Understanding Predictability and Surge Capacity are among top recommendations for shippers who face seasonal transportation challenges.
When most people in transportation and logistics think about seasonality, they envision the mad rush of holiday shoppers to stores during December, and the tremendous amount of product and freight involved in getting goods on store shelves as the onslaught unfolds.
The reality, however, is that seasonality spikes happen all year long. Take today, Halloween, as an example. According to blogmaster Brandon Gaille:
- The average household will spend $44 just to purchase Halloween candy.
- An estimated 4% of all candy consumption in the US happens on the day of Halloween
Like, candy, here’s a quick list of other items that have major demand shifts throughout the year:
- Christmas Trees
- Fresh produce during summer/fall harvest
- Tree ornaments
- Fruit, meat and cheese gift baskets
- Pool chemicals
- Trees, plants and landscaping supplies
- Back to school clothing and supplies
- Floral arrangements
- Sporting goods
- Lawn equipment
- Snow equipment and shovels
…..and the list goes on. Getting goods delivered to stores on-time and cost-efficiently can become a major challenge for shippers when the demand spikes for these types of goods.
In today’s post, we’ll share several ways shippers can counteract the impact of seasonality on their business. But, even with the best counteractive measures in place, let’s all keep in mind that the totally unpredictable – such as the recent Hurricanes in the Southeastern US — can still happen. If you’re experiencing anything like we’ve seen, the squeeze on capacity, and the result of skyrocketing freight rates, can create the perfect storm for shippers.
Ready to get ahead of seasonality? Here are our top recommendations:
Recommendation #1: Issue an RFP with Annual Commitments
Doing an RFP and getting a large group of carriers competing for your freight can help you get some control over regular, recurring shipments. At LeSaint, we also recommend tying incentives and penalties to your desired Key Performance Indictors (KPI’s). The more consistency and commitment you can add into your overall freight portfolio, the better off you will be and the better off the carrier will be.
Recommendation #2: Carefully look at the comparison between market versus fixed pricing
A lot of companies really try to ‘play the game’ with market pricing. While a generally riskier approach than fixed pricing, some companies feel that taken in full, they get better rates more than they become victims of capacity squeezes or rising rates — during seasonal times of the year, for example.
What we’ve seen at LeSaint over the years is that companies with consistent flows and consistent volumes tend to benefit the most from fixed pricing, even if the consistency only holds true for a portion of their overall freight needs.
We’ve also observed that taking advantage of market pricing requires a robust, savvy in-house transportation department. In today’s marketplace, the type of talent, expertise and technology know-how (ie. to keep up with the ebbs and flows in the market) can be a rare find. That type of talent is increasingly spread thin, as internal transportation departments are also tasked with a wider range of priorities, such as managing and tracking inventory, and designing the transportation network. We’re finding that they simply don’t have the bandwidth any longer to negotiate and scrutinize the daily and weekly shifts inherent in market pricing.
For companies that know when their seasonal demand spikes are likely to occur, and have a good idea of volumes, take a closer look at fixed pricing each year to get more predictability.
Recommendation #3 : Keep lines of communication open during pre-season planning
In the perfect transportation utopia, functions in forecasting, supply chain, transportation and suppliers are all aligned and ready to manage through your seasonal demand. In the real world, however, this requires advanced planning and open lines of communication. During busy times and even despite the best technology, we see the most transportation “failures” occur because people in the network simply weren’t communicating on a timely and accurate basis.
Make it a regular habit to communicate across your organization and with your suppliers to help everyone get ahead of seasonal needs.
At LeSaint, we hold regular Quarterly Business Reviews (QBR’s) with our clients, as part of our proprietary 360 Logic™ program. During each QBR, we talk about overall business goals, as well as anticipated activities, such as seasonal demand spikes, that could be coming down the pike. Other types of anticipated activities could be a new market/geography entry, new product types, etc.
I’d venture to say that being fast and agile is important, but communicating across your network trumps that!
Recommendation #4: Take a closer look at your access to “surge” capacity.
As I mentioned previously, unexpected and unpredictable surges can happen during Hurricane season. Imagine, for a moment, what happened to the demand for chainsaws in South Florida after Hurricane Irma took down thousands of trees. Now, no one could have known exactly when Hurricane Irma would hit, nor where. But generally, positioning Hurricane-related inventory – chainsaws, generators, bottled water, and so on — in Gulf Coast markets during the fall Hurricane season every year, is just a smart way to make seasonal demands more predictable.
What can be problematic for many companies, however, is tapping into the final mile delivery of goods to exactly where they need to be when the unpredictable happens. That’s where a smart 3PL can help! At LeSaint for example, we have established relationships with carriers nationwide, and we can get creative with how we leverage those relationships when special needs arise. We also help our clients design their networks in a way where goods can quickly be diverted to major markets nationwide, especially given their access to LeSaint’s consolidated view of where all inventory is at any given time.
Recommendation #5: Consider different modes.
Once you’ve had a chance to get past the mad rush of a seasonal spike, it’s important to take a step back and take a more holistic view of how you’re doing things.
For example, could you back up the Christmas shipping timeline, to allow for delivery via rail, instead of the much more narrow (and more expensive!) window for truck capacity during the months of November and December? Further, are there opportunities:
- To combine freight with other companies to build full truckloads, rather than paying LTL rates?
- To find backhaul or complimentary freight to offset your empty miles and keep control of capacity within your own network?
These are but a few of the potential solutions we investigate for shippers, when they turn to LeSaint for transportation.
Wishing you a very Happy Halloween and a great Holiday season full of predictable freight!