The continued surge of online ordering is having a ripple effect across the logistics sector, resulting in shipping delays and shipping surcharges that, ultimately, might result in higher prices charged to consumers.
The Associated Press reported that carriers, and the retailers who rely on them, are facing a holiday shopping season that could “tax” networks and lead to delays.
Those delays would come even as carriers such as FedEx and UPS are boosting hiring in an effort to satisfy increased demand.
There’s evidence that marquee names in retail are shifting some of their brick-and-mortar operations to deal with eCommerce surges. In one example, Walmart said earlier this month that it was putting eCommerce-focused “pop-up” fulfillment centers in 42 of its regional distribution centers to ship almost a third of its holiday sales volume.
In the meantime, getting goods where they need to go as they cross trade lanes and wind up in ports – which is a step toward getting them to distribution centers – and then, ultimately, to consumers’ hands may prove to be both challenging and expensive.
In a raft of thus far seemingly scattered pressure points, at least some shipping lines are seeing pressure. The Loadstar reported that shipping lines tied to Asian tradelines are seeing port congestion surcharges on Chinese exports as they make their way to the Mediterranean and North Africa. Shortages of containers on intra-Asian lines are pushing up spot rates.
Congestion at the Ports
And here in the States, as noted by the Los Angeles Times, a number of cargo vessels have been anchored outside the Port of Los Angeles, where delivery delays are mounting and empty containers have been in short supply. There have been labor shortages and other inefficiencies highlighted by the ongoing pandemic, as routes stretching across Europe and South America have grappled with high demand from consumers, but limited ways to satisfy that demand. For example, freight rates for over-ocean conduits to the U.K. have more than doubled this year, reported the Times.
The demand has been, and will be, a tailwind for shippers’ results. As reported in this space, Maersk is predicting a better 2021 as retail sales continue to surge.
As for the sticker shock that might wind up hitting consumers’ wallets: UPS and other carriers have instituted rate increases, FreightWaves has detailed. Transportation Impact has estimated that high single-digit percentage increases will come in the next year for at least some ground residential options.
We contend that higher shipping costs may translate into overall higher prices for all manner of offerings as we move through the holiday season and beyond. But there’s a bit of friction in place for merchants, as the most recent edition of the PYMNTS Global Digital Shopping Index found that 56 percent of shoppers consider free shipping to be an important offering, but only 32 percent of merchants share that view, indicating a disconnect between what’s on offer … and what likely should be.
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