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As autumn leaves begin to fall, retailers brace themselves for the annual onslaught of peak season. However, 2024 is shaping up to be a particularly challenging year, with a confluence of factors creating a perfect storm of potential disruptions. From capacity constraints and pricing hikes to looming labor disputes and unpredictable weather events, retailers face a complex and demanding landscape.
One of the most pressing challenges facing retailers this peak season is the ongoing strain on the global supply chain. The lingering effects of the pandemic, coupled with geopolitical tensions and labor shortages, have created a bottleneck in the flow of goods. As a result, carriers are grappling with limited capacity, forcing them to prioritize higher-paying shipments and implement substantial price increases.
According to industry experts, ocean freight rates are expected to surge by as much as 30% during peak season, while airfreight rates could climb even higher. These increases will inevitably trickle down to retailers, impacting their bottom line and potentially leading to higher prices for consumers.
In addition to higher base rates, retailers can expect to face a slew of additional fees during peak season. These surcharges, which are typically levied by carriers to offset increased costs of handling peak season volumes, can range from fuel surcharges and peak season surcharges to congestion surcharges and equipment imbalance surcharges. These fees can quickly add up, further impacting retailers’ profitability and potentially squeezing their margins. It’s essential for retailers to factor these additional costs into their pricing and inventory planning to avoid any unpleasant surprises.
The pandemic has also significantly altered consumer behavior, and these changes are expected to persist during peak season 2024. E-commerce continues to boom, and consumers are increasingly demanding faster, more convenient delivery options. Retailers will need to invest in robust fulfillment capabilities and omnichannel strategies to meet these expectations.
Rising inflation and economic uncertainty are impacting consumer sentiment as well. Shoppers are becoming more price-sensitive and are likely to be more discerning in their purchases. Retailers will need to offer competitive pricing and promotions to attract and retain customers. This also leads to expectations for a shorter peak season as many consumers are delaying holiday shopping until closer to the actual events, expecting deep discounts and promotions.
In addition, peak season 2024 is fraught with potential disruptions from weather events and labor disputes. Hurricane season is in full swing, and storms like Helene could wreak havoc on supply chains, delaying shipments and causing shortages.
Meanwhile, the strike by the International Longshoremen’s Association against port operators on the East and Gulf coasts could have a devastating impact on retailers, especially those reliant on those ports for their imports.
The upcoming peak season presents a formidable set of challenges for retailers. From capacity constraints and pricing increases to unpredictable weather events and labor disputes, there are many potential obstacles to success. By proactively addressing these challenges, retailers can position themselves for a successful peak season. This involves carefully managing inventory levels, diversifying sourcing and fulfillment strategies, and investing in technology and automation to improve efficiency.
About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.