As this year’s holiday shopping season ramps up, shipping industry experts say supply chain issues that plagued the season last year have alleviated, but there are other dynamics at play.
“The supply chain is in a lot better shape than it was a year ago,” said Steve Denton, CEO of UPS warehouse and fulfillment subsidiary Ware2Go. “But we’re not out of the woods yet.”
The peak holiday season will still be tough for the logistics industry, he said. And there’s also the continued threat of a rail labor strike. President Joe Biden called on Congress to intervene and block a railroad strike, and House Speaker Nancy Pelosi said lawmakers would take up such legislation this week.
“A railway strike would cause unnecessary impacts to the U.S. economy and consumers,” said a spokesman for Sandy Springs-based UPS in a statement. “UPS will flex our integrated smart logistics network to serve our customers.”
Already this year, retailers have been dealing with the after-effects of past supply chain shortages, which drove them to stock up to avoid coming up empty on products. But as a result, many found themselves with loads of excess inventory. That made it difficult to find warehouses for goods shipped in, with many storage facilities near coastal ports reaching capacity.
The excess inventory prompted many retailers, including e-commerce giant Amazon and Target, to run huge pre-holiday sales with deep discounts to clear out old inventory — such as Amazon’s Prime Day sale in October.
But UPS expects shoppers won’t finish all their shopping unusually early, as they did last year amid severe supply chain woes. Instead, the company planned for a more typical big rush of shopping, online purchases and shipments around Thanksgiving and into December as the holidays near.
“Despite inflationary pressures and the rising cost of borrowing, there was not a material decline this year in early holiday shopping,” said Taylor Schreiner, senior director at Adobe Digital Insights, in a written statement. Online shopping has remained strong “in spite of a challenging macroeconomic environment.”
About 76% of consumers said they shopped over the Thanksgiving holiday weekend, up from 70% in 2021, according to a poll released Tuesday by the National Retail Federation and Proper Insights & Analytics. More than 122.7 million people visited stores over the weekend, up 17% from 2021, according to the survey report. Black Friday and Cyber Monday were also popular days for online shopping. Adobe Analytics expects the best deals to still happen around Cyber Week.
“Last year was an unusual peak because it peaked early – everywhere there was concern about inventory levels in stores,” said UPS Chief Financial Officer Brian Newman. The surge of COVID-19 cases due to the omicron variant caused even more disruption.
“People shopped early because they were afraid the wouldn’t get their items after,” Newman said. But this season, there’s expected to be a return to normal patterns, he said.
Retailers have learned from supply chain disruptions, according to the National Retail Federation. Many brought products in earlier than normal this year to make sure they would have products available, and shifted to East Coast or Gulf Coast ports to avoid potential disruptions on the West Coast due to labor contract negotiations.
Consumers have also learned from past shipping delays and supply chain woes, and use of curbside pickup is expected to increase in December by consumers who want to avoid shipping delays, according to Adobe Analytics.
But unexpected events can throw a wrench into the nation’s supply chain. Tropical Storm Nicole, for example, disrupted shipments in Florida and prompted the temporary closure of the Jacksonville port.
And economic uncertainty, layoffs by some large employers and fears of a recession could affect how much shoppers spend. Two in three people are more concerned about the economy this year, and 59% are worried about supply chain disruptions that could make holiday shopping harder or more expensive, according to an IBM survey.
Consumers are concerned about inflation and 44% plan to look for sales or coupons, according to a McKinsey survey. An SAP survey found 45% of consumers say price will be the top factor in their buying decisions, and 39% say inflation is causing them to shop more online.
Shipping deadlines
UPS last days to ship for Dec. 24 delivery for U.S. domestic shipments:
3 Day Select: Dec. 20
2nd Day Air services: Dec. 21
Next Day Air services: Dec. 22
FedEx last days to ship for U.S. domestic holiday packages:
Same Day: Dec. 23
2Day: Dec. 21
Express Saver: Dec. 20
Postal Service last days to ship for delivery before Dec. 25 within lower 48 states:
USPS retail ground: Dec. 17
First-Class Mail: Dec. 17
Priority Mail: Dec. 19
Priority Mail Express: Dec. 23
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