of the largest carriers in the world all agreeing to expand operating hours, it’s possible that some of the transportation issues discussed above will be mitigated to some degree.
There’s no doubt about it, this peak season is likely going to be a challenge for most (if not all) supply chains. With ever-rising transportation costs, slim margins, and an expectation of a longer peak season than in previous years, consumers will need to practice patience and understanding when retailers don’t have the season’s hottest gifts in stock.
But hope springs eternal. The federal government has developed a task force to address the aforementioned supply chain issues. As a result, ports, carriers, and retailers are all expanding their hours in an attempt to overcome the problems at hand.
Whatever happens during the 2021 holiday shipping season, it’s important that we all understand this widespread issue cannot be fixed overnight and that everyone is doing their best to remedy the situation.