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Our Annual Shipping & Logistics Update with the Telsey Advisory Group
At the end of this year, the Telsey Advisory Group hosted a webinar with the LJM shipping experts. Here is a valuable summary of that 12/16/21 discussion with our own Thomas Anderson, VP of Supply Chain Services, and Kenneth Moyer, VP of Supply Chain Strategies.
Carriers still have the clout. With greatly increased online orders – and a dramatic 66% increase in e-commerce shipping volumes in 2021, – major Carriers like FedEx and UPS feel free to set the terms when it comes to package sizes, select surcharges, and higher prices overall. While Covid surely played a part in increased online orders these last 2 years, it only accelerated an existing trend. Even with Carriers’ expanded capacity, LJM predicts shipping costs to rise again in 2022. Accordingly, both FedEx and UPS expect base rates to increase at least 5.9% this year – and this is before one factors in higher fuel and labor costs, and residential surcharges.
Industry Trends & Current Events. Major supply chain bottlenecks across all industries have not made life easier in 2021, especially during the holiday season. To start, the volume of goods scheduled to come into the country has increased around 30%, but at the same time there has been a labor shortfall of nearly 30%. International container charges have risen to new highs. Not surprisingly, small package shipment prices increased 7 – 10% in 2021. LJM expects these shipping and supply challenges – and higher prices – to continue well into 2022, despite the fact that Carriers have made measurable progress this year, with peak 2021 Packages Per Day up significantly over 2020, something we may give them great credit for.
Other good news. From a shipping and retailing perspective, some of the bottlenecks will be alleviated by ordering earlier in the season, and increased flexibility through dual Carrier sourcing. Greater decentralized distribution, where possible, will help to speed up deliveries and add to other creative options. There is also something to be said for learning from the retail giants. LJM applauds major shippers like Walmart, Target and Best Buy for shortening order to delivery windows, using multiple Carriers, and improving their overall shipping capability, not just by size but by resourcefulness. Again, the key is flexibility.
If your business wants expert guidance and support in creating the most advantageous Carrier contracts, finding flexible solutions that work for you and the customers you deliver to, and meeting both your shipping and financial goals in 2022, look to the professionals at LJM Group, shipping consultants with insight and know-how — and the track record to prove it.