Christmas is approaching, retailers and manufacturers are facing peak season challenges when it comes to international shipping. As the holiday season is peak shopping time, manufacturers have to ensure produced goods have been delivered to retailers before this period.
Nevertheless, the influx of orders leads to volume overload as many items have to reach destinations around the same time. Eventually, there will be tight capacity, leading to shipment delays and high freight rates. The following will explain the definition of peak season and how to minimize its negative impact to your business.
What exactly is Peak Shipping Season?
Peak shipping season is the time of year (from October to December) when shipment volume tremendously increases. Many orders have to be fulfilled due to the busy shopping season such as New Year, Christmas, Black Friday, etc (as shown in Figure 1). Peak shipping season varies in different countries, depending on the local culture, consumer activities and celebratory events.
During peak shipping season, the consumer demand grows and retailer supply drops. Retailers and manufacturers have to break through these obstacles to secure their supply chain.
Why are there Peak Shipping Season Challenges?
Customer Demand and Expectations
There is an increase of consumer demand during peak season. Consumers expect they can purchase a variety of products from retailers around holidays. Nowadays consumers expect to have products right away and a result, manufacturers and retailers face a huge burden to fulfil customer needs.
Increased Consumer Activity
During the peak season, people purchase more goods than usual as sales are predicted to rise 11-15%. It is estimated that there is an annual growth rate of 4.4% in holiday sales in the coming years. Consumers are more likely to buy products for celebrations, or gifts to relatives, friends, and family during holidays instead of at normal times.
In turn, manufacturers have to produce goods on a massive scale and send them to retailers before holidays. However, due to the increase of shipment orders in the same period, overloading occurs. Eventually, shipments get stuck at the airport or are being returned to the shipper’s address.
Throughout the Covid-19 pandemic, many countries have implemented various lockdown restrictions which increased the delivery burden and causes shipment delays. Furthermore, peak season adds fuel to the fire. Despite the reduced delivery capacity due to fewer planes for cargo, there is high demand for international shipping during the holiday season.
Best Practices in Peak Shipping Season & Order Fulfilment
Retailers have to prepare for the peak shipping season a few months before October to manage the influx of demands. By implementing a demand and inventory forecasting system, retailers can analyse historical data, determine goods seasonality, and identify fast-selling products.
As a result, retailers can make early preparations and arrange the production with manufacturers in advance to prevent the holiday rush. More importantly, this helps to optimize stock levels at all times.
Increased Communication between Manufacturers and Retailers
Manufacturers and retailers should communicate and work together to produce goods before deadlines and to avoid inventory shortage during the holiday season.
Not only forecasting demand, retailers should also keep a close eye on all well-stocked items and out-of-stock items. This information can be shared with manufacturers. Based on this transparency manufacturers can plan the production lead times, produce goods upon request, and minimize the chances of in-demand items running out of stock.
Partner with a Third-Party Logistics Provider (3PL)
Partnering with a third-party logistics provider (3PL) reduces the burden of the chaotic holiday season. Logistics experts can manage and secure the entire supply chain process from picking up goods to arranging flights, filling in customs documentation and transport to the final destination. Through their support and well-defined 3PL functions, retailers can maintain their supply chain and easily make the most out of the last quarter.
To conclude, the 2021 holiday season comes with new opportunities and challenges. However, through adequate preparation, transparency, and collaboration, retailers can make the most of each year’s peak shipping season.
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