Dec 9, 2022 | Blog
Maintaining an organized warehouse and storage area is a fundamental element for any company, especially when handling substantial quantities of material. This article will delve into the sequence of methods that will optimize your warehouse bin storage system, with a focus on layout, shelving, aisles, and more.
What is a Warehouse Bin Storage System?
A warehouse bin storage system is a method of arranging inventory in specific spaces within a warehouse, aiding in efficient inventory management. Correct identification and labeling bin warehouse systems play a vital role in preventing errors and make it easier for your team to search for items in your own warehouse management system. Discover more about warehouse bin storage systems here.
Understanding the Layout of Your Warehouse
The layout of storage rooms in your warehouse, including the floor space planning, directly impacts the efficiency of your operations. Well-organized aisles, zones, and areas, marked with clear arrows, ensure a smooth pick path for workers. The use of devices like a phone for material tracking can also enhance the effectiveness of your layout, improving service for customers. Since there are 6 different types of warehouses, it’s important to factor in that bin layouts vastly differ from one another.
Naming Convention and Labeling System
Adopting a consistent naming convention and labeling system is crucial. A common method includes a combination of letters and characters to denote different elements, such as racks, shelves, and bins. Additionally, a location numbering scheme can be implemented to ease and further streamline the inventory process. A properly maintained warehouse labeling system can greatly reduce errors and confusion among workers.
Choosing the Right Inventory Management System
The right inventory management software and system can revolutionize your store and warehouse operations. Tools like Shiphero can help manage your stores efficiently by providing real-time inventory updates, enabling you to position your inventory in the most effective way.
Organizing Your Warehouse with Zones and Aisles
Zones and aisles in your warehouse design should be designed with the flow of people and materials in mind. Effective sequencing of these areas in your warehouse layout can help minimize unnecessary movements and maximize efficiency.
Warehouse Labeling and Identification
Warehouse labeling and identification are not just about sticking names to bins. They are about creating a system where every position of available space, every unit, every rack, and every shelf has a unique identifier. This system aids workers in quickly finding and storing items, reducing errors and boosting customer satisfaction.
Implementing Automation in Bin Storage System
Automated Storage and Retrieval Systems (AS/RS) are computer-controlled systems that can significantly improve the efficiency of bin storage systems. They are designed to increase the speed of retrieval, decrease manual labor, and minimize human error at rates. Besides, automated systems can help optimize warehouse space due to their ability to support higher and denser storage.
Inventory Turnover Rate
Inventory turnover rate is a metric that shows the number of times a business has sold and replaced inventory during a specific period. A high turnover rate indicates effective selling and replenishing. This means less capital tied up and reduced storage costs. A well-organized bin storage system can significantly increase this rate by ensuring faster retrieval times and reducing instances of misplaced items.
Seasonal Variation in Inventory
Seasonal demands can cause fluctuations in inventory volumes in warehouses. An optimized bin storage system should have a flexible layout that can be easily reconfigured. During peak seasons, your ideal warehouse layout should be able to accommodate larger inventories without compromising on organization or retrieval times.
Temperature-Controlled Bin Storage
Certain items, like perishable foods or sensitive electronic components, need specific temperature conditions to maintain their quality. Temperature-controlled areas can be included in optimized bin storage systems. Advanced systems can even offer varying temperature zones within the same warehouse floor.
Sustainability in Bin Storage System
An environmentally friendly warehouse is a critical requirement in today’s world. Using recyclable bins, optimizing energy usage, and incorporating natural light where possible are ways to make your bin storage system more sustainable. Additionally, an efficient warehouse layout optimization minimizes unnecessary movements, thereby saving energy.
Regulations and Compliance
Compliance with safety and inventory management regulations is crucial for maintaining your warehouse’s credibility. This includes guidelines for stacking height, aisle width, and hazardous material handling equipment storage, among others. An optimized bin storage system ensures these regulations are met, thereby reducing the risk of legal issues.
Bin Storage System Software
A wide range of warehouse management software is available today that can help manage your bin storage system more efficiently. The features include real-time inventory tracking, automated data collection, and advanced analytics that provide insights into warehouse operations.
Employee Training for Bin Storage System
Despite having an optimized bin storage system, it won’t be effective unless your staff is well-trained in how to use it properly. Regular training ensures that all employees are familiar with the system, can locate items quickly, and know how to handle any issues that may arise. This not only enhances efficiency but also improves workplace safety.
