Peak season management

Many companies have been pinning their hopes on an anticipated turnaround in the manufacturing market this year, with economists forecasting demand bumps, stabilized inflation and lower interest rates.

Those hopes helped ease some of the anxiety manufacturers were having over rising material, labor and energy costs at the outset of the year. But as of July, the forecasted industry turnaround has yet to materialize. The Federal Reserve hasn't dropped interest rates, and a focus on cost management has grown across the industry. 

Elevated supply costs and stagnant demand are lowering companies’ expectations for a rebound in the second half of the year ahead of a pivotal presidential election. Many manufacturers have tightened their belts, holding off on major spending, including investments in production and labor, until some of the uncertainty in the market wanes.

"As the year's gone on, it's really converted from a 2020, core performance year, which is really profit focused, to more concern about liquidity in the absence of any real reduction moves, which opened up financing obviously for companies," Timothy Fiore, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee, said on a June 3 media call for ISM’s May Purchasing Managers’ Index. "Uncertainty is the devil of business, and that’s exactly where we’re sitting today."

Political uncertainty can heighten supply chain costs

Stability isn’t likely to arrive in the coming months as the U.S. gears up for the presidential election, said Ted Stank, co-executive director of the Global Supply Chain Institute at the University of Tennessee Knoxville. 

Geopolitical risks, including the impact of the U.S. presidential election as well as the ongoing wars in Ukraine and Gaza, can affect both supply and logistics costs for manufacturers. As the presidential election approaches, Stank anticipates raw material costs will rise for precious metals such as gold, silver and copper. 

"I bet gold is going to skyrocket because everybody's going to think ‘we're going to Civil War 2.0, and let’s get rid of our stock and buy gold instead or precious metals,’" Stank said. "So if you're manufacturing with those, that's going to have an impact.” 

Election uncertainty can also hurt the value of the U.S. dollar, further driving up costs. 

"As we get closer to the elections, if things continue to look the way they are now, and there's all this uncertainty, the dollar will probably weaken against some other currencies," Stank said. "And that's going to impact manufacturers' ability to buy [supplies] if your currency is weaker than the places that you're buying from."

Looking at logistics costs for shippers, Stank added that disruptions in the Red Sea have caused ocean freight rates to rise, which he doesn't see abating in the coming months. Domestic freight rates will also soon rise as the industry heads into peak shipping season. 

"As we start hitting the holiday season, the harvest season, domestic freight costs will probably start going up," Stank said. "Manufacturers that have been shipping on the spot market should maybe be looking at locking in some costs for this fall."

Labor costs could stabilize, but scarcity to remain

Labor continues to be a top issue for many manufacturers and their budgets. Labor costs were up year over year in Q1, according to the Bureau of Labor Statistics, as companies navigated rising wages. Companies also expect employee wages to rise another 2.8% over the next 12 months, according to the National Association of Manufacturers' Q1 2024 survey. 

As inflation and therefore wage costs come down, Stank noted that labor constraints aren't likely to ease in the industry. The challenging recruitment market means companies often need to spend more on automation to fill the gap. 

"The cost of talent — that's going to be with them forever," Stank said. "I've been working on a couple of projects with some manufacturers that are really investing quite a bit in automation, because of not just wage increases, but lack of availability of talent."

The inability to attract or retain labor was also the top challenge for more than 65% of manufacturers that responded to NAM's Q1 survey. That percentage, however, dropped to its lowest since the end of 2020, a sign of possible cooling in the labor market.  

In addition, investments in headcount are among the budgets some manufacturers are reevaluating amid the still high interest rates, according to ISM.

"Given the uncertain demand here in the lack of new orders coming in, there is no really significant hiring going on," Fiore said on the June 3 call. "We've returned to a much more cautious hiring environment, because the future is a bit uncertain."

Preparing for the months ahead

In preparing for the final months of the year and peak season, manufacturers should keep a sharp focus on quality, even as they manage their bottom line and cut costs, said Lindsey Berckman, a principal at Deloitte. 

Berckman, who leads Deloitte’s U.S. Aerospace and Defense practice, encourages companies to keep prioritizing supply continuity and renew their focus on "producing it right the first time."

"Focus on quality. You need to have supply lines, but you also need to be producing quality parts," she said.

She also encourages manufacturers to take advantage of tax incentives and government funding available through the Department of Energy and elsewhere to help with costs. 

Stank, meanwhile, urges companies to maintain robust cost models that can help them forecast for budgeting. 

