Capacity challenges will continue in 2021

This year’s hyper-accelerated holiday shipping volume will have lingering effects in 2021 and force shippers to focus on strategic planning and relationship-building as a way to manage the crunch for transportation and warehouse space, according to some year-end predictions from logistics-industry leaders.

“With fewer trucks, warehousing space, pallets, and containers available to transport goods, rates are rising and shippers are forced to compete not only for customers’ attention online, but also the means to make good on those orders once they have been placed,” Glenn Koepke, a senior vice president at supply chain visibility solutions provider FourKites wrote earlier this month in a report detailing the booming holiday shipping activity and its effects on the supply chain. “Amidst this complicated landscape, the companies that come out ahead will be those agile enough to adjust to changing dynamics both quickly and efficiently.”

December data from FourKites showed accelerated activity through the Christmas holiday followed by a return to more historic averages as we inched toward the New Year. FourKites reported an 89% increase in retail shipping volume in the first three weeks of the month, along with 21% growth in CPG tracked shipping volumes, and a 6% jump in shipping volume in the food and beverage industry. As of December 30, those numbers had begun to slow, with volume down more than 11% in retail, 3% in CPG, and 4% in food and beverage.

Many industry watchers say volatility is likely to continue as pandemic-related issues continue to shape consumer buying habits and the global economy.

“We will see ongoing capacity challenges—and a seller’s market for those that control the capacity—throughout 2021, as most passenger flights remain grounded and sustained peaks around e-commerce, Chinese New Year, and the [Covid-19] vaccines mean that demand remains high for domestic ground carriers and international capacity across multiple modes,” according to Jim Monkmeyer, president of transportation, DHL Supply Chain North America. “The capacity situation will likely normalize over the mid-term—at least, it will revert to its ‘normal’ cycles of supply and demand swings as the vaccine becomes widely available—but securing capacity, managing price volatility, and strengthening relationships with carriers will remain a priority throughout 2021.”

Rick Ehrensaft, chief commercial officer for Grand Worldwide Logistics, a division of logistics service provider Odyssey Logistics, agrees. He said many of the firm’s larger customers were working to refill depleted inventory late in the year to get ahead of anticipated headaches in 2021, essentially “trying to get their floor stocks back where they used to be.” 

“This is all good business for us,” Ehrensaft said. “But at the end of the day, you can see this is not business as usual. [Customers] are trying to get ahead of what they see to be a continuing constraint.”

He emphasized the importance of shippers, “getting inventory in place and locking down your carrier.”

An expected reverse logistics boom and efforts to roll out Covid-19 vaccines will further complicate the landscape. But overall, the complexity supply chain companies are experiencing will also lead to innovation, some industry-watchers say.

“We expect them [logisitcs challenges] to continue as the global effort to roll out vaccines puts pressure on already strained logistics resources. Pandemic-related trade will continue to crowd out trade in other types of goods,” said Christopher Hale, CEO at Kountable, a global trade and technology platform provider. “On the other hand, a lot of very smart people and groups are working hard to find innovative ways to adapt and create better solutions that will have impacts on how supply chains are run far beyond this pandemic, so we expect to see some innovation and progress starting to appear too.”