Warehouse Safety and Efficiency: The Essentials
Ensure Safety Protocols in Warehouse Storage Rooms
The best warehouses put safety first. Clear aisles and effective labels help reduce accidents. Warehouse signs can highlight hazards, while safety training teaches staff to handle materials correctly. So, your warehouse becomes a safe place to work, not just an efficient one.
Tech Boosts Warehouse Efficiency
Efficient warehouses use the right technology. Adding RFID tags, barcode scanners, and warehouse management software (WMS) to your setup boosts real-time tracking and cuts down errors. To make these tech tools work, staff need training—a step you can’t skip.
Staff Training Matters
You need well-trained staff for a top-notch warehouse. Regular move reviews and training updates on the storage system, new tech, and safety processes are vital. So, if your staff knows their stuff, your entire warehouse will work better.
Layouts that Cut Costs
A smart, efficient warehouse layout design does more than just organize and keep things smooth—it saves money. Fewer unnecessary movements mean less time wasted, and fewer errors mean less money spent on fixing them. It’s the secret to running a warehouse that’s cost-effective, not just operational.
Regular Audits Keep Things Running Smoothly
You can’t forget about regular audits. They check that everything’s working as it should and spot areas for improvement. With regular audits, your whole warehouse operation will always be at its best, delivering top efficiency and productivity all the time.
Efficient Bin Storage System Setup Tips
Grouping Items: ABC Way
Group your items based on their traits, such as size, weight, and how often they’re used in existing warehouses. The ABC analysis is your best friend here. ‘A’ items are popular, ‘B’ items are less so, and ‘C’ items are the wallflowers. The outcome? Picking processes are streamlined, and workers cut down on their cardio in the warehouse.
Smart Placement
Think of usage patterns. Your fast-moving items should be neighbors with the dispatch areas, slashing retrieval times. Meanwhile, slow movers can chill in the less accessible spots. This “product slotting” tactic ensures every inch of your warehouse floor plan works hard and your productivity is on point.
Labels: A Necessity
Labels on your bin locations are the tour guides of your warehouse. Workers find items quicker when labels on storage bins are readable and packed with info such as product name, SKU, and bin location. So, time spent on the “Where’s Waldo” of items? Significantly reduced.
Vertical Space: Use it
Don’t ignore your vertical wall space – it’s a hidden gem of storage space and capacity. Stack those bins and use taller storage units. But remember, safety first – no heavy or oft-used items in the stratosphere.
Layout Design: The Fishbone Advantage
Design your bin rows’ layout to put Usain Bolt to shame – minimize travel time. A method to swear by is the “fishbone” aisle design, a straight-line path perfect for item retrieval.
Choose the Right Type of Storage Bins
Bigger isn’t always better. Choose the right bin for your items. Some items need bins with dividers; others demand larger, robust bins. The right bin not only keeps your items snug and safe but makes accessing them a breeze.
With these elements, you’re on track to add up to a bin storage system that takes your warehouse layout from good to great.
Final Thoughts on Warehouse Bin Storage System Best Practices
Every company has a reason to keep their warehouse organized. Whether it’s for inventory system efficiency, error reduction, or simply to maintain a well-organized warehouse, implementing these best practices can enhance your operations. A well-structured warehouse layout design, consistent naming conventions, and easy and effective labeling systems all contribute to a more efficient and productive warehouse.
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For More Information About ShipHero
Whether you want to let go of running your warehouse or run your warehouse better, you can do both – and so much more – with ShipHero.
Click HERE to Schedule a Meeting with Our Sales Team.
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Dec 9, 2022 | Blog
Do you know how to select the right warehouse for your business and maximize savings? Warehousing is a necessary component of the customer journey and can be interpreted as an investment. If you’re looking to save on costs and boost your productivity, know that a well-run warehouse can give you better control over your inventory and ensure customers receive their orders on time.
But when it comes to selecting the right warehouse for your business, no one size fits all, so you need to consider factors such as proximity to suppliers and customers, cost optimization, technological capabilities, space utilization, and scalability, to name a few. With careful planning – which often requires help from external logistics specialists – you’ll have more success determining the right warehouse for your needs.
