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It’s hard to remember when the global supply chain was such a hot topic of conversation. Whether it’s on social media or network news, discussions about shelves becoming increasingly bare, slow, or delayed shipping, and higher prices are the norm. And with the holidays right around the corner, these challenges could be just the beginning. So, how can businesses prepare and adapt their shipping strategies around supply chain issues?

Before we look at some of the ways retailers can prepare for their holiday shipping, let’s explore some of the reasons we’re in this situation in the first place. 

Why is the global supply chain struggling?

One issue is an increase in spending. According to a recent survey, 48% of people between 18 and 34 say their spending has increased in 2021. In addition, 50% of people between 35 and 54 say their online expenditures, in particular, have increased this year. These surges make it hard for supply chains to keep up. 

Another issue is a workforce shortage.

COVID-19 has had an enormous impact on the workforce. Many Americans who may have stayed home during the pandemic to care for family have not returned to work. With more people at home or out of work, the labor pool has grown smaller. To make matters worse, in April of this year, four million people quit their jobs in the hopes of finding more rewarding work. This loss was felt strongly across retail, transportation, and utilities all of which directly impact daily supply chain functionality.

Container costs have spiked.

The Wall Street Journal reported that the price of shipping containers from Asia to the U.S. and Europe has risen sharply. In fact, the average cost to ship a 40-foot container has more than quadrupled from a year ago.

The looming impact on holiday shipping

Compounding matters, many companies have been slow to adapt to learnings from the last year. For example, the same ACG Global survey found that only 18% of companies have adopted technology platforms to solve their supply challenges since the beginning of the pandemic. 

With the supply chain stretched beyond its capacity, goods are running late which means many items will ship to retailers at the last minute. Where in a typical holiday shopping season, shelves are groaning under the weight of goods for last-minute shoppers to scoop up and take home, this year, the prospect of bare shelves is very real indeed.

Those same concerns impact online shopping as well. More and more consumers were already shopping online due to the pandemic. And now Deloitte is forecasting that e-commerce sales will grow by 11% to 15%, year over year, between November and January 2022. An already overstretched supply chain can’t possibly keep up with that demand. This means continued delays will be the rule rather than the exception. 

What can retailers do?

With continued disruptions a near certainty throughout the rest of the year, retailers need to focus on flexibility in their holiday shipping. In addition, they need contingency plans to help manage expectations in the event of delays. Given that capacity issues have forced many carriers to limit their volume, merchants need alternative carriers they can switch to when trouble hits. Here are some other things retailers should do right now: 

  • Place orders much earlier to ensure they have the right products in stock for the holiday season. Granted, that runs the risk of potentially misjudging both trends and demand but waiting to order will practically guarantee limited or nonexistent product availability.
  • Work to manage customer expectations. For example, consumers who’ve been accustomed to overnight delivery may now be waiting days, if not weeks, for their goods. That’s why up-front transparency is crucial. 
  • Start holiday sales and promotions even earlier this year, to get ahead of likely shipping and delivery delays in December.
  • Consider adding the opportunity to buy online and pick up in-store so that shoppers can skip shipping entirely.

The new norm?

Adding capacity to a supply chain takes time which means these shipping issues will likely be with us for a while. Still, with a bit of planning and preparation, retailers and shippers alike can work to minimize the impact on their business.

At Gorgo Group, we work with our clients to adapt to these and other changing business environments. If you’d like help preparing your business for what tomorrow holds, our experts can help.

Reach out today to see how we can help prepare your company for success in a challenging business landscape.