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Holiday sales could generate freight complications, say experts

Sept. 25, 2014

Current predictions for a mild uptick in holiday sales this year could become further complicated for freight carriers as a significant portion of those sales are expected to be conducted online via e-commerce.

Consulting firm Deloitte LLC’s retail and distribution practice expects total U.S. holiday sales to climb to between $981 billion and $986 billion, representing a 4% to 4.5% increase in November through January holiday sales, excluding motor vehicles and gasoline, versus the same period in 2013 – a moderate improvement over last year’s 2.8% holiday sales gain when compared to the 2012 season.

Yet Deloitte is also forecasting a 13.5% to 14% increase in “non-store” sales via online and mail order channels during the 2014 holiday season – with “digital interactions” by consumers vis smartphones, computers, tablets, and other devices expected to influence 50% or $345 billion of retail stores sales over the 2014 holiday season.

“While online sales continue to climb, digital customer interactions through both virtual and physical store channels present greater sales opportunities than online or mobile commerce alone,” noted Alison Paul, vice chairman of Deloitte LLP and the firm’s retail and distribution sector leader.

“Our research indicates that 84% of shoppers use digital tools before and during their trip to a store,” Paul added. “Additionally, those shoppers convert, or make a purchase, at a 40% higher rate than those who do not use such devices during their shopping journey.”

Yet that “digital shift” could also complicate freight transportation efforts to a high degree this holiday season, cautioned Robert Nathan, CEO of third party logistics firm Load Delivered.

“If you describe last year’s e-commerce impact on holiday freight as a ‘strong current’ you’d need to warn the surfers about, then this year it’s going to be a Tsunami; a tidal wave that’s going to create big challenges in the supply chain,” he told Fleet Owner – noting that this but one symptom of a boarding and growing shift in logistics patterns.

Nathan pointed to the infamous holiday delivery meltdown suffered by United Parcel Service last year as one example of how freight carriers can be overwhelmed by e-commerce volumes.

“I believe shippers and carriers alike need to hedge themselves better,” he stressed. “The supply chain is so complex now that transportation planning works best by ‘hyper-specialization’ in particular modes and markets. It’s like medicine: if you have a knee or a heart issue, do you go to general internist? No, you go to an orthopedist or a cardiac surgeon.”

In terms of freight, Nathan predicts the holiday surge will generate what he describes as an “unprecedented acceleration” in demand for time sensitive and perishable temperature-controlled shipments in comparison to previous years, as well as for reverse logistics services.

“Last year we worked on a number of [logistics] projects that just involved a massive amount of e-commerce returns – how to sort, re-pack and re-sequence such goods,” he said. “Shippers and carriers both need to prepare for reverse logistics; that surge in volume due to gift returns after the holiday season.”

Nathan added this has company started working in December 2013 to prepare for the 2014 holiday season, boosting its e-commerce and focused investments in technology and personnel by 75% since then.

“Using more focused data generated by technology is what will help us better navigate the freight demands generated by e-commerce of the holiday season,” he stressed.

Shippers need to work more in that area as well, argued Deloitte’s Paul, noting in particular that retailers should also focus on developing the “right functionality” rather than simply more functionality in terms of their digital outreach and connections to consumers this holiday season.

“Rather than offer their full e-commerce site on a mobile device, for example, retailers may be more effective by helping consumers compare prices, scan through local assortments, and navigate the store,” Paul said. “Retailers that better understand how consumers make purchasing decisions, then deliver tools that support that process in a way that is consistent and complementary across online and store channels may have the advantage this holiday season.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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