Reuters Events | Supply Chain & Logistics Business Intelligence

As the holiday season is in full swing, Chuck Moyer, CEO Express Delivers, forecasts what eCommerce delivery will look like.

If you thought the 2013 holiday season was a wild ride, CLDA board member Chuck Moyer says 2014 has all the makings of a train wreck.  Chuck was a presenter at Eye for Transport’s 12th Annual 3PL Summit on the Future of the Same-Day Industry.  He’s spent 36 years in the transportation industry, 30 of them in the same-day sector.  We asked him what he expects for the 2014 holiday season and his advice for those in the supply chain who don’t want to become casualties of that train wreck.

 

Why do you think this year’s holiday season is going to be tough, possibly tougher, than last year’s?

The number of shopping days, the increase in on-line shopping and the fact that many have yet to make systemic changes in reaction to last year’s chaos.

This year, the “traditional” holiday season has only 26 days between Black Friday and Christmas, just one more than last year and five fewer than 2012. 

In addition, retailers are starting earlier.  Kmart aired its first ad for holiday shopping within a few days of Labor Day weekend.  Consultants to the retail industry started advising their clients in mid-October that it was time to begin holiday advertising.  They said customers were already working on their holiday shopping lists at that time.

 

We also know that delivering on the ecommerce promises was one of the things that stressed the supply chain in 2013.  What do you foresee for the 2014 holiday season?

More of the same.  The trend for the past two years has been for shoppers to spend more online during the holiday season, spending more money. On average, they spent on average 9.3 percent more per online order in November 2013 than two years earlier, and 13.0 percent more per order than last December. 

Forecasters are expecting an even more robust 2014 holiday sales season in which online sales growth will again outpace overall retail sales. Emarketer projects that ecommerce sales will rise nearly 17 percent this year (compared to a projected 5 percent growth in retail overall).  They expect online sales to make up 8.4 percent of all holiday season sales. 

Consumers are also loosening their holiday purse strings.  In 2011, consumers spent an average of $121.38 in November and $108.39 in December. In 2013, those figures jumped to $132.71 and $122.46. according to CJ Affiliate by Conversant,  an online advertising and internet marketing company that specializes in affiliate, media and tracking services.

So, you have those two factors and the reality that many shippers are going to continue to make unrealistic promises that they expect the carriers to keep.  Last year, that was on full display.  Online retailers were telling their online customers that they could get their gifts before Christmas.  In many cases those retailers were not coordinating with their shopping partners to confirm those promises.  They were working off historical experience instead of dealing with real time situations.  You can’t expect to base your predictions on past holiday seasons because we’ve never seen anything like where we are today.  

The business landscape is changing fast than we’ve ever seen it.  In today’s environment big data and predictive analytics are our friends but many are not using them effectively.  I’m amazed that despite the black eyes shippers received from last holidays’ season that they still aren’t using that information productively.  They are building solutions that would have worked in 2012.  We know it didn’t work in 2013 and this season promises to be bigger and faster than it was.  Trend lines are dramatically increasing.  Volumes and capacity of 2013 won’t service 2014.

 

What should carriers be doing?

In a word – changing.  They need to start using the tools that are available to them.  Not only for the holiday season, but year-round.   We all need to build infrastructures that can handle different trends throughout the year

The big carriers get it.  They are adjusting their rates so that they can invest in ways to handle surge and capacity challenges.  They understand that they have to invest heavily in an infrastructure that will support future trends.

It’s not a four-week issue that runs from Thanksgiving to Christmas.  Ecommerce trends are growing dramatically. Right now online is 9 percent of retail sales and some estimates have that at 14 percent of retail sales by 2017.  That online retail trend accounts for $32 trillion sales.

We can’t look and prepare for historical trends or what happened last year.  We have to use the tools available in big data and predictive analytics.

 

Where do regional carriers fit into the picture?

Shippers are using many sectors of the supply chain as volume starts to build up.  Regional carriers are benefiting from the increased demands on the supply chain.  Shippers that can’t get it done by UPS or FedEx are looking for additional resources.   

In addition, carriers like Express are receiving request from both shippers and carriers with requests to handling their overload.  Our members and all other suppliers in the supply chain can benefit from this increased volume.

My advice to shippers, carriers and retailers is this: everybody needs to use all the resources in the supply chain and coordinate resources.

 

In this business we’re all about saying “yes.”  Do you sometimes have to say “no”

Yes.  It’s all about making and keeping your promises.  That means really talking to your customers so you can partner with them to get the best outcome.

Before this holiday season kicked in we talked to our key accounts.  We told them how much volume I could handle during holiday season.  We committed to that.  To do that you have to know your capacity.  It means making sure you commit whatever resource you deem to be appropriate to keep those promises.  And knowing when to say no so that you don’t hurt or hinder your current or future relationships.

When I talk to my shippers, I’ll be straight with them.  I’ll say, “I can handle 1000 deliveries for you normally and during this peak season I can handle 1800.  And I’ll do it well.”  I’ll tell them that I’ll commit to that increase and meet their expectations within those parameters.  We’ve been having those conversations with our big customers for the last several months.  

I’m confident FedEx and UPS are doing that, too.  They are talking to their big shippers about their own limitations.  They are setting volume limits.  They are telling shippers, “Here’s when I need it if you want it delivered by this date.”  The big guys are prepared for spikes.  Those are “normal” for them.  But if this holiday season is going to result in dramatic spikes, they know they have set expectations about that.  

My advice here is to communicate proactively to your customers so they can make informed business decisions.  Otherwise you’re putting your customer in a position to fail.  It’s all about being honest; knowing your limitations and committing to be the quality provider you say you are.  For all of us the promise is simple: If you entrust me to get it there, I’ll get it there.  Even if I have to get in my car and deliver it myself.

It’s also about communicating honestly with the ultimate customer – the consumer.  Give them all the information and let them make a realistic choice.  Say you went on line and ordered the hottest gadget for your son.  The retailer communicates with the supply chain and is honest with you that you’re not going to receive it until December 27. We need to treat the consumer with dignity.  Let them make their choices based on facts and real data.