By Tim Robertson, CEO DHL Global Forwarding Americas
The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
The logistics industry has undergone significant changes over the years, responding to numerous evolutions in consumer demand.
For decades, the logistics industry had a seasonality to it, with the period from the late summer to late fall known as the busiest time for suppliers. Today we are seeing a new trend, one of multiple peaks spaced more evenly throughout the year. We are moving from a landscape dominated by a single mountain to one with an expansive mountain range.
This is a change from what has historically been true. In the past, peak season came once a year, representing a significant increase in commercial and transportation activity around the winter holidays. During this period, logistics companies had to work hard to increase freight volumes, ensure timely deliveries and optimize operational efficiency. Advance planning, effective coordination and specific logistics strategies were all key to meeting this spike in demand while maintaining service quality.
But the world has been changing rapidly. New patterns were emerging in consumer behavior, globalization, e-commerce and supply chain dynamics even before the pandemic, which further accelerated these trends. Technological advances and socioeconomic shifts have driven new consumer expectations and preferences; people are shopping, and shipping, differently from how they did before 2020.
One of the results of this has been an apparent end to our traditional view of peak seasons, suggesting the need for a major overhaul in how logistics providers plan their years.
Changing consumer habits
The unprecedented growth of e-commerce is one of the pandemic’s most obvious long-term impacts for the logistics industry. With limited options for in-store shopping and businesses of all sizes scrambling to offer consumer-friendly ways to shop online, it was no surprise that e-commerce spiked during the pandemic.
Even with in-store options available once again, IMF data shows that the online share of total spending is still above what it would have been without the crisis overall, with some countries showing much larger proportional increases than others.
With this greater emphasis on e-commerce, we may see new peaks in demand arising from various factors, including major trade events, widespread sales or special promotions that drive consumer demand. For example, the Institute for Supply Management estimates that Amazon’s July 11-12 Prime Day event drew about 150 million shoppers, creating around 100,000 temporary jobs in the United States months before the year’s traditional peak season.
Just like all other industries, logistics has felt the effects of these changes. Now, the challenge lies in successfully adapting to them.
Adapting to a new landscape
If we look at these trends together, it is easy to see how the idea of a single annual peak season could become irrelevant. Increased incentives for consumers to make online purchases throughout the year will naturally lead to numerous, and perhaps less predictable, peaks at new times.
To adapt to these new annual patterns, logistics companies will need to focus on what they can control and find ways to help customers comfortably navigate an uncertain and volatile market. This will make flexibility critical. Solutions that allow businesses to quickly change their shipping plans will help companies respond to new and changing needs. And whatever services providers offer, the ability to support customers during this challenging time will certainly be key to providers’ and customers’ success.
Technology has provided many tools to help us in this. The Internet of Things, AI and data analytics can all enable greater efficiency in logistics management, helping companies adapt to new peaks in demand.
DHL recently upgraded its myDHLi tool to not only support responsive tracking, quoting and booking, but also use AI to predict shipment times more accurately. And this is just one of the ways technology can help logistics providers support their customers in this new and evolving world.
Even now, we should expect to see the traditional year-end peak. But with general trends in consumption patterns, e-commerce and globalization pointing to spikes in demand for logistics services throughout the year, we can be sure that the world will need efficient supply chains more than ever. Now, it is the logistics industry’s responsibility to use the tools around us and rise to the challenge so we can keep things moving for us all.