As 2023 peak season nears, the trucking industry faces a unique blend of strength and uncertainty. A survey by UPS subsidiary Ware2Go, reveals a positive outlook for the lead-up to 2024.
Ware2Go’s head of supply chain, Kelton Kosik, describes the ongoing market disruption as “very bizarre.” It’s forced many business leaders to shift strategies and adjust their peak planning.
Kosik explains: “We’re hearing the interest rates are going up, things are [not going] as well, everything like that. Then you randomly get hit, whatever it was a week or two ago, with consumer spending being up and everyone just keeps spending. [..] It’s made it a challenge.”
Troubling economic landscape
With peak season being a pivotal period in logistics, it’s wise to look at both the opportunities and the unpredictability it presents.
On the bright side, 73% of merchants expect higher sales than in previous years, despite economic volatility. The National Retail Federation (NRF) backs this claim, projecting holiday spending growth of 3 to 4% year-over-year, reaching up to $966.6 billion.
NRF’s chief economist, Jack Kleinhenz, remains concerned about several factors that could still impact peak season sales. He cautions about persistent inflation of prices in goods and services continuing to rise.
Inflation, credit limitations and hope
Kleinhenz notes: “The average household remains on relatively solid financial footing despite pressures from still-high inflation, stringent credit conditions and elevated interest rates.”
This leads to reduced consumer spending over the peak period since people are likely to prioritize essential expenses over gift-shopping.
There are stringent credit conditions which makes it harder to obtain credit, such as credit cards or loans. Since it’s harder for shoppers and businesses to borrow money, consumers will undoubtedly spend less. Businesses, meanwhile, could find it hard to invest in inventory or marketing.
Despite the uncertain economic conditions, the survey shows how consumer behavior continues to adapt. A Project44 survey reveals a surge in online shopping since confidence in timely deliveries has grown.
Warehouse operations are adapting too. A bigger workforce over peak season to manage holiday shipping also exemplifies the industry’s agility. Kosik notes that this strategy isn’t new but is now more prevalent than ever.
The bigger picture
This dichotomy of rising inflation coupled with increased confidence in online shopping presents a unique challenge for the trucking industry.
Retailers and trucking companies alike are thus bracing for a peak season that may see high volumes, while also navigating the complex economic landscape.
This makes the 2023 peak season both promising and precarious. Says Kosik: “We know that there is going to be the volume spike during peak; there always is. When I look at it, to be completely honest, I see somewhat of a normal peak season if we had to look ahead and look in the crystal ball and see what’s actually coming.”
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.