"The more robust their cost models are, the better off they're going to be," Stank said. "Over the last 30, 40 years we've been guilty of focusing on one cost above all others, mainly labor costs. If nothing else, over the last five years with COVID, we've realized there are a lot of things that can reach up and bite us if we haven't included them in our cost models.”

The nation’s top seaports should continue to expect elevated import levels this year as strong levels of consumer spending persist, the National Retail Federation and Hackett Associates said in a May forecast.

The organizations forecasted that loaded import volumes at the top 12 container ports will remain above 2 million TEUs through October 2024, marking the highest sustained volumes in years. The groups credited continued consumer spending on goods as the cause of continued freight demand.

“We haven’t seen numbers this high for this many months in almost two years,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Regardless of what headlines about the economy might say, consumers are shopping and retailers are making sure they have merchandise on hand to meet demand.”

May is projected to be the first month to reach the 2 million TEU threshold since October 2023, a sign of a potential cargo recovery this year.

Such high volumes were rare prior to the COVID-19 pandemic, with much of 2018 and 2019 falling below the threshold. Then, demand surged during the global health crisis, leading the top ports to handle well over 2 million TEUs every month, from August 2020 to October 2022.

However, the past few years have seen significantly lower volumes, with ports only surpassing the milestone during two months: September and October 2023, according to the report. Consumers may turn that trend around this year.

“We are still seeing a strong volume of goods flowing into ports despite global geopolitical turmoil, high interest rates and a slowdown in economic growth,” Hackett Associates Founder Ben Hackett said, noting the surge has been spread across all three coasts, though Gulf Coast imports have grown the most.

“The issue now is whether this surge will continue or level off,” Hackett said.

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Whether disruptions are happening or not, shippers should have contingency plans in place, experts say, which was a hard lesson learned during the pandemic.

Though as that crisis subsided, 2024 has not been a smooth year for ocean shipping stakeholders. Risks along the Red Sea have created longer transit times, fueling congestion at some ports in Asia. Along with higher ocean rates and a looming East and Gulf Coast labor contract expiration, shippers are also facing a volatile ocean market.

Transport and logistics experts shared their take on the current risks shippers and carriers are facing along with strategies to mitigate supply chain disruptions during Industry Dive’s live event on July 24, “Supply Chain Outlook: Trends and Risks To Watch in 2024.”

Here’s what the experts suggest logistics industry stakeholders should do to best navigate the rest of 2024.

Diversification: Back to basics

Supply chain disruptions loom at U.S. ports. The International Longshoremen’s Association’s master contract with the United States Maritime Alliance is set to expire on Sept. 30. While negotiations continue, experts suggest preparation is the best strategy to mitigate problems.

“As far as preparing, we have seen a good bit of the front loading of ocean freight cargo. The early peak season and some of that could be attributed to a potential strike to make sure that the retailers have their inventory and such,” Cathy Morrow Roberson, founder and president of Logistics Trends and Insights, said during the live panel.

Diversification is one tool shippers can tap to reduce potential disruptions — a lesson many retailers learned during the pandemic, Roberson said. During contract negotiations for West Coast dockworkers, shippers "learned to diversify their ports," she added.

Hedge cargo, don’t push it all

When service issues arise at the ports, trucking typically is the next segment to feel its impact, according to Paul Brashier, VP of global supply chain at ITS Logistics. He has been advising clients to stay away from areas that are problematic.

“Hedge, don't don't push everything to the U.S. West Coast,” he added. 

One option is for certain SKUs to be moved through the Panama Canal to the East Coast. If possible, a shipper should avoid moving all cargo to the West Coast because “we are concerned about significant congestion,” he added, since there has been an increase in volumes shifting to those ports.

Another lesson learned from post-pandemic congestion is ensuring drivers can enter all the ports in certain regions, Brashier said. For example, making sure drivers coming from Southeast ports such as Jacksonville, Charleston, and Savannah can enter ports in the Northeast like Norfolk, New York, and Baltimore, he said.

Whether or not an East and Gulf Coast labor strike happens, the decisions around a potential strike can cause some ripple effects along the supply chain. Simply navigating the uncertainty is already changing patterns and bookings, Brashier said.

After navigating the West Coast port labor negotiations in 2023, Brashier recommends that shippers should be prepared for any service disruption situations. That can start with having the right capacity and adequate network that can operate outside and avoid problem areas while still fulfilling shippers’ needs. Second is visibility, Brashier added, “making sure you know, where your containers are, when they're going to discharge, where they're going to discharge, what's happening to them outside the terminal.”

