Little Holiday Joy for Retailers, Preparing for a Peak Season That Could Go Bust

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Right about this time in any “normal” year, ocean carriers and truckers would be entering their annual peak season for freight volumes, in expectation of that ever-reliable holiday shopping bonanza. Ships laden with cargo destined for American store shelves would be making their way across the Pacific, and warehouses all over the country would be filling up. And now, in 2020, it’s happening once again — with an obvious twist.

The difference, of course, is COVID-19, which presents retailers with the ultimate wild card: the question of whether the holiday buying stampede will happen at all. Will stores be open, and consumers free to shop in them? Will online sales be their only avenue for purchasing? Or will the deepening recession slam the lid on the whole thing?

Ever-hopeful carriers and shippers are preparing for the surge. And there’s some evidence that it’s underway. Already there’s a shortage of chassis in Los Angeles and Long Beach harbor, notes Lidia Yan, chief executive officer of Next Trucking, provider of a technology platform for drayage services. The transportation industry, she says, “is adapting to changes well ahead of the holiday season.”

Even without the pandemic, this time around would be different from the last, in the sense that each succeeding year has seen an increase in the percentage of holiday shopping taking place online. (As a harbinger of seasonal activity, Black Friday is rapidly being supplanted by Cyber Monday.) Yet lockdowns, shuttered stores and sheltering in place have given e-commerce an extra boost. Many consumers who previously preferred to shop in person have grown enamored of the convenience of goods being delivered to the door.

With the rise in online ordering come new demands for transparency. Customers want to know where their orders are, and when they’ll arrive. Meanwhile, manufacturers are expanding their rosters of suppliers to head off disruptions caused by the failure of a single source to keep product flowing.

Foremost among all these concerns, of course, is the health and safety of the individuals tasked with making and moving that product. In a small truck fleet, one sick driver can impact the entire operation, notes Yan.

She recommends that shippers and retailers plan ahead for their warehousing and trucking capacity needs. Driver shortages, already a major concern prior to the pandemic, are even more of a threat today. Even drivers who aren’t infected with the coronavirus are scared to venture out. “Make sure you have appointments,” Yan advises, adding that price searches should be part of the effort.

In a time of great uncertainty about supply-chain vendors, Yan wishes that shippers could be more flexible and understanding of their logistics partners. COVID-19, she notes, is only the latest challenge for truckers, who already are dealing with restrictions on the hours they can drive, as well as a government mandate for installing electronic logging devices (ELDs) in their cabs. “Everybody is in this together,” Yan says.

From the shipper’s point of view, however, it’s difficult to be understanding when ocean carriers regularly cancel scheduled sailings. The result is less overall capacity and higher freight rates — precisely what carriers set out to achieve with this frustrating practice. (In the past, they’ve accomplished that goal with the temporary removal of entire ships from the trade, berthing them en masse in locations such as Singapore until higher rates justified their return to service.)

The chassis situation is even tougher to untangle. This essential piece of equipment might be owned and controlled by one of several entities — ocean carriers, leasing companies, combined “gray pools,” truckers, or even the shippers themselves. These various entities don’t readily communicate or share data with one another, leaving shippers with little recourse when chassis fail to show up where they’re needed.

“We’re working very hard to address this problem with technology,” says Yan. “I believe that this year it will continue to be chaotic, especially for Southern California markets. It’s not a problem we can address immediately.”

Drayage truckers, who ferry containers and trailers between ports and inland distribution points, are undoubtedly deserving of shippers’ sympathy in times of high activity. Often these are small, independent operators surviving on extremely thin margins. They might wait for hours at port terminals to pick up a container, even if they get there on time. Yan says drivers need to factor such delays into their schedules, while working with ocean carriers and terminals on “free-flow” programs and accompanying technology that can accelerate the process.

Peak seasons come with the potential for logistical bottlenecks at multiple points along the supply chain. Because importers anticipating the impact of the pandemic on the holiday rush brought shipments into the country early, warehouse capacity is already in short supply. The inevitable result will be higher storage prices, as facilities seek creative solutions to the space crunch.

And so shippers and retailers enter another peak activity period with fewer ships, drivers and intermodal equipment; longer waits at ports; higher prices all round, and the possibility that all their preparations will be for naught if the holiday shopping stampede goes bust. Hardly the most joyous of seasons, in a time of seemingly endless pandemic and a cratering economy.

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