Choosing a Warehouse Location
How to select the right warehouse location for your business can be quite a puzzle. You want to find one close to major highways, convenient for customers, employees, suppliers, and vendors— yet cost remains a key factor. Do you opt for the warehouse near a densely populated area or the one further away with cheaper real estate? And don’t forget about labor costs—will you be able to find qualified staff in this location? Luckily, you have all the tools at hand to solve this logistics riddle of success!
Where Are Your Customers?
Before you can assume your spot as an industry titan, you must understand where your potential and current customers are. Ask yourself the tough questions: Do our sales primarily target people within a specific region? Are we selling all over the world? Taking an inventory of the customer landscape is vital for maximizing efficiency—setting up a shop near your customers helps keep transportation costs down, streamlines delivery, and saves resources in the long run. Ready, set, map!
Are You Getting Value For Your Money?
When selecting the ideal location for a warehouse, the cost is always at the top of the list. But to get a true sense of value for money, it’s essential not to overlook hidden charges — a factor that can offset any savings you make on cheaper rental rates.
Luckily, there’s more than meets the eye when making your decision; tax structure and incentives are also vital considerations. Certain areas may be subject to special government programs designed to boost particular industries. All in all, weighing up all this information is an absolute must if you’re looking to get the most bang for your buck!
What Are the Utility Costs?
Whether you’re growing or shrinking, it pays to do your research to avoid making a potentially costly mistake. When planning your move, remember to factor in all the utilities necessary for smooth operation: electricity, water, and sewage are standard, but what about the internet? Before you move, double-check the availability and cost of the internet; after all, fast and reliable service is essential in this day and age!
What is the Structure and Layout of the Building?
Choosing a suitable warehouse building for your business requires a lot of thought and consideration; after all, it might be challenging to adjust specific equipment to an old building that cannot sustain a proper flow of raw materials. It could also result in needing to modify an existing warehouse and that could lead to additional costs.
Thinking about ceiling heights, column spacing, and other factors is key in ensuring that you will avoid any issues with inward and outward flows. Do you sell perishables that need to be refrigerated? Be sure to look at refrigerated warehouses to ensure frozen or perishable goods are stored correctly and arrive in top condition!
To guarantee your buildings are fit-for-purpose, put as much time and effort into the structural planning as you would the other aspects of planning – otherwise, you may discover too late that essential elements have been missed or overlooked.
What is the Workforce Availability in the Area?
Despite the great potential for cost savings, it’s important to remember that workforce availability means more than hiring bodies at low wages. You must look at the big picture regarding supply and demand and consider whether these workers have the desired skills to meet your business’s needs. If not, you could find yourself with a team lacking in drive to give your customers the service they deserve while wondering how much money you wasted in the process.
Is the Warehouse Close to Airports, Railways, or Ports?
Regarding transportation costs, there’s a lot to consider – from where your business is located in relation to roads, highways, and airports to the volume of local traffic. If trucking is your primary mode of getting products around, accessibility and easy access are key. It pays well then to be mindful of proximity when selecting warehousing facilities – ideally as close as possible to the airports, railway stations, and ports for maximum drayage cost control and high-velocity levels.
What are Some Local Environment Factors?
When considering an optimal location for a new warehouse, you’d be wise to look at two key factors: proximity to major suppliers, producers, and/or customers, plus local environmental considerations. Logistics pros and cons can quickly outweigh each other based on these locality choices, so getting it right is vital.
Make sure you pay attention to weather risks just because the building looks great – would you want a hurricane tearing through your new facility? When it comes to markets and local environmental factors, go the extra mile in your due diligence!
Factors to Consider When Selecting a Warehouse
It takes significant research and internal evaluation of company priorities to select the correct warehouse. Here are some considerations to keep in mind when choosing your next warehouse.
Special Features
It is not uncommon for warehouse features to be as unique as the inventory. Ensure your warehouse has everything you need for storing your products, like dock doors, levelers, fire suppression systems, refrigeration or air conditioning, power requirements, and floor loading capabilities.
Technology
Typically, warehouses are not equipped with technology before leasing or purchasing; the tenant’s needs determine it.
When selecting a warehouse, consider the following questions related to warehousing technology:
- How will the new warehouse integrate with your company’s existing supply chain and processing systems?
- Does the warehouse already have any tech?
- Does the warehouse have the capacity to handle new technologies such as drones, pick-by-vision systems, and electronic data exchange?