Planning starts today

Another concern for shippers is possible peak season delays and what they should do to reduce risks. According to Robert Reiter, CEO of DHL Global Forwarding USA, peak season came early and will probably last for a couple of months.

In response to preparing for such delays, “contingency plans starts today,” Reiter said.

Reiter said during the July 24 event that delays emerged in the Transpacific Eastbound shipping lanes for the previous six to eight weeks with some significant space shortage driven by uncertainty in the ocean market.

“If you look into Southeast Asia, we see port congestion all over the place already going on,” he said. “So this is not a topic that we expect. This is a topic that we are currently dealing with that triggers delays.”

Shippers should also foster stronger relationships with carrier partners, Reiter said, as well as leverage other freights modes such as intermodal and airfreight.

“It’s absolutely critical to stay agile [and] leverage the technology,” he said.

Dive Brief:

• Shippers and forwarders need to be prepared for peak season to avoid being “at the mercy of the market,” according to a July 5 report from Xeneta.
• After six months of consecutive double-digit growth in air freight demand, the report said market players are strategizing how to navigate the expected challenges of Q4 2024 — including higher spot rates.
• “I’ve heard already that certain airlines and forwarders are thinking of implementing a peak season surcharge by the end of August. There’s a consensus it will be a hot Q4 for air cargo in many Asian markets,” Xeneta Chief Airfreight Officer Niall van de Wouw said in the report.

Dive Insight:

Growing e-commerce demand, ocean disruptions due to Red Sea conflicts, and manufacturing activity caused global air cargo spot rates in June to spike 17% year over year to $2.62 per kilogram, according to Xeneta.

YoY growth should continue in the double digits in July and August, van de Wouw said, particularly in comparison to the low demand from last summer.

“The global machine is humming along nicely at this level – but this is likely the calm before the storm in terms of air freight rates,” van de Wouw said.

Despite expectations for strong growth in July and August, van de Wouw noted demand will ease through the balance of Q4 2024 due to "a strong Q4 2023 comparison.”

“Shippers will pay more throughout Q4, the question is how much more?” said van de Wouw.

Southeast Asia to the U.S. recorded the largest spot rate jump of any other corridor, up 14% YoY to $5.32 per kilogram, according to Xeneta. Meanwhile, the Northeast Asia to U.S. corridor experienced a less dramatic increase of 4% YoY to $4.00 per kilogram.

Spot rates from China markets to the U.S. also dipped, albeit by 1% to $4.80 per kilogram.

As uncertainties loom for the air cargo market, shippers are looking to adjust their preferred contract lengths ahead of potentially rocketing rates in the last quarter of the year, Xeneta reported.

In Q2 2024, the share of contracts lasting more than six months grew to 28% as shippers looked to avoid peak season rate fluctuations. According to Xeneta, the dip in three-month contracts “suggests unease among shippers about negotiating rates just before the year-end peak season.”

Van de Wouw said those with long-term capacity agreements will be less at risk for paying high rates. Meanwhile, market players dependent on spot market rates will likely face a “hefty premium.”

“As we head into the second half of the year, it might be now or never to consider longer-term contracts,” Van de Wouw said. “With a mix of ocean shipping chaos, an upturn in manufacturing activities, and fear-of-missing-out, a delicate balance of short and long-term contracts is on everyone's mind. Only time will tell, but whatever happens, you’re going to be paying a lot more to ship goods from Asia Pacific once September comes.”

Dimerco Express Group is launching a weekly air freight charter service from Shanghai to Chicago as the freight forwarder anticipates a tighter than usual peak season, according to a July 10 blog post.

The charter service will be operated by Cathay Pacific and run from Sept. 12 to Dec. 5 using a Boeing 747-800F. The flight leaves PVG in Shanghai each Thursday morning before stopping in Hong Kong on its way to ORD in Chicago. Dimerco will then leverage its truck carrier network for final-mile delivery from Chicago.

The charter service is a response to expected freight capacity constraints on both air and ocean lanes during peak season from China to the U.S. While charter services are common in the industry, added peak season services provide regularly scheduled additional space during times when capacity is strapped.

Dimerco has launched charter services in the past — during the pandemic and another during peak season 2023, Kathy Liu, VP of global sales and marketing, Central Service Center of Dimerco Express Group, told Supply Chain Dive in an email.

