Adobe Digital Intelligence says that 31% of consumers start shopping before November 1, and 27% will start before Thanksgiving, so the supply chain plans for the holiday season for months and months in advance. So many of the year’s sales occur during the short two-month season, so the logistics process needs to be efficient enough to handle the increase of purchases. It’s estimated that retailers derive 20-30% of their annual profit during November and December. “The holiday season puts great pressure on supply chains because everyone peaks at the same time,” says NRS vice president of logistics and supply chain solutions.
The National Retail Federation announced that it expects
sales in November and December 2016 (excluding auto, gags and restaurant sales) to increase a solid 3.6% to $655.8 billion – significantly higher than the 10-year average of 2.5%.
Manufacturers, carriers, 3PLs, and suppliers prepare for expected supply chain demands and unpredictable disruptions with volume forecasts, market trends, inventory management, customer expectations, labor resources, and performance analyses. Suppliers and retailers optimize their supply chains and distribution networks so that they’re able to deliver high volumes of product on-time.
UPS expects holiday shipping volume to be about 14% higher this year than last year, making for a record peak season. UPS says its peak shipping day will most likely be Monday, December 19. FedEx expects about 10% growth in holiday season shipping volume. FedEx says it expects that the four Mondays leading up to Christmas will be the company’s busiest. The NRF is predicting that non-store sales will increase between 7-10% to as much as $117 billion.
As SDC Exec explains, successful supply chain planning doesn’t only mean supplying goods. The omnichannel environment requires that inventory is available for sale at the right price and right time through any channel the customer shops – then, the brand must fill an order from store stock, the retail network, or even a brand vendors warehouse. In 2016, mobile is predicted to exceed desktop shopping during the holidays. Thanksgiving and Black Friday will see nearly 60% of mobile shopping and 40% of e-commerce.
According to ADI, Black Friday 2016 will set record sales, passing $3 billion, and Cyber Monday will be the largest online shopping day in history. Thanksgiving Day will grow the fastest, reaching $2 billion in online sales (15% YoY growth). “It’s clear that consumers have become more comfortable spending money online,” said Tamara Gaffney, principal analyst at ADI. “The convenience of not having to go into stores and deal with the stress and strain that take place during the holidays looks like one of the primary drivers for online sales growth this holiday season.”
Thanksgiving Gobbles Up Truckload Demand
In 2015, DAT reported Thanksgiving shipping boosted demand for dry vans and refrigerated trailers. The number of loads posted increased 7.1% while capacity was essentially unchanged (-0.3%).
It’s not surprising that refrigerated trailer demand is up at this time of the year, given that 250 million Americans celebrate Thanksgiving and flood grocery stores to fill their carts and tables with seasonal favorites.
This year, reefer volumes have been in a holding pattern, but the week of Thanksgiving traditionally provides a surge of demand for temperature-controlled trailers. The national average rate rose to $1.97 per mile during the first week of November, the highest since early July. Spot market reefer posts unexpectedly increased 10% the week of October 30. During the week of November 6, reefer rates slipped two cents, and some markets saw double-digit declines. The same week, refrigerated trailers load posts declined, but truck posts increased 3.4%. DAT trends show rates on the top reefer lanes have been hard to predict with weekly changes.
Factors that Can Affect Christmas Truckload Demand
- Fuel Prices
- National Average Rates
- Weather
- Capacity/Availability
- E-Commerce
When it comes to the holidays, meeting customer’s logistics demands and optimizing the supply chain is essential. Manufacturers, carriers, 3PLS, and suppliers consider the various predictable and unpredictable factors that might change costs, routes, demand, and performance.
What to read next:
- Why Warehouse Tech is the 1st Step in Fast Shipping
- Manufacturing Productivity Generates Focus on Transportation
- Parcel Shippers: You’ll Pay More if You Don’t Take these 3 Steps
- 3 Ways Supply Chain Cost Analyses Benefit Your Bottom Line
- How Retailers Overcome Challenges of Seasonal Demand
