Blog Posts Smart Parcel Planning for Holiday 2022
- Soaring fuel prices and parcel rate increases are sure to challenge retailers and brands over the holidays.
- The key to peak season success is identifying parcel needs early and establishing shipping strategies.
- Parcel optimization can help retailers to reduce costs and better serve shoppers.
Holiday 2022 will be here before we know it. In fact, Salesforce research shows that 37% of U.S. shoppers plan to start buying gifts earlier than usual.
To help retailers and brands gear up for increased parcel shipping demand, Digital Commerce 360 sat down with Megan Rudolph, Senior Director of Parcel Operations at Saddle Creek Logistics Services. Following is an excerpt from the conversation…
Peak Season Outlook: What’s in Store for Shipping
What challenges should retailers expect for the 2022 peak shipping season?
Capacity limitations and delays are likely to pose challenges this year, but we don’t expect the impact to be as significant as 2020 or 2021. Carriers have had time to implement new strategies to offset some of the challenges, but rising parcel rates will continue, and skyrocketing fuel costs will intensify peak parcel issues.
Keep in mind: Carriers will prioritize existing volume over new volume if capacity becomes an issue. If retailers plan to add a new carrier, they should establish volume in their network as early as possible.”
~ Megan Rudolph, Senior Director of Parcel Operations, Saddle Creek Logistics Services
What can retailers do now to prepare for the season ahead?
Advance planning and communication are critical. Retailers should firm up their shipping strategies as soon as possible. By identifying their parcel needs early, they can work proactively with carriers and allow time to make necessary adjustments.
As carriers announce new peak surcharges, retailers should analyze these charges carefully, estimate the impact to margin, and if necessary, modify holiday promotions to protect profitability. It’s important to consider average order profile, but package-level data is needed to measure the true impact. A parcel analytics tool can help to determine where surcharges will have the greatest impact based on the different variables.
Establishing relationships with multiple carriers, including regional and niche carriers, offers more flexibility. Keep in mind: Carriers will prioritize existing volume over new volume if capacity becomes an issue. If retailers plan to add a new carrier, they should establish volume in their network as early as possible.
How can retailers better manage parcel costs?
While some retailers pass increased costs on to their customers, most shoppers expect fast, free delivery. As a result, retailers are better positioned to reduce cost through optimization.
Rate-shopping solutions can help determine the lowest-cost shipping without impacting delivery speed. These dynamic routing solutions also allow retailers to offer upgraded shipping options at a fraction of the price to the consumer.
For high-volume shippers, zone-skipping can be beneficial. By consolidating regional packages and shipping them to a sortation facility in the destination area, retailers bypass zones and significantly reduce shipping costs.
Additionally, big and bulky products are at the biggest disadvantage in this market, but smaller shipments are still impacted by dimensional weight. Completing a packaging study can confirm that orders are shipping in the most optimized box.
For more insights, read the full Q&A on page 27 of Digital Commerce 360’s 2022 Retail Leaders in U.S. Ecommerce report (requires registration).
Related to: Holiday Fulfillment, Parcel Shipping, Selling Online