Like during the pandemic, shippers this year are "scrambling for high-priced cargo space," Dimerco said in the blog post. But unlike in 2021, market constraints today are due more to high-volumes from ultra-fast fashion brands like Shein and Temu, and its ripple effects on capacity.

Typically, 30% to 40% of carrier capacity is pre-allocated under forwarder contracts, with the remaining space available to the rest of the market, according to Dimerco. However, this year, that pre-allocated percentage is much higher as e-commerce companies in China are asking forwarding partners to have at least one Block Service Agreement with a carrier.

In turn, several small- and medium-sized forwarders signed minimum volume contracts with carriers of around 25 to 50 tons per month, leaving very little available capacity to the open market, per the blog post.

The limited open market led Dimerco to secure its own capacity through a charter deal with Cathay Pacific. The service adds roughly 149 tons of weekly capacity to the market, according to a Cathay Cargo aircraft fact sheet.

“Traditional air freight shippers will be searching for added capacity, particularly brands launching new products for the holiday season, since they can’t afford inventory delays that would jeopardize a major selling day, like Black Friday,” Liu said in the blog post.

A turbulent ocean market is also contributing to air freight capacity constraints. Shippers are facing longer transit times and significantly higher rates as a result of the Red Sea crisis. The combination of factors is making some consider shipping goods by air instead.

“Air freight is typically 12–16X more expensive per kilo than container shipping,” Liu explained. “But right now that gap is just 6–8X and shrinking. Couple that with a China-to-USA, door-to-door transit time for container freight of up to 40 days and brands will be open to alternative modes.”

Dimerco is also considering adding a charter service from PVG to AMS in Amsterdam, due to the Red Sea crisis, Liu told Supply Chain Dive.

Industry experts are prompting shippers to start peak season planning now to avoid capacity concerns. In a July 5 report from Xeneta, Chief Airfreight Officer Niall van de Wouw said that there is a “consensus it will be a hot Q4 for air cargo in many Asian markets.”

According to the report, shippers and forwarders who are not preparing for peak season will be at “the mercy of the market,” with June spot rates on the Southeast Asia to the U.S. trade lane seeing the largest spot rate jump of any other corridor.

With air cargo demand stabilizing and capacity up, shippers are reevaluating contracts as air freight rates drop, industry executives say.

Following COVID-19’s capacity-strapped market which put air carriers in the driver's seat, shippers are now in a position to negotiate their rates, Hellmann Worldwide Logistics Airfreight COO Jan Kleine-Lasthues told Supply Chain Dive in an interview.

“I believe we will see more and more RFQs coming out and shippers [trying] to secure the low rate level which we have at the moment for a longer period,” Kleine-Lasthues said. He anticipated possible contract agreements of six to 12 months.

Kleine-Lasthues noted that certain industries such like automotive and pharmaceuticals are especially looking for longer-term agreements right now, and he expects to see “more RFQs coming in the coming weeks.”

As customer contracts based on prior period rate levels expire, Geodis is also advising shippers to revert to long-term pricing agreements with a fluctuating fuel charge, EVP of Freight Forwarding Eric Martin-Neuville told Supply Chain Dive.

“There are limited risks in terms of access to capacity and thus the time is right for shippers to work on reinforcing the robustness and resiliency of their supply chain,” he said. 

Xeneta’s Clive Data Services reported in June that freight forwarders, still feeling “handcuffed” by high airfreight rates and blocked space agreements with airlines, saw more shippers push to relaunch tenders and negotiate lower rates. During Q2, Clive saw six-month or longer contracts “gaining more ground.”

Amid shifting market conditions, shippers should remain focused on long-term relationships with carriers as capacity on certain trade routes may be vital in the near-term, said Peter Penseel, COO of air freight at CEVA Logistics. Over the past several years, volatility in the air freight market “placed a premium on relationships” when considering capacity, demand and freight rates.

“As markets swing back and forth, all sides at the table need to remain focused on the long-term partnership, prioritizing long-term stability and trust over short-term gains,” he said.

Rates have been on the decline due to falling demand and recovering capacity, with general spot rates down 41% YoY in July. Penseel expects rates to continue to decline globally, noting that “certain routes may be the exception, but given the current economic indicators, the second half of the year should remain on a similar trajectory as the first half.”

While promises of peak season demand typically drive a spike in rates and the need to secure capacity, most industry players anticipate no peak this year, or at the very least, a mini-peak, Penseel added.

