We all remember Christmas 2020 and how difficult it was to get presents to loved ones on time. Shipping delays were rampant and product stock-outs were widespread. You’d think with Christmas 2021 on the horizon, the various lessons learned from last year’s disastrous holiday season would prompt changes among businesses and major shipping carriers. But instead we expect things to be much worse this year.
Last holiday season, the U.S. experienced unprecedented e-commerce growth. With many shoppers turning to their computers instead of in-store purchases, online order volume reached an all-time high, and retailers, warehouses, and shipping carriers struggled to keep up.
At the peak of the holiday season many packages were delayed as many as three weeks, and many arrived after Christmas had passed. Consequently, loved ones had to forego opening a present under the Christmas tree on Christmas morning only to receive their brown box in the mail two weeks later, creating a massive backlog of returns for small businesses.
From this experience, many sellers, warehouses, and shipping carriers implemented plans to increase their capacity in anticipation of continued e-commerce growth into 2021. Even as restrictions began to ease, many consumers continue to enjoy the freedom of shopping online.
However, due to elevated unemployment benefits, upward pressures on the labor market, and a shortage of many supplies commonly used in warehousing and logistics, there has been minimal gains in capacity across the logistics industry. If you go on any job board around the nation you will see countless posts begging for warehouse labor, delivery and truck drivers, package sorters, and processors. The growth in logistical capacity is being yet again outpaced by the growing demand of e-commerce.
If you go on any job board around the nation you will see countless posts begging for warehouse labor, delivery and truck drivers, package sorters, and processors.
So far in 2021, we have seen shortages of everything from lumber for pallets, corrugated material for boxes, chips for automated equipment and forklifts, and a lack of available shipping containers and chassis to carry them from ports. Pallets have risen from $3 for a B-grade pallet to well over $10, if you can find them at all. Many warehouses and logistics companies have been forced to turn to brand new pallets made of expensive lumber that have also seen a surge in prices. The price of ocean freight as well as trucking freight have also greatly increased. The price of sending a container from Hong Kong to New York has increased over 500% in the last year. What used to cost an importer a few thousand dollars in transportation now costs tens of thousands of dollars.
This increase in demand has placed undue strain on ports across the world. If you are an importer and were able to afford the elevated transportation costs for ocean freight, you are then faced with the issue of getting your container to port in a reasonable amount of time. Today, we are facing unprecedented wait times at ports, with over 90 container ships outside of the LA port at the moment. This is creating even more strain on the availability of containers, trucks and chassis to move them. Additionally, many ports around the world can be closed at a moment’s notice due to coronavirus outbreaks, especially in China.
You might be asking how this will affect me this holiday season?
Many retailers may not get the inventory that they expected to have for the big sales such as Black Friday or the week before Christmas. Because of this, many sought after gifts may be very hard to find. On top of this, we may see prices continue to rise as importers are paying significantly more for the capacity that they are able to get their hands on. We should see some of these costs pushed to the consumer overtime as more expensive stock reaches our shores.
If you wait till the last minute to purchase a Christmas gift, the post office, UPS, FedEx, and any other carrier you can name will most likely ship your gift late. Many warehousing companies and shipping carriers are putting in place heavy peak season surcharges that will affect how much money an online seller or importer pays to send their good to the end customer.
So, what is my recommendation?
As somebody with an inside view of the problem, I see shortages and shipping delays as a guarantee rather than a possibility. I expect this year to be worse than last year in terms of delays. Because of this, I highly recommend completing your Christmas shopping before Thanksgiving. Christmas shopping so early may feel uncomfortable to many consumers, but it may be the only way to guarantee that you both get the product you want and have it in time to give to somebody else for Christmas.
Bill Carlin is the chief marketing officer at Shipmate Fullfillment, a Philadelphia-based shipping and fulfillment company.