Flexibility
The COVID-19 pandemic clearly illustrates that eCommerce services need to be more flexible. It would help if you chose a warehouse that will be flexible enough to expand and meet the logistics requirements of the future (and those of your customers).
Pick Your Warehouse Like You’d Pick a Date
With eCommerce playing a more significant role in the consumer market than ever, an efficient warehouse solution is essential. Don’t just click and go when selecting your warehouse logistics; read up on implementation strategies, scalability potential, and reporting capabilities for that extra peace of mind. After all, your warehouse may be the basis for your eCommerce business, so don’t view it as an afterthought – treat it with respect! Pick the best service that fits your future goals and overall branding strategy, and watch it become the groundwork for success. Don’t let yourself be overwhelmed by making hasty decisions; take time to find what fits you best.
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For More Information About ShipHero
Whether you want to let go of running your own warehouse or run your warehouse better, you can do both – and so much more – with ShipHero.
Click HERE to Schedule a Meeting with Our Sales Team.
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Dec 9, 2022 | Blog, Warehouse Management Software
It’s the most wonderful time of the year … or is it? Peak season is make or break if you’re in the retail business. And this year, there are more challenges than ever before. Between inflation and the heavy reliance on credit and discounts, many retailers scramble to keep up. But fear not! In this blog, we’ll look at how buy now pay later (BNPL) programs are helping to keep the holiday season bright.
Inflation & The Holiday Season
Inflation has been rising throughout 2022, and December is no exception. This is bad news for retailers, who already feel the squeeze from higher costs across the supply chain. Products once affordable are now out of reach for many shoppers, who are forced to either cut back on their holiday purchases or turn to credit cards and other forms of debt to finance their shopping. According to the NRF, online and other non-store sales were up 9.5% at $261.6 billion, which fell short of its 2022 forecast of a 10% to 12% growth. While inflation has continued to soar for several months, consumer spending has remained relatively consistent.
What is Buy Now, Pay Later (BNPL)?
We all know the feeling of wanting something we can’t afford. What if there was a way to buy now and pay later? No interest, no fees, and no credit card required. Enter: buy now, pay later.
A BNPL solution allows shoppers to spread the cost of their purchase over time without accruing any interest or fees. This makes it an attractive option for shoppers struggling to keep up with the rising cost of living. BNPL programs are also convenient because they can be used online and in-store.
BNPL emerged in the early 2010s to help consumers finance their purchases without the high-interest rates and fees associated with credit cards. Since then, it has grown increasingly popular, particularly among younger generations. And with the recent pandemic, BNPL solutions have taken off even more. The size of the U.S. market was worth around a few billion dollars in 2019 but is estimated to grow by 1,200% by 2024!
The Escalating Use of Credit Cards and BNPL Programs
The use of credit cards and BNPL programs has been rising recently, but it has exploded during the pandemic. These companies have gone from being relatively unknown to becoming a significant force in consumer credit in just a few short years. And it’s not hard to see why.
For merchants, it drives higher average tickets and reduced cart abandonment. Plus, retailers benefit because people can make purchases even when they don’t immediately have funds available. If played correctly, they may see them return again, which would be a great play toward loyalty.
Why Has BNPL Gotten So Popular With Consumers?
There are a few reasons why BNPL programs have become so popular. First, they allow shoppers to make purchases now and pay later without accruing any interest or fees. This can be especially helpful during economic uncertainty when people try to be more careful with their money.
Second, BNPL programs usually have very low minimum payments, which makes them even more appealing to cash-strapped shoppers. Finally, most BNPL providers offer promotional periods that allow shoppers to delay payments even further. For example, Afterpay—one of the most popular BNPL providers—gives customers the option to pay interest-free for their purchase over four equal installments.
BNPL: A Winner of Black Friday
Thanksgiving and Black Friday may have been great days to be a buy now, pay later service provider. Given the economic pressures many shoppers face right now, BNPL payment options offered a way for consumers to still get the goods they wanted. More telling is that some shoppers are using BNPL for lower-priced goods instead of high-ticket items, with the average order value for BNPL purchases decreasing in the U.S. by 6% on Thanksgiving. Orders using BNPL rose by 78% the week of Nov. 19 to Nov. 25 when compared to the week before, according to Retail Dive. Additionally, overall revenue from BNPL is up 81% during the same period. In other words, people are using buy now, pay later services more than ever to finance their holiday shopping – and they’re doing it at lower price points than in previous years.
