For the 2022 holiday season, shipping is expected to be more challenging than ever.  Covid-19, and its most recent variants, continue to exert pressure on Carriers to deliver goods on time, especially when shipping internationally, with trade routes from Asia to Europe and from Asia to North America being especially hard hit.  Overbooking and space limitations continue to plague ocean shipping, while ports are faced with related land-based issues, most notably trucking service shortages.  As always, unanticipated events−such as weather-related delays, labor strikes, consequences of war in Europe, piracy, and fire−can wreak havoc on maritime shipping.  Resulting shortages of manufacturing components, especially related to electronics and semiconductors, further exacerbate production planning in most every industry.

How can industry cope with 2022 shipping challenges?  While there are no surefire ways to guarantee that cargo will not get delayed, or “rolled,” there are measures that can be taken to minimize the risk, if applied creatively.  

STRATEGY 1: Creative Logistics Management

Strategic planning, budgeting for surcharge increases, taking advantage of early shipping incentives, and building in redundancy or “Plan B” options for short-notice shipping changes or cancellations are all proven to be effective strategies for logistical roadblocks.

Likewise, shipments should be booked as early as possible, providing adequate time for document preparation for customs clearance.  Scheduling a flexible sail date for overseas shipments can provide alternatives to guarantee that goods arrive on time.  Whenever possible, it’s advisable to avoid peak season shipping, which generally occurs between mid-August to mid-October, and periods prior to holidays that are widely celebrated in China, including New Year (in January/February) and Golden Week (October).

At the documentation level, by splitting bill of lading agreements, companies can better respond to Carrier overbooking, since they often decide which containers to delay based on the bill, and not the physical container itself.  Sending 10 containers on one single bill of lading limits flexibility by requiring shipment of the entire lot together, whereas separating shipments into various ladings allows the option that a partial shipment can occur despite other parts being rolled.  Also, containers traveling on routes with trans-shipments run a much higher risk of getting rolled, at the port of sail or later at trans-shipment ports, so managers should avoid trans-shipments whenever possible.

Suggesting creative options for customers is another useful approach, such as subscription boxes, or multiple promotional sales with niche themes.  Bundling of made-to-order products or items that need light assembly, such as pre-built holiday kits, is often useful for simplifying shipping and logistics. By bundling products, customers can often increase their average order value (AOV) and improve their shopping cart conversion rates.

Most important, personnel need to be proactive, and when needed, be able to tap into the expertise of experienced logistics advisors.  A good and experienced logistics consultant has better knowledge of the routes and/or ports that tend to cause the most problems and where containers are most likely to be rolled and can advise clients about strategies to reroute shipments. They also likely have more negotiating power and may be able to get a container shipped when overbooking occurs, or when a shipment is at risk of getting rolled or delayed.

Logistics Consulting

STRATEGY #2: Forecasting

Supply chain forecasting is growing in popularity as a management tool during peak shipping periods. It combines data from past supply deliveries with insights and understandings about demand, providing more reliable decision-making for stock inventory, cargo booking, budget planning, or market expansion. Using advanced data and analytics tools, companies are better able to identify trends in product demand, product development, or raw material used further down the supply chain.

Supply chain forecasting can play a major role in contributing to efficient supply chains and business growth, and at a minimum should include:

• Strategic planning – Businesses can be built or broken in the strategies they deploy to manage expansion to new markets, budget planning, or risk assessment. Forecasting provides insights to make such decisions wisely, ensuring suppliers can meet customer demands.

• Ongoing inventory monitoring – When managers have a better understanding of the demand for products in different markets, they can work more closely and easily with suppliers to maintain inventory levels throughout the year. This process holds shortages to a minimum, provides lower costs for customers, and keeps warehouse fees under control without having to store unneeded stock.

• Improved customer experience – Customer experience is set to define supply chains in the years to come. By being able to predict customer demand, managers can better monitor and control supply levels to ensure orders are fulfilled on time. The result is a sense of trust between service providers and customers.

STRATEGY #3: Data Resources

Major shippers such as DHL, UPS, and FedEx are proactively reminding customers that in 2022, they need to start planning their holiday shipping schedules earlier than ever.  This includes prediction and revision of sales forecasts using the most current data, and creation of more detailed trend analysis of target customers.  Building inventories as early as possible will ensure fulfillment remains consistent throughout heightened seasonal demand, while tracking of inventory across all selling platforms, not just the most popular, can provide insights into market behavior and consumer demand.  

Constant monitoring of supply chain operations data will ensure products are available when needed, avoiding the need to notify customers of broken delivery promises. Fortunately, most major Carriers provide data and updates that allows customers to check which days they deliver and help plan shipments in every season. Examples can be viewed at:

FedEx:
https://www.fedex.com/en-us/holiday-schedule.html

UPS:
https://www.ups.com/assets/resources/webcontent/en_US/UPS_Days_of_Operation_Schedule-2022.pdf

Increased consumer demand, existing backlogs, and sustained demand for imports will undoubtedly challenge shippers throughout the 2022 peak shipping periods. As a corollary, supply chain issues will hinder Carriers seeking to improve or expand their fleets and will require both shippers and Carriers to proactively plan, apply data-based decision making, and manage change effectively.

Both regional and international shippers will likely be faced with unprecedented logistical challenges for the 2022 holiday season, and those most adept at managing change, adaptability, forecasting, and optimizing data application will be able to maximize service and minimize cost for their customers, regardless of Carrier choice.

Sources

2022 FedEx holiday service schedule

https://www.fedex.com/content/dam/fedex/us-united-states/services/FedEx-Holiday-Schedule1.pdf

FedEx International Holiday Schedule

https://www.fedex.com/en-us/holiday-schedule.html

2022 UPS Holiday Operations Schedule

https://www.ups.com/assets/resources/webcontent/en_US/UPS_Days_of_Operation_Schedule-2022.pdf

Supply Chain Forecasting: How to Plan for Expected and Unexpected Disruptions.

May, 2021.  In Twill, by Maersk, available at:

https://www.twill.net/es/centro-de-conocimientos/conocimientos-pr%C3%A1cticos-en-log%C3%ADstica/supply-chain-forecasting/