icon21 Nov, 2022
Top 3 Logistics Challenges Companies Will Face This Holiday Season
Plus, how to solve them.
Ah, the holiday season. The sights, the smells, the supply chain headaches. Wait, what? As retail sales reach their peak during the holiday season, the supply chain tends to become overburdened. This creates logistics challenges for companies in what should be their most profitable quarter. What logistics challenges are companies likely facing this 2022 holiday season and how can they overcome them? Read on to find out.
What Logistics Challenges Will Arise this Holiday Season?
While the holiday season brings a common set of logistics challenges for companies each year, the way that those challenges present themselves, the reasons behind the challenges, and potential solutions vary. Differentiating factors include things like market conditions, geopolitical and weather-related issues, regulatory issues, and new solutions becoming available to the market.
Logistics challenges companies will face this year are likely to be an intensified continuation of the supply chain issues that have plagued companies across all sectors throughout 2022.
Logistics Challenge #1: Shipping Delays Will Make It Hard to Get Holiday Freight In
While the Pandemic-induced capacity crunch has eased, freight is still bottlenecking at several points in the supply chain. Continued port congestion means that, even if you’re able to get your items headed to the right port promptly, you may not be able to get your hands on them. Wait times at ports across the globe are up, adding time to ocean freight’s already timely trip from origin to destination. Plus, with sailings are currently being canceled to try to balance supply and demand for ocean capacity and get rates back up, getting freight in by ocean could be a risky prospect this holiday season.
2022’s specific issues aside, freight is generally just slower to move during the holiday season. The biggest shopping season of the year creates its own little capacity crunch every holiday season. Despite a relatively loose capacity market, finding a truck or other method of transportation for freight could take a little longer as the season wears on.
The Solution: Utilize Faster Shipping Methods Like Air Freight Services When It Makes Sense
Since holiday freight is time-sensitive and more traditional ocean freight shipping methods are less than timely at present, it might behoove companies to turn to faster shipping methods to ensure their holiday stock.
Air freight services may be an ideal solution this holiday season when companies need freight now to continue to serve their customers. Shipping by air can cut down a month-long (or even longer in current conditions) trip to mere days. Using a full-service 3PL for air freight means that transport to and from the airport can be handled by the same company, resulting in a faster, simpler shipping experience.
Logistics Challenge #2: Delayed Shipments in Other Transport Methods May Necessitate Faster Shipping Methods, Leading to Increased Costs
With port congestion remaining a big issue, more companies are likely to turn to air freight to ensure they’ve got the supplies they need to see them through the holiday season. However, many freight brokers must rely on a third-party to send freight by air. Many freight brokers either don’t have the right airline connections or they aren’t certified IATA agents. This means the shipper gets hit with a secondary markup. These secondary markups are commonplace when it comes to air freight since brokerages must be IATA certified to send freight by air directly. A non-IATA-certified brokerage must pass off the freight to a freight forwarder that is IATA certified. The shipper is then not only accounting for the freight brokerage’s margins but also the freight forwarder’s margins.
Shipping by air tends to be more expensive than ground or ocean shipping, so companies may need to find ways to mitigate or offset the higher shipping costs of air.
The Solution: Minimize Mark-Ups by Cutting Out Middlemen
One way to cut shipping costs is to cut out some of the middlemen. For example, when companies are shipping air freight, they can seek out a freight broker that is also an IATA agent so that they don’t get hit with that second markup from the freight forwarder.
The best way to ensure you’re not paying extra middlemen for air shipping? Ask. When you speak with a 3PL about your freight, don’t hesitate to ask if the freight forwarder is an IATA agent so they can contract directly with the airline.
Logistics Challenge #3: Warehouse Space and Labor Shortages Will Affect Freight Movement
Labor and warehouse space shortages across the logistics industry will make getting freight where it needs to go a little more complicated than usual this year. All that extra holiday freight needs to be received, stored, picked, packed, sorted, and shipped, but finding the bodies to accomplish all that for the extra freight may be difficult.
While there are some worries that the looming recession will reduce the need for seasonal retail labor, it’s likely that warehouses will still run into understaffing issues since they were so understaffed to begin with. Not to mention, many warehouses are bursting at the seams after overstocking as insulation against Pandemic-related import issues. Finding space for all the holiday stock will likely be difficult for some companies.
The Solution: Outsource to a Third-Party, Full-Service Warehouse to Manage Overflow
Luckily, there are 3PLs and full-service warehouses that companies can pass the overflow off to. Full-service warehouses can not only store freight but also carry it through the entire warehousing process, from receiving to shipping.
Outsourcing warehousing solves both the storage space issues and the staffing issues that many companies are encountering this holiday season.
Are These Solutions Right for Your Company?
Of course, these solutions are suggestions and are certainly not the only way to solve these problems. If your company needs a little help figuring out how to overcome the holiday hurdles this year, reach out to the NEWL team. We offer a full complement of transportation and logistics services, and our global partnerships allow us to provide a variety of solutions for our clients regardless of location.