Could There Be Repercussions?
The problem with BNPL is that there are consequences if you don’t follow all the rules. However, many providers and their critics are currently concerned about the types of products purchased. In the past, many consumers took out BNPL on high-ticket items. Now, that same money is used to pay for groceries and other essential expenses, leaving a potential for predatory lending if the market is not regulated correctly. While such practices can be considered harmful, on the other side, the diversity and flexibility in BNPL approaches could spell a new era for consumer buying and boost future buying potential.
Nevertheless, for now, it appears that the pressures are manageable. Losses on installment loans are low, and payment rates are high based on corporate filings. It is clear that the ‘pay in four’ BNPL product has found a sustainable niche in the consumer credit market. By providing a more efficient and cost-effective option for consumers, BNPL companies are stealing growth from traditional financial providers. What happens next will only be revealed with time.
Only Time Will Tell
The holiday season is always challenging for retailers, but there are more challenges this year than ever. Inflation puts pressure on tight margins, and shoppers increasingly turn to credit cards and other forms of debt to finance their purchases. This is where BNPL programs come in. While BNPL programs may provide a much-needed boost to retail sales during peak season, there could be long-term consequences for retailers and shoppers alike if debt levels continue to rise. However, by allowing shoppers to spread the cost of their purchase over time without accruing any interest or fees, BNPL programs are helping to keep the holidays bright for retailers and shoppers alike. Only time will tell how this will all play out, but one thing is for sure: we’re in for an interesting peak season!
ShipHero Team
About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With thousands of brands and 3PLs relying on us daily, we’re here to help with all your logistics needs. Let us know how we can help you today by scheduling a call HERE.
Follow ShipHero today on Twitter and LinkedIn.
Dec 8, 2022 | Blog
It’s that time of year again! The leaves are changing, the air is getting crisp, and eCommerce and 3PL businesses worldwide are preparing for peak season. For many of us, peak season is both the most wonderful and most stressful time of the year. That’s why we’ve brought in our resident peak expert, Alex from ShipHero, to share some wisdom on how to make it through peak season without losing your mind. From personal experience, Alex can attest that peak can often be a bit of a “wild west,” but having a peak plan in place helps to keep things under control. So tune in for some peak wisdom and maybe a horror story! It’s all happening on this episode of PalletSide Chat.
What is Peak Season?
As peak season approaches, you may feel like a football coach preparing for the big game. But instead of designing plays, you’re strategizing how to navigate the influx of shipments and rising freight rates. It’s no wonder peak season is often referred to as the Super Bowl of logistics. Between mid-August and Thanksgiving, markets see high demand and increased goods on the road. And while we might spend all year optimizing our supply chain processes, peak season can still bring significant challenges for retailers and those managing logistics. So buckle up because peak season is officially here.
“What is peak? It’s the Super Bowl of logistics.” -Alex Lewkowict
Prepping for Peak
As any online business owner knows, peak season can make or break your year. That’s why it’s important to start preparing as early as possible – analyzing past inventory levels and sales numbers to forecast volume accurately and determine staffing needs. Trust us – we know from experience the mayhem that can happen during peak. Parking lot overflowing, surprise visits from the fire inspector, and throw in a visit from the USPS guy, and you’ve got the perfect storm (just ask Alex!). But having a plan in place, including cross-trained staff ready to handle any task thrown at them, will set you up for success during this chaotic time. Prepping for peak season may take extra effort and forethought, but trust us – it’s worth it in the long run.
“I feel like that’s like the peak-est peak season story I’ve heard so far.” -Dan Van Meer.
Overcoming Operational Challenges
Alex understands navigating peak season can be a headache for their clients. So, he strives to make it feel like an in-house operation without stress. Overcoming operational challenges is critical, and he prioritizes communication to understand each brand’s needs and timelines. For all of One23 Fulfillment’s clients, his ultimate goal is to ensure a smooth and successful experience.
Even with the best-laid plans, things can still go wrong—and they often do during peak season. Operational challenges can still arise during peak, even with clear communication and solid preparation. That’s why you need a strategy for overcoming any bumps in the road, whether it’s longer-than-expected lead times from vendors or unexpected employee absences. It’s important to know how to anticipate and adapt to any situation that might come your way.
“Ultimately, the playbook is lead a great team, build great relationships with customers and vendors and execute well.” -Dan Van Meer.
