In this week's Friday Five: An industry expert gives advice how to thrive in perpetual peak season, McDonald’s is hit in their dairy-aire while Walmart diversifies. Let's get to it.
The post-pandemic economic response drove higher financial performance of major retailers in the U.S. Consumers started their back-to-school shopping back in stores as COVID-19 numbers decreased and the vaccines because readily available. Amazon, Best Buy, Walmart, Target and Home Depot had stellar numbers but faced difficulties not being able to get the inventory they needed to keep up with the demand. With the delta variant now surging, the holiday buying patterns will most likely shift again.
Bob Ferrari, head of The Ferrari Consulting and Research Group and supply chain industry expert, discussed in a recent post that although retail sales soared the first six months of 2021, the hot market may be cooling off based on data from The National Retail Federation’s (NRF) August 2021 Economic Review.
“Retail sales during the first six months of the year were up 16.4 percent year-over-year, and NRF’s revised forecast calls for overall annual retail sales growth in the range of 10.5 to 13.5 percent over 2020 levels. That is a healthy level of growth but in comes with significant qualifiers mostly centered on supply chain networks. Namely, there is a flood of merchandise headed toward the U.S.”
To prepare for the blitzkrieg of inventory headed across the water, Ferrari provides key takeways for retailers and wholesalers to better prepare for the anticipated disruptions ahead during this holiday fulfillment period and foreseeable future. Those that don’t heed his advice, will most likely feel the sting of some painful additional learning.
Supply chain disruptions and European driver shortages have left McDonald’s with a milkshake and bottled drink shortages.
"Like most retailers, we are currently experiencing some supply chain issues, impacting the availability of a small number of products," a McDonald's UK and Ireland spokesperson said in a statement on Tuesday. "Bottled drinks and milkshakes are temporarily unavailable in restaurants across England, Scotland and Wales."
While it’s easy to pick on the UK right now with the Road Haulage Associate estimating that close to 30,000 drivers have stopped operating since January and Brexit further compounding shortages, the United States and EU countries have also been stretched thin due to truck driver shortages.
The National Retail Federation claimed August TEUs would increase 12.6 percent YoY at the nation’s largest retail container ports surpassing the most recent record just set in May 2021. The only reason why imports came in slightly lower in July at the Port of Los Angeles was due to warehouses at capacity, rail yards maxed out and shortages of chassis and containers according to Gene Seroka, port executive director.
“Both anchorage and dwell times are trending in the wrong direction,” Seroka said. “Seventy-five percent of ships stopped at anchor in July [instead of heading to berth], up from 50% in June. Early data for August shows that 90% of arriving vessels are headed straight to the parking lot.”
Limited openings on ocean sailing schedules, longer berth times at ports, unloading freight delays and workforce shortages are just some of the issues facing the transportation industry. Once the freight is routed inland, the problems just continue to pile up slowing down the supply chain. The scarcity of containers and chassis and slow rail service work against each other adding additional time for freight to arrive at its final destination.
The chaos will continue to be more, well, chaotic in Southern California. American Shipper reported that as of last Friday, “there were 125 ships of all types (including tankers and cruise ships) either at berth or anchor in Los Angeles/Long Beach. That’s a new record. The Q1 high was 113.” In addition, “On Saturday, there were 68 ships of all types at anchor, yet another record. There were 66 container ships either at berth or waiting offshore, just one short of the all-time high. And there were 37 container ships waiting offshore, three short of the February peak.”
We have barely left back-to-school season and now consumers have shifted focus for holiday shopping. But there is hope. Despite how messy things seem right now, the supply chains of the future will be more robust and resilient having shouldered the burden the past year and a half and all the challenges that came along with it.
Stefany Martin, a marketing leader from Slync.io , a logtech company at the forefront of delivering purpose-built solutions for managing ocean freight chaos for logistics providers, discussed how quickly seasons are blending together.
“By the time students receive their first homework assignment, retailers have already moved on to the next season, swapping out school supplies for Halloween and the holidays,” writes Stefany Martin, head of partnerships and alliances from Slync.io, in this contributed byline.
Further adding to the disruption of perpetual peak season, the Delta Variant is causing havoc across supply chain operations and according to the latest Inmar Intelligence report, shoppers are reporting product shortages which indicates consumers are yet again beginning to stockpile items.
However, despite how chaotic and messy things seem right now, those who operate within the supply chain are learning the importance of being agile and adopting new processes and technology to better adapt and overcome the next disruption. The monthly Global Port Tracker report released by National Retail Federation and Hackett Associates cited that retailers are now moving up their shipments this year as a risk mitigation strategy in hopes that they will have adequate inventory for the holiday season.
To respond to retailers shipping earlier to prepare for the holiday season, logistics providers should adopt agile booking and allocation management processes and workflows that can respond to real-time carrier changes o respond to the next disruption.
Although keeping much information, like pricing, close to the vest, Walmart announced a new line of business called Walmart GoLocal which will offer delivery capabilities to other businesses. The focus will be on white glove service for products that have complex requirements and need to meet specific timelines. Walmart stated they have already made agreements with several retailers and are accepting new merchant partners.
This move further makes the Bentonville, Arkansas-retailer closer to becoming a service provider to not only consumers but to fellow merchants.
If you missed it, be sure to check out last week’s logistics news recap which looked at the ongoing changes to shipping in Central Asia. Stay tuned every Friday for a roundup of the week's biggest logistics headlines in our weekly blog, The Friday Five.
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