Experts Predict Busy But Similar Peak Shipping Season
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As holiday shoppers gear up for an earlier start to the season, transportation experts predict a bustling peak period that mirrors last year’s activity.
“We anticipate year-over-year volume … to be up one or two points overall,” said Andrew Williams, regional CEO for the Americas at DHL Express, on a media call. “There is good growth in the SME sector, some of our enterprise customers are still finding their footing and getting things back. But what we do is put ourselves in a position to be prepared for more if consumer behavior shifts quickly.”
DHL Express invested heavily in its assets and network throughout the coronavirus pandemic. That included developing additional automation and digitalization capabilities. Williams believes this has positioned the company well for the somewhat volatile, but resilient, market conditions.
The State of Consumer Holiday Shopping 2024 report, released by Project44, found 68% of consumers plan to do their holiday shopping before the traditional peak season. It also noted that 40% of consumers cited higher prices of goods compared to last year as a top concern. However, 65% of consumers plan to prioritize brands that demonstrate a commitment to sustainability.
Krieg
“We’re seeing consumers shift their buying and sustainability habits when it comes to their holiday shopping,” said Carson Krieg, director of global alliances at Project44. “Shopping for gifts before peak season can help shoppers save money, lower carbon emissions and limit delayed shipping headaches. In 2024, retailers prioritizing reliable shipping and reducing carbon emissions will have a competitive advantage over brands that don’t.”
While consumers are adjusting their shopping habits, the transportation industry faces its own challenges. TD Cowen noted in a report that excess capacity continues to limit the upside to freight rates, despite strong import volumes from ports and carriers expecting a traditional peak season. The financial services company has seen more pop-up opportunities for carriers as well.
Seidl
“Overcapacity continues to limit upside to rates even though a slightly more traditional peak season has taken shape,” Cowen analyst Jason Seidl wrote in the report. “While carriers are pointing to more pop-up business compared to last year, we don’t expect this to drive material bottom line upside through peak (but note it should help somewhat).”
Williams noted that peak season is typically defined as the period between Cyber Monday and Christmas. DHL Express typically handles about 40% more volume during that time. Its busiest day falls on Dec. 23.
Williams
“It’s our responsibility to be prepared,” Williams said. “So, we do a fairly serious ramp-up of staffing. In the U.S., it’s going to be in the range of about 600 team members. Our sales teams get very proactive with our customers to really understand forecasting and demand very well and, where necessary, potentially agree to caps on volumes, especially for those that might have an abnormally large peak season demand.”
Kraig Foreman, president of e-commerce at DHL Supply Chain, said his company is approaching this year’s planning with a strategy similar to last year’s. It does not foresee any significant increases in volume. Instead, it’s focusing on maintaining a solid and sustainable business plan, building on the strong performance seen across the industry in the previous year.
Foreman added that there could be an increase in the total dollar amount this peak season. But that will have more to do with inflationary pressures as opposed to an increase in volume. He notes that the dynamics within that volume may change even if the total amount doesn’t.
Foreman
“Last year we really experienced an interesting dynamic where the trend has been to start Black Friday sales early,” Foreman said. “We see those sales starting to hit websites two weeks, three weeks even, prior to Black Friday, of which consumers traditionally were really adopting that in a strong way and taking advantage of that to get the goods that they wanted. What we saw last year was the consumers were really cost-conscious.”
Foreman anticipates similar consumer behavior this year, given ongoing challenges with disposable income. While he expects consumers to make holiday purchases, questions remain about the timing and volume of these transactions. Consumers may take advantage of early sales or hold out for better deals closer to the traditional peak season.
To prepare for the holiday rush, DHL Supply Chain is significantly boosting its capabilities. The company plans to hire more than 5,000 additional staff members for the peak season and is expanding its automation efforts by adding 500 robots to its network, bringing the total to nearly 2,500. Foreman noted that retailers have been proactive in their inventory management this year.
“We have seen the trend this year where inventory has been brought in earlier,” Foreman said. “They are in a very good position to go after those sales and deliver those sales strategies.”
DHL ranks No. 14 on the Transport Topics Top 100 list of the largest logistics companies in North America. It ranks No. 4 on the TT Top 50 list of the largest global freight carriers.
