The 2021 holiday peak season was a harrowing one for retailers as they tried to navigate congestion at the ports, transportation capacity constraints, inventory and labor shortages, and rising inflation. Yet, in spite of these challenges, retail finished the year strong. According to Mastercard’s Spending Pulse, holiday sales rose 8.5% year-over-year. Furthermore, analysis from the logistics software company ShipMatrix, indicated that more than 90% of deliveries to residential addresses were on-time this holiday season.
What’s the outlook for the retail supply chain for 2022? Will the challenges of 2021 continue to dog retailers into the new year? According to Jess Dankert, of the Retail Industry Leaders Association (RILA), there are three main trends to watch this upcoming year:
In terms of transportation congestion and capacity constraints, Dankert says she expects to see more capacity come online as the year progresses, particularly in terms of the ocean sector. However, RILA will be keeping a close eye on the upcoming contract negotiations with the International Longshore and Warehouse Union (IWLU), which represents 22,400 dockworkers along the West Coast. The last time the contract was up for negotiation, the affected ports saw disruptions and shipping delays.
In addition to collaborating with retailers, government officials, ports, and other transportation partners to mitigate the effects of disruptions in the near term, RILA is also working on long-term solutions. “We are looking farther down the road to address underlying systematic issue that predate the pandemic and that the pandemic shined a light [on], so that we don’t find ourselves in a perpetual ‘Groundhog Day’ situation where we are constantly reliving the same disruptions. Instead, we want to address some of those underlying challenges.”
These challenges include improving the infrastructure at the ports, data infrastructure, and data standardization. Dankert says she is hopeful that these improvements can be made as part of the Infrastructure Investment and Jobs Act, which was passed in November 2021. “But I think it’s essential that major users of that infrastructure have a role in saying where and how to best spend that investment for maximum impact on freight fluidity,” she said.
RILA’s upcoming supply chain conference, Link2022, in Dallas from Feb. 20–23 will look to help attendees gain a deeper understanding of these issues and facilitate collaboration on solutions to these challenges.
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