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The peak season for logistics companies is near and this year we’re noticing new logistics insights and supply chain trends. While consumption of products continues to increase, the need for reliable logistics and transportation is more present than ever within the supply chain. However, there are several obstacles that present themselves this season that are hindering many logistics companies’ ability to deliver.
Full Tilt Logistics has been closely following these supply chain trends and logistics insights to fully prepare for the work ahead. Take a look below to learn more about our findings.
The supply chain trends of the 2021 peak season are somewhat different than what was expected originally. While it is true that eCommerce and in-store shopping are projected to continue increasing throughout the holiday shopping season as is true of previous trends, the peak season itself is likely going to shift. In past years, the peak season typically sees its height around Black Friday. However, in 2021, roughly 25% of consumers claim that they plan to have their holiday shopping done before Black Friday, shifting the peak of the season to be earlier than anticipated.
Another supply chain trend we’re noticing is the growing backlog of container ships being held offshore. In 2020, the U.S. ports held their worst historical numbers of backlogged ships and though many people believed this would improve, the backlog has only continued to accrue more vessels. More than 100 ships were backlogged in October off the ports of Southern California, waiting to be unloaded. To fully clear this up, there would need to be a hold on all incoming vessels for about 2 weeks — a feat likely to never occur.
Challenges in logistics faced during peak season vary, but the most prominent we’ve seen thus far include the strict California regulations and taxes on logistics distributions, historically high fuel and insurance costs, inclement weather impeding the ability to safely travel, and finally, the nationwide labor shortage.
Doing business in California as part of the supply chain is not an easy task. California taxes and regulations significantly limit transportation opportunities in and out of the state. Take, for example, California’s state fuel tax rate which sits at 62.5 cents per gallon while the national average is at just 24.4 cents per gallon.
Fuel costs have risen significantly in the past year for both gas and diesel. Diesel fuel itself is up 57% from 2020. With the ever-changing fuel efficiency standards occurring in the nation, we’re bound to see costs continue to rise. Similarly, insurance costs are getting out of hand as well. With the cost of insurance going up, trucking companies are held responsible for more liability than ever before which drives up costs.
During the second quarter of 2021, more than 25% of open job positions were in the logistics industry. The biggest issue with this is that logistics require nearly 3x the labor force than traditional warehouses. With the demand for transportation being higher than the labor capacity allows, it’s evident that a large number of drivers are still needed and this number is likely to continue growing with the supply chain trends.
As it stands right now, roughly 110,000 drivers will need to be hired each year to keep up with the demand. Unfortunately, driver retention and recruitment continue to pose a constant threat to logistics businesses.
To operate a successful logistics company, your team must show exemplary problem-solving skills and strategic competency. As a knowledgeable logistics company with experience with almost every type of shipment there is and that includes winter freight shipping, we continue to lean into the situation and grow the company regardless of the challenges. With tested processes, robust technology, and talented professionals, we’re confident in our ability to navigate this peak season and deliver top-notch service.
Connect with us today at fulltiltlogistics.com and see first-hand how quality logistics management operates.
