Global supply chains have undergone significant changes, some of which were upheavals during the last decade. While pundits and analysts say that 2023 will be more “normal,” the sector continues to develop and expand.
Two landmark events defined the last two years: the COVID-19 pandemic and the Great Resignation. These events have put shipping companies and ports at a great disadvantage. Unfortunately, the challenges continue – the issues unabated.
Consumers are also learning much more about the processes involved in moving goods from manufacturers into stores after global lockdowns. Most customers never gave a thought to the shipping sector. Before the pandemic, buyers went to retail stores to shop.
Despite port delays, labor shortages, inflation, and international conflicts, online merchants still successfully shipped and delivered items to their customers. Entrepreneurs constantly searched for emerging shipping trends that can help their operations.
Load balancing, outsourcing fulfillment to third-party logistics (3PL) providers, and digitized supply chains became essential. Business owners who are streamlining their processes are tapping into these processes and technologies today.
No matter how your 2022 went, the new year brings along new business opportunities. Challenges and roadblocks will undoubtedly come your way, but you can prepare for them.
Learn which shipping trends will shape supply chains and logistics in 2023.
The State of Shipping Trends at the End of 2022
The COVID-19 pandemic gravely impacted ports and supply chains, causing major delays. Lockdowns, worker shortages, container ship congestion, and longer turnaround times for manufacturing and shipping became commonplace.
In a National Retail Federation (NRF) survey, 97% of their members reported that port congestion and shipping delays severely affected their operations.
What was the aftermath?
Sixty percent (60%) of U.S. consumers found it difficult to buy certain products due to shortages and delays.
With the rise in the popularity of online shopping, consumer preferences have also changed. Fast and free shipping is a necessity now, not a luxury. For global consumers in 2022, 41% prefer to receive their online purchases within 24 hours.
Even with the world opening up and operating fully, inflation has changed the holiday shopping landscape. And it could be dismal as only 5% of customers will start their holiday shopping in December. This is in stark contrast to the 70% who said they would begin buying gifts before Thanksgiving.
Despite these setbacks, the supply chain industry is in a better place than it was these past two years. Consumers are spending more and employment numbers have steadily risen over the past months. Ships are arriving and leaving on time at major ports. Just eight (8) ships were reported as late on the arrival manifest at Los Angeles and Long Beach ports. Compared to the peak of 109 delayed ships last January, streamlined queueing systems have contributed to the port relief. Captain J. Kipling “Kip” Louttit, executive director of the Marine Exchange of Southern California & Vessel Traffic Service Los Angeles and Long Beach, describes their workforce as less stressed due to managing more reasonable levels of incoming cargo ships.
Even though most experts look at 2023 optimistically, it’s best to stay vigilant and prepared. Companies must continue process improvements and optimize to protect against shipping volatility.
Simplified and streamlined supply chains are still the name of the game. Before looking into what 2023 has in store for your company, review the wins and challenges you had in 2022. It’ll help evaluate which trends you can keep a close eye on.
Five Shipping Trends to Watch out For in 2023
Retailers must stay current on the latest supply chain technologies and strategies to keep up with the unpredictable shipping landscape.
In 2023, keep an eye out for these six (6) shipping trends. Monitoring these trends next year can help your company stay competitive and make wise business decisions. And the economy, technology, and global events will shape these shipping trends.
1. Load Balancing
Load balancing is becoming a popular fulfillment strategy as retailers explore ways to reduce shipping and warehouse costs. Load balancing is the process of effectively allocating incoming goods across several distribution hubs. It differs from the common practice of having all stocks go to one warehouse.
Retailers who use load balancing can save shipping costs and quickly deliver the correct goods to customers.
2. Agile Supply Chains
If the pandemic has taught business owners anything, it’s to be ready for anything. Retailers are reviewing their current shipping practices due to recent and historical supply-chain difficulties. Businesses should rely less on tried-and-true techniques and more on innovative alternatives.
Modern shipping challenges demand adaptable solutions. Going for a complete process overhaul isn’t always necessary, however. The right tools to adjust quickly to any situation is key to an agile supply chain.
Your operations should scale based on consumer demand and product availability. Investing in powerful predictive tools such as AI and cloud-based management systems can offer greater control and visibility over your supply chain.
3. Delivery Time Accuracy and Transparency
Customers demand transparency regarding their package delivery dates. Brands are risking their reputations when they fail to deliver on time. Customers will buy elsewhere if you don’t provide reasonable delivery expectations. Although consumers prioritize free and fast delivery, you shouldn’t disregard full disclosure on reasonable delivery timeframes.
Let your clients know the expected arrival date at checkout rather than when the item is supposed to arrive.
You can lose sales due to unclear shipping policies. Twenty-two percent (22%) of shoppers polled by Shopify in the previous year abandoned their carts because “there was no confirmed delivery date.” While 32% did so because “the projected shipping time was too long.”
Improving delivery-time communications is a crucial aspect of nurturing great customer experiences.
4. Cheaper Shipping Costs and Less Port Congestion
Retailers are finally getting some respite after a rise in freighting costs over the past few years. The global average cost of shipping a container is $3,429, compared to $10,396 in October 2021, according to the Freightos Baltic Index, a global container freight index.
As mentioned earlier, ports have become better at dealing with their backlogs. This moves container ships faster. Customers can expect their items to arrive sooner thanks to the faster unloading of goods.
While supply chain interruption could still disrupt maritime transport companies, these problems could disappear. Retail brands should get low shipping costs thanks to lower container costs and a decline in backlogs.
5. Partnering with 3PLs
Previously, enterprise-sized retailers benefited the most from using third-party logistics suppliers. But if you’re a merchant that wants to scale up operations, seriously consider 3PL services.
The 3PL market may develop at a compound annual growth rate of 8.5%, with Asia Pacific being the center of growth.
Using a 3PL can save time by outsourcing shipping logistics internally. You can also enjoy lower expenses thanks to pre-negotiated contracts and a worldwide network of fulfillment centers. Using fleets of smaller trucks and vans helps accommodate more frequent and shorter-distance deliveries.
Working with a 3PL can also enable retail businesses to test new areas without having to make infrastructure investments. They can also help you learn more about foreign market rules.
Working with a 3PL can also assist in reducing your risk during periods of unpredictable economic conditions. Your business is protected from significant shipping surcharges because of the partnerships that 3PLs typically maintain with numerous shipping carriers.
As 2022 comes to a close and 2023 is set to start, keep these shipping trends in mind so you may begin adoption as early as Q1. Your company will be able to run more efficiently and give customers a better experience if you keep up with innovative shipping techniques.
Future supply chain management trends frequently focus on significant adjustments, such as new production sources or improved technologies. However, changing your supply chain might take a lot of work. So be sure your business will see a good return on its investment.
It won’t entirely be the “normal” we were all used to before the pandemic. Experts and analysts predict 2023 to be a better year for shipping services and supply chains.
ZhenHub is ready to assist your business in making great strides into the new year. Simplify your shipping operations with smart logistics software solutions. Get connected to a global network of fulfillment centers, ready to handle multi-platform integrations. Sign up at our website now.