Call for a Free Audit877.728.5328

From carrier performance during an unprecedented peak season to the number of ships stranded off the West Coast, we’re breaking down the latest stats in logistics.

 

2020 peak season breaks records and carrier preparation pays off

  • The 2020 peak season was the busiest ever, with more than three billion parcels delivered, according to ShipMatrix data.
  • Although two million parcels were not delivered by Christmas Day, USPS, UPS and FedEx posted on-time delivery percentages in the 90s from Nov. 22 to Dec. 26. This feat is particularly notable for the US Postal Service, which delivered a record number of packages during the holiday season and handled additional parcels due to customer volume restrictions imposed by UPS and FedEx.
  • UPS anticipated that 8.75 million returns would be entered into its system the week of Jan. 4, a 23% increase over the highest week of returns for the 2019-2020 season.

 

Carriers increase rates to cope with demand

General rate increases (GRIs) take effect this month as well as peak season surcharges. While these carriers routinely announce rate increases, this time they cite the impact of COVID-19 and resulting surge in residential deliveries as the primary drivers.

  • UPS has increased their ground, air and international rates by 4.9%, plus across-the-board surcharge increases.
  • FedEx Express package and freight standard list rates have increased an average of 4.9% for Domestic, US Export and US Import services.
  • FedEx Ground and FedEx Home Delivery standard list rates have increased an average of 4.9%.

For more information on GRIs and surcharges, or how they will impact your bottom line, please contact your sales representative or account manager.

 

Leased warehouse space at all-time high; warehouse rents likely increase at slower pace

  • New leases of 179 million sq. ft. for warehousing and distribution were signed in Q4, pushing the year’s total to an all-time high of 569 million sq. ft., according to a report by Cushman & Wakefield. This increase is due largely to the explosion of ecommerce, which takes up to three times the space that traditional retail distribution operations require, as there are no retail shelves or brick-and-mortar storefronts to store the stock. Additionally, businesses are moving their supply chains closer to consumers to improve delivery speed and order turn time.
  • Warehouse rents are likely to increase at a slower pace in 2021 compared to 2020, according to the same Cushman & Wakefield report. Industrial rents in the US went up an average of 4.6% from Q4 2019 to Q4 2020, setting a record high last year. Warehouse and distribution rents rose 5.6% in the same quarter.
  • It’s not just rent that’s at an all-time high—construction is too. As of Q4, there were 360.7 million industrial square feet under construction with 94% of it intended for warehousing and distribution.

 

Retailers seek to automate their fulfillment centers

General rate increases (GRIs) take effect this month as well as peak season surcharges. While these carriers routinely announce rate increases, this time they cite the impact of COVID-19 and resulting surge in residential deliveries as the primary drivers.

  • Over the next 2-3 years, retailers’ usage of pop-up distribution centers (DCs) will more than double, increasing from 12% to 26%.
  • Micro-fulfillment centers will nearly double, rising from 15% of networks today to 27%.
  • 64% of respondents provide buy online, pick up in store (BOPIS) services and contactless shopping, but usage of these offerings will decrease by roughly 7% over the next 2-3 years (likely due to vaccinations and shoppers returning to stores).
  • 14% of respondents have automation across their fulfillment locations today, and another 21% expect full automation in the next 12 months.
  • 17% of drug store/health and beauty retailers have all fulfillment locations automated—more than any other vertical.

Other insights regarding supply chain plans over the next 12 months:

  • Almost 40% of respondents want to improve picking processes and reduce warehouse/DC costs.
  • 38% of respondents want to improve workforce management, including associate retention, employee engagement, and productivity.
  • Also listed as top respondent priorities are improving real-time inventory visibility (36%) and assortment management (36%) to drive higher sales and margins across channels with localized customer insights.

 

Logistics hiring strong in December

According to the US Bureau of Labor Statistics, core freight transport and distribution sectors added 52,900 jobs last month, as package delivery, warehousing and trucking operators staffed up to meet surging demand from online shoppers and high-volume customers.

 

Port delays lead to cargo ships stranded off US Pacific gateways

  • +40 cargo ships were lined up waiting to get into the ports of Los Angeles and Long Beach as of Jan. 13. Small and medium-size companies have been hit particularly hard by the cargo backlogs, which have left retailers waiting for weeks for goods stuck on ships at sea or at the port. Labor shortages at the ports are largely to blame for the backup as freight terminals cope with the surge in COVID-19 cases that hit California and slowed cargo handling operations.
  • 76 million 20-foot equivalent units (TEUs) were imported into the US last month—20.4% more than December 2019 and the fastest growth pace since August 2010, Panjiva reports.
  • Volume at Port of Los Angeles is expected to be up more than 80% YoY between Jan. 17 and Jan. 23, and up nearly 148% YoY between Jan. 24 and Jan. 30. Congestion at West Coast port facilities is expected to continue into at least February.

 

Fewer blanked sailings over Chinese New Year 2021 than ever before

  • Container carriers are expected to provide more capacity out of Asia over the Chinese New Year holiday, beginning Feb. 12, than in any other year. Across the transpacific, Asia-Europe and transatlantic trades, 7% and 0.6% of sailings have been cancelled in February and March respectively, compared with 19.9% and 9.4% sailing cancellations in the same months last year.
  • As a result, there is a YoY increase in TEU capacity of 6% this month over January 2020. February and March are up by 34% and 17% respectively.

 

Contact Visible Today

Now that you know what’s happening in the world of supply chain, let us know where you need support. Visible Supply Chain Management has thousands of satisfied customers who rely on our team for their shipping and logistics needs. Contact us today to start the conversation of how we can help you navigate the new year and have a prosperous 2021.