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Prepare for a Shipping Capacity Strain this Holiday Season

According to a new report from Salesforce, the strain on parcel shipping from the pandemic is far from over. Though the holidays are considered “peak season” for parcel shipping every year, increases in e-commerce, limited carrier capacity, and supply chain backlogs continue to bring a new level of intensity in the weeks to come.

COVID-19 has Changed the Holiday Retail Landscape as We Know It

Last year, we saw a flux in digital sales and online shopping. Physical retailers with an online presence saw massive increases in sales as consumers sought to avoid unnecessary trips out in public, and this year is looking to be no different. With the rise of the Delta variant, industry watchers such as Salesforce anticipate an increase of online orders of 10% in the U.S. and 7% around the globe.

Increased Online Orders Mean More Overhead Costs

This increase in online orders will lead to rising costs across the board. Whether it’s labor, freight, or manufacturing, each of these costs are predicted to increase. But the extra expenses don’t stop on the supply end of the spectrum. During this peak season, Salesforce predicts consumers will pay an extra 20% more for their gifts, while retailers face an additional $223 billion for the cost of goods.

Capacity Issues Lead to Surcharges

Not only is there a great likelihood of shipping delays this holiday season, but businesses must also contend with peak delivery surcharges. While carrier surcharges are nothing new, and international shipments have been subjected to pandemic-related surcharges for much of the year already, this peak season will add unprecedented expenses to shippers’ transportation budgets.

UPS and FedEx have already announced significant peak season surcharges that run as high as five dollars per parcel for some customers. The United States Postal Service is also implementing peak season surcharges on its biggest clients — Amazon, UPS, and others — that rely on the USPS for the last leg of delivery.

Last year, Salesforce expected approximately $40 billion — yes, billion with a b — in peak surcharges last year. With the new influx of charges, it’s safe to say this number can only increase in 2021.

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Physical Stores Remain an Important Strategy

Provided the United States doesn’t enter a second lockdown period due to the Delta variant, physical retail stores remain an important piece of the retail strategy. Though foot traffic and sales are steadily increasing as the country has reopened, physical stores remain vital for those consumers without reliable internet connectivity as well as older consumers who don’t buy as much online. But this isn’t the only reason physical stores remain crucial.

Given the expected capacity problems and delays in parcel shipping (and specifically, last-mile shipping) this holiday season, businesses with an existing retail footprint should rely on their physical store locations to ease shipping delays. By enabling buy online, pick up in-store (BOPIS) or ship-from-store, retailers can streamline shipping processes and improve the delivery experience for many customers.

It’s important to note, BOPIS can be a real opportunity for improving brand recognition and loyalty. Both metrics have suffered during the pandemic, as consumers turned to whatever brand could deliver. By establishing a great BOPIS experience, brands can regain some of this brand awareness and increase their dedicated consumer base.

Consumers Are Buying Earlier than Ever

The trend to buy early remains strong. Many consumers still find themselves in remote working spaces and have more time to spend online. Salesforce predicts consumers will be eagerly looking for pre-Cyber week promotions to hop on any deals before Black Friday or Cyber Monday and avoid the delays that happened last year. The study forecasts $31B in U.S. online spending and $141B in global spending before Cyber Week even begins!

Better Tools Bring Better Success

Capacity strains and surcharges are going to be a challenge for retailers this peak season – and likely beyond. But retailers that implement state-of-the-art logistics and shipping tools will be better positioned for success. For a full breakdown of the peak season landscape and tips on how your shipping can thrive, check out our eBook guide. And for a solution in any season, the Logistyx multi-carrier shipping system streamlines your processes and optimizes your shipments, from parcel shipping execution to carrier invoice reconciliation.

If your business needs to simplify the complexities of multi-carrier shipping, Logistyx can help. Reach out today to learn what we can do for you.