Service center

Earlier demand, stronger service: Experts predict what the 2022 peak season will bring

Peak holiday delivery season often challenges shippers and carriers, but it can also surprise them.

Capacity limitations were commonplace in 2020, leading operators to become more selective about the types of packages they accept in their networks. In 2021, prior order activity and upstream supply chain challenges kept holiday volumes lower than expected.

As the 2022 peak season approaches, some of the challenges stakeholders have faced over the previous two years have subsided, while others remain prominent. The pandemic-induced spike in home delivery is waning and carrier labor issues are easing. At the same time, shipping costs remain high, and companies like FedEx and UPS are focusing on prioritizing the most profitable shipments.

To get an idea of ​​what’s to come this year, we asked five experts for their take on the busiest (and most panic-inducing) stretch in the parcel delivery industry: how much carriers last mile delivery efficiently during the 2022 peak season, and what can shippers do to be successful during this time? Some answers have been edited for length and clarity.

Dean Maciuba

Managing Partner, USA, for Crossroads Parcel Consulting

With the negative impact of COVID virtually behind us, we can look forward to a relatively orderly holiday shipping season for 2022 for integrated carriers including FedEx, UPS, and USPS. E-commerce volume is down for UPS and FedEx by design, as both carriers exited much of their less profitable deferred ground operations. E-commerce shipments are also down for retail giants like Amazon as consumers continue to return to old brick-and-mortar stores for their holiday shopping.

Slowing e-commerce growth also means UPS and FedEx should have the capacity to process and deliver packages unaware of huge shipping backlogs clogging their networks. However, temporary hiring to support increased holiday volume will continue to be a challenge for integrated carriers, although the USPS appears to handle temporary hiring better than UPS/FedEx during peak season.

Predicting the performance of regional carriers is a bit difficult for this high season. Many merchants have shifted part of their business to these smaller carriers to reduce costs in response to UPS and FedEx rate increases. While we’d like to assume regions have built the necessary infrastructure to support increased volume, that’s a bit of an unknown. The key for regional carriers is to control the receipt of packages, a task that can be difficult, as turning away customers is always a challenge.

In general, I’m looking for a manageable holiday shipping season in December, with a slowing economy limiting e-commerce growth, which supports less unforeseen volume for all carriers. As always, bad weather in December can still screw up the best-laid peak season plans of parcel carriers.

Laura Ritchey

COO and EVP of Radial

Given current macroeconomic conditions and the impact on retail, the demand for last-mile delivery services and the timing of that demand remains difficult to predict. Last year, some consumer demand shifted to October and early November, driven by Prime Day and Singles Day respectively. However, Black Friday and Cyber ​​​​Monday were still the first two days of the entire high season and represented more volume than in 2020. When the purchase is compressed into a three-day window, the number of orders processed and packages to be shipped puts pressure on warehouses and last-mile delivery providers to manage this increase in volume.

For peak 2022, an important strategy is for shippers to start forecasting early and work with last-mile delivery providers to ensure they have allocated capacity for expected volumes. As these forecasts evolve, frequent communication about volume changes, shipping profiles, and delivery zip codes should provide agility to react and adjust capacity. Accelerated capacity near major holidays is especially rare, so be sure to cover that volume.

Shippers must also manage their customers’ delivery times. Many retailers started adding messages to their online stores about possible delivery delays at the start of the pandemic. Over time, with supply chain delays, labor shortages and delivery capacity constraints, these messages remained on most websites and were added to many. many customer emails. During the peak window, these messages may be updated frequently to let customers know when they may see a delay as well as how long the delay will last.

Another strategy is to ensure that a shipper has the appropriate portfolio of last mile carriers available to support the volume. Over the past three years, we have observed constraints in the networks of the major carriers as well as in the regional networks at various times. With a strong diversification strategy, volumes can be shifted around to avoid these bottlenecks and keep these packages on track to arrive at customers when promised.

Harshida Acharya

Partner and Marketing Director at Fulfillment IQ

One of the biggest trends to emerge over the past few years is that peak season shopping starts early. [National Retail Federation] reports show that more than 50% of families began back-to-school shopping in early July and this trend will continue through the 2022 peak season. Shippers should take note and prepare for sales in advance of the high season. Amazon capitalized on this trend with its Prime Day 2022 in mid-July and now plans to hold another shopping event, Prime Fall, in October.

Fear of inflation and contraction will not have such a big impact. We will see a demand and buying cycle very similar to last year. Shippers should focus on strengthening their peak season plans to be able to meet customer expectations. Strengthen your 3PL partnerships and create emergency scenarios. Start your peak season planning now if you haven’t already. Hire and train full-time employees, especially if you are in an area with many other warehouses where labor demand is higher. Focusing on training and retaining full-time employees, planning for demand, and building brand loyalty with your employees is always a valid strategy.

Last-mile delivery players will perform much better this year than in previous years, as they have had time to make the right investments in infrastructure and planning. There are also more players in the last mile space, which is contributing to last mile carrier diversification plans.

For brands and shippers that have a busy peak season, you might want to start setting consumer expectations. One of the strategies we found to successfully manage customer expectations was to let them know they expected delays. And several brands have effectively managed their demand curve by starting their Black Friday sales earlier or extending them for an entire month, giving customers plenty of time to place their orders for the holidays.

Gregg Zegras

Pitney Bowes Executive Vice President and President, Global E-Commerce

The logistics industry has gone through tough challenges with the peaks of COVID, but ahead of that peak, many are building on capabilities and capabilities that are already showing on the ground with improved service performance. This peak should unfold more smoothly – that said, shippers should still have last mile diversification as a consideration to cover any issues with a single supplier.

To further enhance the final delivery experience for consumers, consider logistics providers who have implemented automation and robotics to improve throughput and alleviate potential labor shortages.

Partner with [logistics] companies that support your brand. Communicate clearly with end consumers about delivery – they prefer bad news to surprises.

Ju Myung Song

Assistant Professor, Department of Operations and Information Systems at University of Massachusetts Lowell

Photo: Richard Pasley for UMass Lowell

Peak season planning has become a 24/7 operation for parcel carriers, and shippers were trying to meet growing consumer demand even before the pandemic. But the past year has presented new supply chain challenges for carriers and shippers. Difficulty obtaining parts, stumbling blocks in the production process, and extended shipping delays have resulted in erratic and unpredictable volume flows from shippers to last mile carriers during peak seasons.

Many experts expect these supply chain issues to continue into 2022, when uncertainty remains as COVID-19 cases rise again. The shortage will continue, but for some sellers the problem will be too much inventory. In short, different industries are likely to experience both shortages and oversupply issues during peak seasons. Additionally, just like last year, FedEx and UPS can put shippers back on hold to limit the number of packages a company can accept to help meet on-time levels. In some cases, they may temporarily block senders until more space becomes available.

One of the best ways to solve this problem is to shop early. Buying early can help reduce peak daily shipments. Therefore, large shippers will plan and coordinate carrier positions by shifting some shipments to local carriers, promoting early holiday deals, and offering discounts to shoppers to pick up online orders from stores. Shipping and buying early in this way can be a win-win strategy for everyone, as it will drive demand forward in the days that [carriers] have sufficient capacity.