Amid Peak Season Surprises, Worries Persist

Amid Peak Season Surprises, Worries Persist

11-7-22_ia_update

After years of pandemic stress, shippers look forward to a ‘normal’ holiday shipping season. But as the surprises—from hurricanes to droughts, from low volumes to high rates—keep coming, shippers are finding that peak season 2022 is anything but ‘normal.’ Here are the nine headlines you need to know in an industry that’s always moving.

Customers Return to Pre-Pandemic Holiday Shopping Habits

 As customers slowly return to in-person pre-pandemic shopping habits, mega-carriers like UPS expect shipping volumes to surge later in the holiday season than in previous years. Retail Dive, reporting on an October earnings call from UPS, wrote, “The company also anticipates its volumes will grow at a slightly lower rate from Q3 to Q4 compared to last year, as top customer Amazon delivers more of its own orders.” While increased independence from Amazon may seem like less-than-stellar news, UPS believes the transition could improve capacity access for other shippers within their network. 

Despite Declining Volumes, UPS and FedEx Increase Rates

To increase revenues despite declining package volumes, shipping giants UPS and FedEx have announced plans to raise rates by an average of 6.9%. Concealed behind the average, however, is a potential for even higher costs for shipping internationally or using special shipping services the mega-carriers offer. Supply Chain Dive reports, “Customers also need to consider larger increases for longer-distance shipments, additional handling fees, and higher minimum package charges to reduce the sting of the hikes on their businesses.” It remains unclear whether the rate hikes instituted by UPS and FedEx will succeed in increasing revenue over the long term or drive already rate-weary shippers toward more cost-effective competitors.

Nervous Shippers Ask Administration to Resolve Rail Disputes

After a freight rail union backed out of the President Biden-backed agreement between unions and freight rail companies, shippers are calling on the president’s administration to broker a second agreement. 

More than 300 state and national trade associations signed a letter asking the president to ensure parties ratify such an agreement. Without ratification from union members, any agreement brokered between union officials and freight rail companies is void, raising fears of a freight rail strike that “could cost $2 billion in lost economic output each day,” FreightWaves reported.

Rate Plateau is Good News for Ocean Shippers — Or is it?

Months of steep declines have left ocean shippers nervous about volatile rates. But in a positive turn for inflation-weary ocean shippers, rates have hit a market bottom, leaving the ocean shipping market with nowhere to go but up. However, as Supply Chain Dive warns, the rate plateau “could be just a temporary plateau before the next leg down.” For many ocean shippers, already pushed to the brink by unpredictable fuel costs, volatile rates, and declining shipping volumes, a further collapse in ocean shipping rates could spell doom.

Potential for Conflict Between U.S. and China Worries Shippers

As the global logistics industry continues to reel from the ongoing war in Ukraine, shippers are beginning to turn their attention to another global conflict with potentially disastrous effects for trans-pacific trade routes. The brewing tensions between the U.S. and China over the fate of Taiwan are a source of immense pressure on the geopolitical and economic fronts.

FreightWaves reports: “During the pandemic, ocean container spot rates rocketed upward from approximately $1,000 per 40-foot container to nearly $20,000 last fall before plunging again to $2,720 last week. Meanwhile, U.S. officials staged visits to Taiwan and took action to further separate the Chinese and American semiconductor sectors. This potent combination of economic, political, and military issues will make trans-Pacific business complicated for years to come.

While China has yet to take military action against Taiwanese forces, the potential for conflict in one of the world’s most important trade routes remains at an all-time high.

Record Low Water Levels Cause Shipping Woes Along Mississippi

Ongoing droughts along the Mississippi River have made headlines in recent weeks, drawing national attention to record-low water levels in the largest waterway in the United States.

 “Current water levels are the lowest we have seen in recent years, and some locations have reached or surpassed historic low-water levels set as far back as 1988,” a Coast Guard spokesman told FreightWaves in late October. He added that the current conditions create significant navigation hazards to the Marine Transportation System.

Although recent heavy rains near the upper reaches of the Mississippi promise some relief, barge congestion remains a significant issue along the river’s central portions.

Walmart Announces Opening of Florida Health Care Centers

Walmart Health, the health division of U.S. retail giant Walmart, recently announced plans to expand healthcare operations. This expansion, which consists of 16 new health centers throughout Florida, will offer Walmart Health patients improved access to primary care, labor work, dental, and other healthcare opportunities.

With these 16 new Walmart Health centers across the state, even more Floridians will have easy access to a wide range of high-quality health services at convenient hours and easy-to-understand prices,” according to a press release quoting Dr. David Carmouche, SeniorVice President of Omnichannel Care Offerings at Walmart. Walmart aims to begin operations of the new healthcare centers by fall 2023.

Survey Reveals Top Issues for Food Supply Chain Professionals

Recently, supply chain visibility provider FourKites partnered with nonprofit Food Shippers of America (FSA) to survey food supply chain professionals on the significant issues faced by the food shipping business

Supermarket News highlighted the survey results, which showed food supply chain professionals consider labor and talent management (49%), transportation capacity issues (39%), and supply and demand planning disruptions (35%) to be the most significant challenges.

Even as the supply chain woes of the pandemic era continue to wane, the struggle to find and maintain an adequate workforce remains top of mind for food supply chain professionals.

Points Experts Recommend Best Credit Cards for Shippers

According to the experts at UpgradedPoints, the top three best credit cards for frequent shippers are the American Express Business Gold Card, the Ink Business Preferred Credit Card, and the American Express Blue Business Cash Card. According to UpgradedPoints, “When deciding which of these card options is best for you, it will be helpful to consider both your amount of shipping expenses and your amount spent on other relevant bonus categories.”

Don’t Let Peak Season Surprises Catch You Off Guard

With a few months left in peak season 2022, shippers are doing everything they can to optimize operations. Intelligent Audit, an industry-leading global logistics and freight audit provider, can help shippers access:

  • Game-changing proprietary machine learning assets.
  • Robust anomaly detection.
  • Integrated freight auditing processes.

All that and more will help shippers prepare for whatever surprises peak season 2022 offers. Start a conversation with Intelligent Audit today to put more than 20 years of assisting shippers to be smarter and more efficient to work for your business.

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