Customer Service Success
Let’s face it – the warehouse is a total madhouse during peak seasons. Orders are flying in left and right, and the team’s main priority is getting them out as fast and accurately as possible. However, that doesn’t mean your customers should be left to wait for solutions to their potential problems.
Alex recognizes the importance of providing excellent customer service even during the busiest times. That’s why he decided to have a few team members whose sole focus is ensuring their clients and customers receive quick responses to their inquiries and swift resolutions to any issues that arise. Customer satisfaction is at the heart of success, so it’s essential to prioritize it no matter how hectic things get.
“You’re the 3PL, you’re supposed to be the logistics expert. [For] brands, it’s their biggest time of the year.” -Alex Lewkowict
Keeping Your Team Motivated
Building a great team is crucial for success during peak season, but it’s important to remember that your team needs motivation all year round. As a business owner, it’s important to filter through employees and build a group of dedicated individuals who are excited about the challenge peak brings.
Keeping an enjoyable work environment with perks like music in the warehouse and a family-friendly atmosphere helps keep morale high and boosts loyalty among employees. It’s also important to ensure your team understands their role’s importance during peak season and knows what to expect regarding increased workload. You’ll be fully prepared for peak season successes by maintaining a motivated team throughout the year.
“We talk about peak all year round. Everybody who works for us knows what’s coming.” -Alex Lewkowict.
You May Be Stressed … but You Can Handle It!
As Alex so eloquently stated, peak season success boils down to a simple concept: just be a decent human being. Sounds easy enough, right? But there’s a catch – the devil is in the details. So, treat your colleagues, partners, and customers with kindness and respect. Be sure to start prepping for the high volume before peak season – stay organized and proactive throughout the year. And when things inevitably become chaotic – take a deep breath, grab a cup of coffee, and remember that it will all be over soon.
Together, we can conquer peak like pros! Reach out with questions and feedback at podcast@shiphero.com. Happy peak season!
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About the Hosts: As VP of marketing, Dan Van Meer is always on the go. From overseeing project management and data analytics, he has his hands in a little bit of everything. Most importantly, he ensures that all creative work – from graphic design to digital marketing – is high quality and on-brand. Co-host Alex Lewkowict is quite the renaissance man. He’s been an adolescent entrepreneur, successful CEO, and Founder of a men’s skincare line, and he created One23 Fulfillment. Did we mention he made the Forbes 30 under 30 list?
Dec 2, 2022 | Blog, News & Updates
Peak season is here, and ShipHero is here to help you through it! Our ShipHEROs at the warehouses are moving at light speed to keep up with demand. We wanted to check in and give you an update on some early trends that we’ve spotted.
Peak Season is Full of Surprises
Due to the fact that the ocean container peak season is from July through September, we can gauge the way other transportation peaks will function during the remainder of the holiday season. Because of this estimation, FreightWaves says, with certainty, that the rest of the season will be incredibly weak. The effects of the Coronavirus have been far-reaching, and peak season is no exception. We’ve seen a significant decrease in demand for all modes of transportation. As a result, peak season shipments are expected to be down significantly this year.
Shipping Rates are Declining
There’s a little something extra in the air… deflation! That’s right, prices are falling during the shipping peak season in 2022. Rates dropped early this year, but in May, they began falling dramatically – presumably because of lowered demand due to inflation and the Shanghai lockdown limiting the availability of goods.
- According to Freight Os, In late July, Asia-US West Coast rates were 55% lower than at the start of the year and 64% lower than at the same time in 2021.
- Asia-US East Coast rates also fell 38% between January and July, reaching costs 50% lower than last year’s.
- Rates from Europe to the US fell about 25% between January and May.
The dramatic drop of May-June has slowed, moving into a leveling-off, but we have yet to see the spike we normally see this time of year.
One factor that has contributed to this trend is falling demand. Retailers report that shoppers are simply buying less than they have in previous years. Another factor is advance orders. Many retailers have already filled their holiday inventory based on advance orders from suppliers, so they may not need to order as much during the peak season.
However, this trend doesn’t apply close to home. National and regional U.S. carriers have still instituted carrier and gas surcharges to keep up with the extra domestic demand they see during peak.
Carrier Updates: Demand Declines, but Congestion Persists
It’s the peak season for shipping, but carriers struggle to keep up with the demand. Rather than the traditional busy peak season, this year has been marked by falling demand and congestion. Excess inventory has meant more congestion than ever, at least in the short term: since new inventory has been arriving before old inventory has emptied, warehouse space is tight.
