RILA show: shippers navigate tight parcel market
Retailers seek relief by diversifying carrier pools and building out curbside pickup, but consumer spending boom continues, analyst says.
Shippers of all sizes are scrambling for creative solutions to handle transportation challenges triggered by a surging demand for goods, scarce carrier capacity, and rising prices. But after two years of pandemic stresses, a few best practices have floated to the top, speakers said Tuesday at the Retail Industry Leaders Association (RILA) supply chain conference, called LINK 2022.
A primary clue for solving the problem is to pinpoint the cause, which is an explosion of retail and e-commerce sales that pushed growth charts to leapfrog through six years of forecasted growth in just six months, Chris Johnson, a senior analyst with Cleveland Research Company, said in a session. And that trend still has legs, with indicators showing the nation’s economic cycle on track to continue additional growth before entering a cyclical slowdown someday, he said in a session titled “Six years in six months: How the parcel and broader transport markets changed with Covid-19.”
In the meantime, consumers are still spending more on goods than services, so retailers continue to build up inventory, he said. Solutions are slow to emerge; for example, regional parcel carriers are increasingly entering the market, but they still hold a measly 3% market share compared to entrenched and consolidated providers like UPS Inc., FedEx Corp., and the U.S. Postal Service.
In response, some shippers are diversifying the carriers they use, seeking relief from red-hot parcel price hikes, Johnson said. And other retailers are expanding their buy-online, pickup-in-store (BOPIS) and curbside pickup options, diverting some volume from last-mile delivery.
