Top Shipping Industry Trends Shaping 2021
After a rocky year, many businesses are probably looking forward to 2021 – new year, new beginnings. Hopefully, the holidays offer a late-year lift as well as a well-deserved respite. But, don’t close the book on 2020 just yet. There’s a lot to learn from a historically-challenging year that can help small and mid-size businesses (SMBs) grow stronger. For example, this year shows how important shipping is to the customer experience and overall health of a business. To help you accelerate into 2021, we broke down the key factors shaping the transportation industry in 2021.
Carrier capacity crunch
Carriers in many ways are the keystone to the shipping industry now and into next year – their availability and resilience will create a domino-effect shaping shipper logistics and customer satisfaction for the foreseeable future. The initial impact of COVID-19 hurt many businesses, but not carriers. They weathered the storm, even when volumes dipped 20-30% as businesses closed down and consumers tightened their purse strings.
Now that businesses and economies are reopening, shipping volume is way up even though the economy isn’t quite at full strength. Why? Because consumer habits changed. Instead of going to the movies, on vacations or to restaurants, they’re buying swing sets and grills and renovating their homes. All these new habits lead to greater freight demand. Sure, a recovery was expected at some point. But nobody predicted freight capacity to reach record highs across every major carrier. As a result of this K-shaped recovery,1 shipment tender rejection rates rose to 22-25%. That’s right – shippers need to re-book transportation for one out of every four shipments. Now that carriers don’t need to compete for bookings, shipping rates swell and surcharges are aggressive.
Because this trend shows no signs of slowing anytime soon, it will define the 2020 holiday and the small business shipping solutions needed to manage overstuffed trucks. As a result, the full truckload (FTL) market is jammed in a way that has forced businesses to get crafty. Many shippers have broken down their FTL freight into less than truckload (LTL) shipments in hopes of moving some orders. Long story short, FTL and LTL are full up. And that’s not factoring in the ensuing consumer rush between Thanksgiving and Christmas or the restocking freight already on its way to U.S. ports from Asia and Europe.
But that’s not the only carrier trend to watch for. COVID-19 puts the well-established hub-and-spoke distribution network in a fragile state. If there is an outbreak, entire terminals can be put on pause during decontamination. Drivers can be taken off the road for quarantining and safety protocols. With orders already packed tighter than sardines, losing a single driver creates a multitude of issues.
High rates, impossible capacity and a pandemic that won’t go away – what can shippers do? It’s difficult to forecast deep into 2021 – there are too many variables. But, it’s critical to build a plan for the known and unknown variables instead of reacting on the fly.
Customer shipping expectations
Consumers are still feeling out the new norms. E-commerce spending was up 44% in Q2 2020 compared to the same period in 2019, and 62% of shoppers say they shop online more than before the coronavirus.2 People still want convenience, speed and cost savings. But how they value these things has shifted. Convenience and speed used to be online shopping and two-day delivery. Now, it might be an in-store or curbside pickup. It might come down to who has the inventory when they’re ready to buy. This is a departure from the bottom-dollar consumerism we’ve seen from Amazon, Walmart and the like.
There’s a fair amount of experimenting – hunting and pecking for what works. For example, 73% of consumers changed stores, brands or the way they shop.3 In many cases, this means switching to online or omnichannel shopping experiences. But, there’s a trend that’s harder to define with a statistic. Living during the pandemic has created a little more give and take between shoppers and shippers. Even empathy. Generally, there is a wider acceptance of delays. Consumers may shop around more, but once an order goes through, delays are more tolerated. It’s a somewhat trained condition – as much a response to the new norm as wearing sweatpants at the home office.
But, where consumers may give in delivery, they want more in shipper transparency. They’re relying on home delivery more than ever, a trend that won’t fade even when COVID-19 is in the rearview mirror. With that dependence comes a responsibility for shippers to provide information. Different shoppers require different levels of information. This includes information:
- Depth – The level of information varies depending on your industry and customer preferences. Some need access to real-time data and itemized traceability. Others just want a pulse check.
- Convenience – Do you have push notifications? Is it easy to log into a tracking portal? Is it mobile friendly?
Transparency was emerging as an important component of the online shopping experience before 2020. Now, it’s critical.
Be ready for 2021 shipping
With equal measures of today’s complexity and tomorrow’s uncertainty, what can shippers do to forge ahead? They should focus on building resiliency and agility in their transportation operations. This includes:
- Building better shipping schedules – This might be the year to take shipping logistics to the next level. Can you factor carrier delays into bookings? What about demand spikes and seasonality? Maybe you can submit tenders earlier in your processes or prioritize shipments more strategically. Look for efficiencies everywhere.
- Broadening carrier partnerships – Working with a wider pool of carriers brings various benefits. You gain more flexibility for bookings. You may land better rates. And you can build a best-of-breed network allowing you to match your shipments to a carrier’s strengths.
- Beefing up communication – Offering information to customers is critical. But, you will also need more persistent touchpoints with carriers. We get two or three notifications on full capacity or rate changes from carriers every day. Managing the updates will take a concerted effort and plan.
- Bolstering with technology – A transportation management system (TMS) can help with carrier selection, rates, claim management, tracking and more. Some look to their data for ideas if they have the resources to extract actionable information from their logs.
Whether it was adding an e-commerce website, curbside pickup or other solutions, most businesses have had to change in some way to get by in 2020. That spirit of innovation and pivoting will be critical in 2021. Know your challenges; establish business requirements and build solutions incorporating technology and partners to navigate to new opportunities.
The role of third-party logistics partner
Most SMBs would rather focus on making great products than eating, sleeping and breathing their transportation logistics. Unfortunately, 2020 had other plans – creating transportation issues that required a lot of resources. Whereas many SMB shippers would work with one or two carriers in the past, that likely won’t work well. Bringing in a 3PL helps scale processes and resources to build more flexibility into transportation operations. A third-party logistics partner (3PL) adds key resources and fills knowledge gaps between shippers and carriers. A 3PL should know how to connect you to carriers that fit your shipping needs, be it availability, costs or other requirements.
In 2020, getting materials from A to B didn’t just keep us entertained (or sane) during quarantines – it saved lives. Shippers finding creative ways to move inventory while staying on budget will be a key factor in economic recovery and growth next year. As a 3PL focused on SMB shipping, we’re a resource that can connect you to carriers, customers and shipping solutions to ensure shipping in uncertain times. Let’s talk about how your business can find new opportunities for growth through nimble, robust logistics.
1 K-Shaped Recovery, Investopedia
James Chen, September 2020
2 50 Statistcs Showing the Lasting Impact of COVID-19 on Consumers, Forbes
Blake Morgan, October 2020
3 Survey: US Consumer Sentiment During the Coronavirus Crisis, McKinsey & Company, October 2020