Containers continue clogging up ports as they wait for a place to go. Retailers have all of the products they need in their distribution networks for the holidays (and then some), so there won’t be a lot of freight demand as we head into the last month of the year. As a result, carriers struggle to keep up with the seasonal shipping trends.
The current situation for freight carriers can be best summed up with one word: peaky. While peak season is typically a time of high demand and increased congestion, this year has been anything but typical. Retailers were carrying bloated inventories and focused on burning them down, which meant fewer load opportunities for carriers. And with firms getting more nervous about the broader economy heading into 2023, there is little incentive to replenish inventories. This could mean more disruptions to seasonal shipping trends and carrier updates in the coming months.
Spot Rates have Fallen, but Contract Rates are High
Contract rates may not be falling as quickly as spot rates, but that doesn’t mean businesses are ready to give up their contracts. Many companies are splitting their shipments, using spot rates for some goods while retaining contracts for others. This strategy allows businesses to take advantage of lower rates without sacrificing the stability of a long-term contract.
While ocean spot rates and imports have declined sharply this year, contract rates have remained relatively steady. This makes sense when you consider that peak season typically begins in the year’s second half. So even though spot rates are lower than they were a few months ago, businesses are still willing to pay a premium for the predictability of a long-term contract.
The Chinese Zero-Covid Policy Uncertainty
The ongoing Covid-19 pandemic has wreaked havoc on the global economy, and the peak shopping season is about to get even more chaotic. According to reports, China is considering lifting its zero-Covid policy to keep peak season on track. However, this could lead to even more disruption as merchants worldwide scramble to get their orders in. If the restrictions are lifted, manufacturers could be overwhelmed by the sudden surge in demand, leading to product shortages and delays. However, if things stay as they are, sellers could be left dealing with serious shortages during high demand.
Tips for Avoid Issues During Peak Season 2022
1. The only thing you can be certain of is that things will keep changing and developing. There are many moving parts, and things can change quickly, so it’s important to stay as informed as possible. This might mean choosing an industry-informed blog to check every couple of days or getting push alerts about the situation sent to your phone. It’s hard to account for changes and developments you don’t know are happening.
2. While the holiday rush can be a boom for sales, it can also be stressful if you’re not prepared. Fortunately, demand forecasting can help take some guesswork out of holiday planning. By looking at historical sales data, retailers can get a good idea of how much customer demand there will be for their products or services during the holidays. Demand forecasting can then use this information to plan inventory and production levels so that businesses can meet customer demand during the peak season.
3. As peak season marches on, many retailers feel the pressure. Will they have enough inventory to meet customer demand? Will their suppliers be able to keep up with orders? These are valid concerns, but sourcing products from local manufacturers is one way to help shield yourself from supply chain shocks.
Of course, no manufacturer is immune from issues, but if you’re sourcing products from within your own country, you’re more likely to be shielded from international disruptions. And if your manufacturer runs into difficulties, only a small portion of your intended selling range will likely be affected. So, explore local manufacturing options for your peak season needs – it’s good for the environment and can help you avoid potential disasters down the road.
We’re All in This Together
It’s been a long, hard road for everyone in the manufacturing, shipping, and e-commerce industries since the Covid-19 pandemic hit. And unfortunately, there’s still no end in sight. Every year brings new challenges and uncertainties, making it difficult to predict whether things will get better or worse. However, there is one thing sellers and freighters can do to help ensure they’re operating on the best possible information: stay up to date on the latest industry news. This way, they can be ready for whatever peak season throws their way. With determination and a commitment to keeping informed, sellers and freighters can weather any storm. After all, we’ve been through a lot these past few years. But together, we’ll make it through to the other side.
Peak season is here, and ShipHero wants to help you get through it with only a few scratches! We have everything you need to ensure it goes smoothly. With important updates, notifications, and general advice, you can be sure that you’re rocking peak season in 2022.
Stay informed during Peak by following ShipHero on LinkedIn and subscribing to our newest blogs and updates.
Aaron Rubin, Founder & CEO
ShipHero
About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning, and a passion for progression. He is known for having his finger on the pulse of ShipHero’s significant initiatives, entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to impact the lives of employees, customers, partners, and investors.
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