“We expect certain trade lanes (Asia-North America and Asia-Europe trade lanes) to see a “mini-peak,” but we do not anticipate any strong movement on the demand side for the remainder of 2023,” he said. “The interaction between the recovering demand and the growing capacity will continue to apply pressure on both rates and contract agreements.”

Over the past year, industry players have been forced to rethink their post-pandemic air freight strategies to keep up with market changes like easing ocean disruptions. After 2021’s capacity crunch and surging demand led carriers and logistics providers to invest in their air networks, many are now cutting back on their aggressive expansion plans. Earlier this year, for instance, Amazon cut back on its air network operated through lessor Air Transport Services Group, while FedEx reduced its Express unit in a bid to right-size its air network.

Dive Brief:

• A shorter holiday shipping stretch and anticipated volume growth justifies UPS' heightened peak season surcharges, CEO Carol Tomé said during a July 23 earnings call.
• The later timing of Thanksgiving this year, falling on Nov. 28, will result in fewer days for orders between Black Friday and Christmas to be delivered than in previous years. That means the 2024 holiday shipping season will be the most condensed since 2019, Tomé said.
• UPS is expecting to encounter "the highest volume ever in our network" on Dec. 18, she added. "We think that the prices are going to stick because of what the environment is telling us from a demand perspective."

Dive Insight:

Even as shippers seek out lower-cost delivery options, UPS will implement surcharges for the 2024 peak season that are pricier compared to previous years. The amount of some surcharges varies by date, with prices peaking between Nov. 24 and Dec. 28. 

Fee hikes will start Sept. 29 for bulky and hard-to-handle packages. On Oct. 27, demand surcharges will take effect for UPS Ground Residential, Air and SurePost packages. The added fees are slated to end on Jan. 18, 2025.

The two demand surcharges are "a double whammy this year and will drive up costs" for customers that don't mitigate them, Onrout founder Jonathan Hessney said in a LinkedIn post.

"UPS has nicely given shippers more time than usual to prepare by releasing these in July (or it could be said they're moving first to try to get other carriers to follow)," he said. "Either way, there's still time to try to onboard alternatives, or negotiate discounts on the peak surcharges."

On UPS’ earnings call, Wolfe Research Managing Director and Senior Analyst Scott Group told executives that the size and magnitude of the surcharges came as a surprise. But the amount of volume UPS anticipates it will handle during peak justifies the pricing, according to Tomé.

UPS is grappling with a surge in volume from new e-commerce customers leveraging its SurePost service, CFO Brian Dykes said. The company's network capacity will soon be tested further by the emergence of its new contract with the U.S. Postal Service. The company expects to fully onboard the Postal Service as an air cargo customer before the holidays.

"When you have that kind of volume flowing to your network, you actually have to charge to service them well, because you have to hire people and lease aircraft and delivery vehicles, so on and so forth," Tomé said.

UPS rival FedEx is also confident in its ability to capture added revenue from peak season surcharges, EVP and Chief Customer Officer Brie Carere said during a June earnings call. As of July 26, FedEx had not yet released its 2024 peak season surcharges.

"The team has done a really good job in getting the increase we need to deliver an amazing peak where we do have to expand capacity," Carere said.

As yet another unconventional peak period approaches, over-communication will help carriers and shippers provide strong holiday service, Supply Chain Dive panelists said during a Sept. 21 panel discussion as part of the event “Insights into the Holiday 2023 season.”

“The number one thing — it’s not surprising — is share your forecast,” Vijay Ramachandran, VP of go-to-market enablement and experience at Pitney Bowes, said during the panel. This includes communication about when shippers plan to run sales or promotions, he added.

It can be hard for smaller shippers to communicate directly with larger carriers, Ramachandran said. It’s important to have a partner with account managers that monitor a company’s forecast and ensure it’s equipped with adequate transportation and labor during peak promotional periods, he added.

“You should really think about looking at partners that have that kind of conversational approach to planning,” he added. “You want that give and take to say, ‘here’s the parts of our network where we’re seeing the most available capacity, what periods during the holiday season are you seeing expected peaks in demand, and can we make sure that we’re tied together?’”

While volume forecasts can’t be completely accurate due to evolving consumer trends, “there’s a lot that can be done just … providing that your carrier is giving you that relationship where you can trade information back and forth on both demand and capacity,” Ramachandran said.

Carson Krieg, director of global alliances at project44, agreed that over-communication remains a strategic move for shippers and carriers this peak season.

“Share historical lane data, combine that with demand forecasts and basically be hand-in-hand with your carrier,” Krieg said.

