With peak season upon us, there’s no better time to look back on some of the peak holiday shipping advice we’ve given over the years. Specifically, we wanted to review advice that stacks up in today’s COVID-19 impacted industry and holiday season, as well as take a closer look at which strategies may be immediately beneficial in today’s vs. next year’s peak season. Let’s dig in!
Shipper Strategies for Today’s Peak Season
- Pursue carrier diversification (immediately). In the past, we’ve discussed carrier diversification as an optimization and cost avoidance opportunity; however, if there’s one parcel lesson to be learned from 2020, it’s this: carrier diversification is survival. It’s no secret that the Big 2 have been challenged by unprecedented capacity in the last six months, so much so new pandemic surcharges were introduced, and shipper volume stopped being an effective contract negotiation strategy. Such a reality has left some shippers feeling vulnerable about being able to meet consumer demand through peak season. As a shipper, you should prepare for continued capacity constraints into 2021, and you should work to build a diverse carrier portfolio that allows you to implement and interchange the most appropriate carrier when your customer commitment is at risk.
- Stay in the loop of peak surcharges and ensure your rate shop accounts reflect those prices. Just as important as reading a contract’s terms and conditions, it’s imperative that shippers stay on top of the peak season surcharges applicable to them. Not only will doing so bring visibility to unplanned expenses, but it’s an effective cost avoidance strategy: 1) when dealing with conditional surcharges, such as those tied to over-capacity volume tiers; and 2) for those that are dual-sourced, loading each carrier’s varying surcharges into your rate shop accounts will allow you to quickly identify the most cost effective holiday carrier for your shipment.
- Ask your carriers for peak surcharge discounts or waivers. You never know until you try – that’s the adage, right? When it comes to new surcharges, you really will never know if there is flexibility in their implementation unless you ask the carrier(s) outright for a particular discount or waiver; however, be prepared to fully explain why the exemption should apply to you, as well as to hear the reply, “No.”
- When it comes to dimensional weight – waste not, want not. Though certainly not a new strategy, the approach of minimizing your shipment’s dimensional weight with minimal and space-saving packaging is an effective one for some brands, especially during peak season when surcharges start to really add up. Just remember that the packaging should still be able to weather the weather – as well as multiple sorting facilities – and find the customer intact. Some brands take this adage further by thinking further outside the box and rethinking which transportation mode is right for them (such as utilizing LTL to avoid parcel surcharges).
- Switch up Last Mile Delivery with curbside and in-store pickup. For many one of the most immediately available strategies in the whole list: offset the delivery delay and rising cost of parcel shipping with in-store and curbside pickup. When COVID-19 first began impacting the parcel industry and carriers hadn’t yet began adapting to the pandemic, this strategy proved to be highly rewarding for many retailers looking to avoid carrier constraints altogether. More importantly, it’s one they’re still implementing today, especially for peak season.
- Align your marketing campaigns to the parcel industry – be strategic. Finally, consider aligning your marketing communication and promotions to what’s happening within the parcel industry. If you can encourage your shoppers to shop early – or at least before the busiest periods of peak – in order to avoid delivery delays and increased surcharges, you should. Added bonus: your brand can only benefit by avoiding disappointing or frustrating your consumers with abnormally delayed shipments should peak season overwhelm carriers beyond the capacity we saw this past summer.
Shipper Strategies for Next Year’s Peak Season
- Apply Big Data and caution to your forecasting budget. Time and time again, we recommend implementing a healthy dose of historical data (Big Data to be exact) and future-focused caution for estimating your costs for next year’s peak season. Understanding the profile of both your customers and you as a shipper are crucial to identifying the strengths and weaknesses of your budget. For example, sharpen the accuracy of your forecast and budget for next year’s expenses by tracking each carrier’s surcharge expenses YOY and calculating the growth percentage, while also tracking the shipping preferences of your customers, and the consistency of your YOY volume. In doing so, you’re already laying a strong foundation by asking who did you ship with, what did you pay, why did you ship that way, and how much did you ship – all key questions to identifying future spend, especially when combined with rich YOY data.
- Manage your vendor fulfillment partnerships. We first touched on vendor fulfillment management back in 2016, and this is still a critical component of reducing errors and avoiding unnecessary costs by preparing for the unknown. It’s a simple concept with a big payoff – stay in close contact with your vendors, utilizing communication to drive increased visibility into the sustainability of your partnership. After all, having to source and sign on a new vendor during a time of limited resources will only add further chaos. Ask yourself what means of visibility do you have at your disposal to gain insights into the vendor’s abilities, compliance levels, and cost performance, as well as how often do you perform a vendor audit to ensure rising or estimated demand can be met?
- Pursue carrier diversification intelligently. While it may be necessary to identify regional or alternative carriers that are helpful for the short-term, preparing for next year’s peak season by thinking long-term and asking what a diverse carrier portfolio that’s most beneficial to your brand would look like – who are the players, how many, and what customers are they each serving? Utilize Big Data, and potentially a strategic partner, to identify how a diverse carrier portfolio can be utilized to optimize your parcel network. Think of carrier diversification as more than a cost avoidance or mitigation strategy, but also a means to better align your brand strategy with your transportation strategy to better serve and delight your customers.
- Continuously improve your omnichannel strategy – or implement an omnichannel strategy if you haven’t yet. While there is no magic bullet or immediate solution that fits all shippers, the omnichannel fulfillment strategy (which plans and executes your parcel network based on known data at the point of sale) continues to be an effective approach for shippers seeking to survive this new parcel landscape. If you’re new to the strategy, think of it as an automated approach to the strategy listed above about swapping parcel delivery for in-store or curbside pickup, as this type of tech-enabled and data-driven parcel network seeks to put the resources of your distribution centers and brick-and-mortar stores, carrier contracts, and any known information about your consumers to their optimal use. Of course, the best strategies grow over time, and few brands ever anticipated a parcel industry impacted by a pandemic, so continue to equip your omnichannel strategy with as much information as possible.
It’s not just a matter of capacity.
At the heart of the advice and strategies above is a message about more than peak season capacity constraints, but one about better understanding the industry you operate within to optimize your own operations. Start by staying on top of peak surcharges and carrier news, using that information to update your TMS and drive cost-effective decision making. Consider your partners as strategic arms (not just external necessities), as these partners are important components to your brand, and vice versa. Finally, tap into the parcel Big Data available to you to lead your decisions regarding the strategies above.
Even at normal times, flexibility and adaptability are required to succeed in any industry, but more so during times of great difficulty. Our best advice is to seek out the Big Picture and apply that information in both your brand and transportation strategies.