During what is typically peak season in customer demand, what we're seeing instead is reduced shipping demand and declining freight rates. The year 2022 saw the challenge of retailers having overstocked inventory created by inventory gluts from COVID demand changing. Of course, we’re also experiencing a tight economy.
Retailers responded to their high inventory with promotions, such as extensive discounts and extended Black Friday sales, to encourage consumer demand. These promotions created a lot of buying earlier in the year, spreading out consumer demand a bit.
These factors contribute to a less noticeable peak season in 2022.
We’re seeing signs of how lower freight volumes are affecting peak season parcel shipping. Lower parcel volumes are already leading 3PLs to cut back on seasonal hiring. For instance, Walmart and FedEx hired fewer seasonal workers than a year ago.
However, low hiring numbers could contribute to chaos at warehouses, especially when you couple this problem with previous shortages of workers at logistics hubs. For an idea of the state of warehouses, an Instawork survey found:
Furthermore, the State of Warehouse Labor: Staying Flexible in 2022 report showed 58% of businesses saw an increase in fulfillment volume over the past 12 months while another 19% saw the same levels.
Carriers have been experiencing increased capacity through lower freight volumes to fill that capacity.—which was expected for 2022’s peak season. Any time the Logistics Managers’ Index (LMI) is over 50, it indicates increased capacity. In November 2022, the LMI showed 71.4 as the capacity reading, slightly less than the highest point in October.
These falling freight volumes have led to lower rates and lower transportation costs. In November, the transportation prices subindex showed the lowest reading since the LMI was created.
Faced with falling rates due to plummeting volumes, shippers need to improve allocation and efficiency strategies throughout operations.
Shippers don't need to wait to respond when diffliculties happen. Instead, they can be proactive and carry out strategies to prepare for challenges like falling freight volumes. These three parcel shipping strategies can help.
This year, challenges of overstocked inventory and other factors changed the logistics landscape, which is impacting what is typically peak season. The industry is facing falling freight volumes, which affects parcel shipping.
Parcel shippers can respond by utilizing cloud-based, expert-driven, machine-learning-enabled parcel shipping strategies. Intelligent Audit offers relevant services that help parcel shippers adapt to unexpected situations like this.
These services include real-time parcel shipping visibility and industry-leading freight auditing services. Intelligent Audit brings over 20 years of expert experience to help shippers make complex logistics decisions.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
As the global logistics industry gears up for a peak season like no other, we've gathered the top supply chain stories making headlines across the industry.