Amazon has pushed peak season to start even earlier with their second prime days of the year starting Oct. 10-11.

“It really is a longer peak season than it has been, historically,” Krieg said. “So [build] out that 75-day plan around seasonality and peak volumes, and where you think you’re going to see your demand from a regional standpoint.”

The e-commerce experience doesn’t end when a shopper clicks buy. Retailers must be prepared to offer status updates as well as properly address late deliveries to turn first-time gift buyers into long-term customers.

The impact of a bad delivery experience can be significant, particularly during the holiday season. Three-quarters of consumers said that the reliability of delivery impacts where they shopped online in a holiday 2023 survey of 3,000 adults by Shipt.

"We have a lot on our plates,” said Jadah Hawkins, SVP and global market leader for retail and e-commerce at Alorica. “Places to go, people to see, desserts to eat, gifts to buy. So for the consumer, there's a lot of immense planning that takes place to accomplish all of these things."

"For the retailer, there's a tremendous amount of planning they have to do to meet higher expectations from the consumer,” Hawkins said.

This emphasis on planning contributes to nearly 7 out of 10 consumers wanting to know when their online order will arrive by looking at the estimated delivery dates, according to data from Parcel Monitor and Rakuten Insight Global.

The study found almost all consumers would be willing to switch to a competitor after just one instance of subpar customer service.

Take advantage of every channel

Holiday communications are a two-way street, and companies need to have options in place to efficiently handle incoming inquiries.

A proper mixture of self-service and live agents is key to assuaging last-mile doubts or troubleshooting issues.

“I think companies should invest in automation and nudge customers into that channel for the transactions that make sense to deliver through automation and self-service, and refocus their live agents on the remainder of services that are offered where customers prefer to talk to a person,” said John King, partner in the business transformation practice of Lotis Blue Consulting.

Self-service is great for simple tasks like tracking order status where speed is of the essence, according to Hawkins. However, websites can’t offer empathy like a real human. This is where live agents come into play.

“Self-service is good when things are easy and customers don't have a lot of time — they just want to get the general basic question or inquiry solved,” she said. “But when it comes to more complex, human-centric situations, you have to have a live agent.”

Live calls are more expensive than visits to an order tracking page, but if a customer can’t connect when they feel the need, it will lead to a miserable delivery experience. Don’t hide the number or otherwise discourage making the switch.

Consumers also need a voice throughout the delivery process, according to Hawkins. This includes letting them choose how they will receive updates or check their order status.

“If I choose to communicate in text, don't ask me for my email,” Hawkins said. “Don't communicate through the different channels that I opted out of. Use and respect my choice.”

Companies should start to think of social media as a channel for communication as well, according to Hawkins. Younger shoppers in particular are making purchases on TikTok, Instagram and Facebook, creating natural platforms for further interactions.

“I think that brands need to embrace and really leverage this as a form to reach out to new consumers and to solve problems for the consumer in real time where they want to be met,” Hawkins said.

Handle hiccups with speed and transparency

Even the most efficient last-mile operation can’t deliver every package on time, often due to factors outside of a retailer’s control. Companies need to be prepared to deal with this inevitability while minimizing the negative experience it can create for holiday shoppers.

“Retailers, over the last few years, have gone through many disruptive changes,” said Kassi Socha, director analyst at Gartner. “They should be prepared for a snowstorm to hit or an item to go out of stock. Those are two common scenarios that have occurred year after year, so retailers should have plans in place if one of those scenarios arises.”

Managing expectations starts at the checkout page. Estimated delivery dates are important, but companies should include the caveat that weather and other factors could mean shipping providers may not be able to hit these timelines, according to Socha.

Retailers with control over their own last miles should be proactive about problems they can detect, according to Hawkins. A transparent message sent ahead of time that lays out why the package is delayed and offers potential remedies can head off a frustrating experience.

This is also a great opportunity to suggest alternatives, such as picking up the item at a nearby store instead. Letting the shopper choose the new delivery date can also help salvage the experience by putting them back in control.

However, retailers can’t always get a message out ahead of a late delivery. In these cases, Hawkins and Socha agreed that quick and empathetic communication is essential. Lay out what happened and how the issue can be resolved, whether with a discount or another form of compensation.

“Don't blame the UPS or FedEx driver, because even though that may be a true statement, [customers] don't remember the logistics supplier,” Hawkins said. “They remember the brand. We need to own it. We need to fall on the sword. We need to take care of them for shopping with us.”