The fourth quarter might be merry for shoppers, but for shippers without a good logistics plan, the peak retail quarter can mean mayhem. Let’s start with just a few numbers illustrating the fourth quarter’s activity surge:
- 30% of annual retail sales happen between Black Friday and Christmas
- 174 million people shop Black Friday weekend
- Shoppers spent $7.9 billion on Cyber Monday 2018; a number expected to surpass $9.4 billion in 2019
- UPS delivers more than 800 million packages during the holiday season or about 32 million per day
Capacity tightens across all transportation modes, and rates go up. Shippers juggle how much to ship, ways to ship it, and what it will cost in response. Those entering this complicated quarter without a game plan are sure to drop the ball. With more than 30 successful peak seasons under our belt at Langham Logistics, the following are a few tips for a winning fourth quarter.
Issue RFPs with Surge Commitments
Many shippers lock in capacity through annual requests for proposals (RFPs). Far too often, the average volume simply is divided across 52 weeks. Shippers scramble for capacity during the fourth quarter when volume jumps, and transportation providers do not plan accordingly. Indicate volume spikes within the RFP or require a surge commitment (e.g. 10-15%) for certain weeks or months, ensuring capacity is available as freight increases.
Build a Fourth Quarter Blueprint
Examine your freight network. Identify where the largest volume spikes occur as well as lanes that slow down. Trade policies, labor disputes, and weather delays can significantly impact cargo ships and back up ports, so create contingency plans. Adjust the budget allowing leeway for higher prices across all modes of transportation. Once the blueprint is built, discuss the strategy with key transportation and logistics partners. Get all parties on the same page with your business’s volumes and timelines for the quarter.
Watch the Warehouse
Work with your warehouse on volume increases and review key operational metrics. Discuss the warehouse team’s fourth-quarter plans for layout, staffing, and sequencing. For shared spaces, know how other customers may affect your shipping schedule. Ensure their surges will not cause picking, packing, and dock door delays affecting your own company’s service and budget.
Delivery timelines continue tightening across the supply chain. Look at multiple modes of transportation to keep freight moving. This may mean a combination of switching between full truckload (FTL) and less than truckload (LTL), hopping on the train, doing team expedites, moving critical shipments by air, or managing international parcel. Account for the nuanced timelines of each mode. Shippers need some creativity and flexibility to get deliveries to shelves and homes on time.
Don’t Forget National Returns Day
Surviving until December 25 is not enough. National Returns Day happens on January 2, 2020. UPS projects a 26% increase in the volume of its year-over-year return totaling nearly two million packages on this day, and another 11.2 million packages returned the week leading up to Christmas. According to the National Retail Federation, at least 10% of all retail goods sold will be returned. Account for return shipments – how they will be hauled, where they will go, and how quickly they need to get there.
Find a Logistics Partner
Avoid fourth-quarter shipping stress by partnering with a logistics provider. 3PLs have the manpower for managing freight surges. They support relationships with thousands of pre-vetted transportation providers across all modes, making capacity and poor service a non-issue. Their highly trained staff also know how to negotiate rates and manage volume commitments while staying in budget.
The best 3PLs know peak season strategies that generate profits rather than problems. From managing international ocean containers to final mile deliveries and everything in between, Langham Logistics creates fourth-quarter success for our clients. Learn more about our award-winning service and best-in-class freight management strategy before struggling through another pressure-filled season.