Post-Pandemic Shipping: Are We There Yet?
by Jarrett Streebin
The end of the pandemic appears to be on the horizon, but when will we get to post-pandemic shipping? The major parcel carriers continue to suspend delivery guarantees, and Amazon is selling two-day Prime shipping but oftentimes delivers parcels in 3-7 days as it prioritizes orders. At the same time, consumer expectations continue to rise, wanting delivery to not only be fast but affordable or even free.
Approximately 40%opens in new tab of holiday shoppers expected items with "fast shipping" to arrive within two days of placing their order. This statistic drops to 25%opens in new tab of consumers who would wait 3-4 days for a fast shipment.
How can a merchant simultaneously deal with carriers extending delivery windows and consumers wanting their goods now in the extended era of post-pandemic shipping? The key is understanding where post-pandemic shipping is headed and preparing for this inevitability proactively.
Shipping Delays Continue at Sea, Ashore
The shipping container supply chain has been turned on its head in the past year, resulting in a screeching halt in timely package delivery. There has been a huge uptick in port congestion and documentation blockages and a reduction in operating ships and shipping containers.
Consider the Suez Canal blockageopens in new tab in March 2021. In those six days, $6 billion was lost.
On land, shipping delays are no different. Starting in China, cargo was backlogged and travel restrictions resulted in a shortage of truck drivers. Trucking capacity is being utilized for other purposes such as transporting food and medical supplies, resulting in slower inventory movement. As a result, the demand for rail services has increased.
Today, companies are getting creative on how to transport products. DHL is using charter flights to transport shipments to and from China, and airlines are repurposing passenger aircraft for cargo transportation.
Shipping Costs Will Continue to Rise
There is no question the pandemic has escalated shipping costs at an alarming rate. Consider:
- There has been an 80% increase in the cost of shipping container goods since November 2020
- Shipping container costs have nearly tripled
- UPS saw an average rise in daily shipping volume of 21% in the past year
And this isn't expected to change anytime soon as factories in both the U.S. and abroad are running at partial capacity due to worker absences and social distancing guidelines. Orders that once took a few days or weeks to fulfill are now taking months.
Retail giants such as Walmart are doing what they can to get around this by paying premiums to manufacturers for fast deliveries directly to stores, bypassing distribution centers altogether. This could be the start of a new delivery post-pandemic shipping model that extends beyond the confines of COVID-19. But for now, merchants need to budget for and anticipate increasing shipping costs through the remainder of 2021.
The Merchant Solution: Time + Agility
Unfortunately, time is the only thing that will fix the shipping disruptions of the past year and get us to post-pandemic shipping. But patience isn't enough. Shippers need to immediately diversify their carrier mix to mitigate shipping delays or capacity constraints.
In addition, shippers should consider:
- Getting in touch with a logistics provider as early as possible to keep delays to a minimum. This is especially key for companies that ship internationally.
- When calculating total shipping costs, factor in the carrier's peak season surcharge in addition to the annual 4.9% surcharge.
- Consider transit time as the moment the package is picked up to the moment it's delivered to the customer's doorstep.
- Factor in any duties or taxes that will undoubtedly affect your ability to feasibly import specific goods.
- Diversify last-mile delivery options in the U.S. as there is a limit on last-mile delivery providers (USPS, UPS, FedEx). Consider crowdsourced providers, regional small parcel carriers, or even curbside pickup.
In short, shippers need to find the right balance between transactional costs, supply chain speed and supply chain flexibility to be successful while we wait for the era of post-pandemic shipping to arrive.
This blog was originally published in Multichannel Merchantopens in new tab.