Transfix study examines shippers and consumers approaches to holiday shopping and shipping

The findings of a recently-published study by Transfix, a New York-based logistics technology services provider that streamlines shipment data to better help shippers make informed decisions to optimize time and revenues, takes a close look at how both consumers and shippers are approaching the holiday shopping and shipping season.

The study, entitled “The Great Holiday Rewrite: Supply Chain in the COVID Era,” was based on feedback from 600 U.S.-based consumers and 519 U.S.-based supply chain professionals within midsize to large retail or CPG brands who also have familiarity with freight booking and management practices.

The study was replete with interesting takeaways, from both consumer and shipper perspectives, including:

• 79% of U.S. consumers maintain their 2020 spending has been less predictable than in previous years, with 72% of shippers indicating they lack visibility into key performance metrics that are needed to make changing inventory and transportation decisions;
• 72% of shippers stated that they are not confident their supply chains are set up for success heading into the holiday season;
• 55% of consumers plan to shop earlier this year, and 87% intend to do more shopping online than in the past;
• only 23% of supply chain professionals said that they have the technology and tools needed for success;
• 37% of shippers said that they are dealing with freight capacity challenges; and
• 26% of shippers are dealing with inventory planning challenges

In an interview, Ahmad El-Dardiry, Chief Operating Officer of Transfix, provided LM Group News Editor Jeff Berman with insights into the study’s findings. Their conversation follows below.

LM: What are the key reasons, or factors, for 72% of shippers not being confident that their supply chains are not set up for success? Was this finding surprising?

El-Dardiry: This was not a surprising finding; this lack of confidence has been around for years, but has been exacerbated by COVID-19 and the holiday season. Since the effects of the COVID outbreak began to accelerate in March, consumers have exponentially altered their buying behaviors, making the supply chain less predictable for shippers than in previous years (in fact, 79% of consumers in our study agreed that their shopping behavior has been extra flighty this season). Consumers are buying earlier than in previous holiday seasons, they’re all buying online, and certain goods are flying off of the shelves. These rapidly changing consumer behaviors have created massive challenges across the worldwide supply chain for the past seven months, putting a strain on shippers. Our study cited supply challenges as the top issue supply chain professionals are facing right now (54%), followed by sales volatility (51%), inventory challenges (46%), freight capacity challenges (37%), and inventory planning challenges (26%). All of these issues, coupled with flighty consumer shopping behavior, are making shippers less confident in their supply chain.

LM: With all of the supply chain issues resulting from COVID that is leading consumers to shop earlier for the holidays-as observed by the 55% of consumers saying that is the case, does it stand to reason that this could be a permanent shift?

El-Dardiry: This could absolutely be a permanent shift. Some trends that we saw pre-COVID have accelerated in big ways—like the shift to e-commerce spending, for example. But we’re also seeing consumers buck a lot of historical trends, like when they are shopping. In previous years, retail spending followed somewhat predictable cycles and seasonality, but this year, more than half of consumers are shopping earlier. Consumers are buying earlier due to a real fear of 1) long shipment timelines and 2) inventory availability. We found that 2 out of 3 consumers say confidence in on-time delivery is the number one factor influencing online purchase decisions, and that 60% would even cancel their orders if delivery delays occurred. With this mindset, ordering earlier is their best bet for getting what they need when they need it. Even those who are braving the brick-and-mortar stores cite product availability as a fear. 88% of consumers who shop in-store expect retailers to provide store inventory information on their website. With next-level insight into when and where an item is in store, consumers will be more inclined to buy that item faster and earlier. Consumers who lived and shopped through 2020 could conduct holiday shopping earlier for years to come due to the massive supply chain woes they experienced throughout this year. 

LM: Why do you think less than one quarter-23%-of supply chain pros say they actually have the technology and tools needed for success? 

El-Dardiry: For supply chain pros, increasing efficiency, flexibility, and sustainability, while also reducing costs, are at the top of their priority list as the market continues to fluctuate. While respondents agree that tools and tech are requirements for success in those areas, especially in today’s volatile environment, there are major adoption gaps that are hindering shippers as they head into the critical holiday season. According to our study, this is because 82% of supply chain pros feel their company has historically under-invested in supply chain tools and tech, and 78% say their company is struggling to quickly acquire the tools and tech they need to navigate COVID challenges. What’s more, 59% agree that the tech gap renders them unable to take swift action in rapidly changing markets, something that’s especially critical right now. The immediate focus has been on fulfilling loads and finding capacity as quickly as possible versus taking a step back to understand where technology could help the process happen more efficiently, flexibly, and sustainably. But this tech gap is a bottleneck to supply chain success—both now and as shippers look ahead to 2021. To all of the supply chain pros contemplating tech investments this year: you have the potential to change your supply chain game. Technology enables agility and flexibility when the market is unpredictable, offering strategic advantages for companies that invest in tech tools or find the right strategic partners. For example, digital freight platforms can provide the visibility shippers need, while enabling real-time exception management and data insights needed to diagnose major inefficiencies.

LM: The report's numbers in regards to transportation capacity, or lack of it, were in line with what we have been seeing, or hearing. That said, what can shippers do to gain, or regain, trust in their carriers, especially at this time of year, short of using the spot market or freight brokers? 

El-Dardiry: In today’s environment, holiday success will require reliable partners for enabling transportation flexibility and agility, yet many shippers don’t have the right partners in place. We found that 98% of supply chain pros say access to reliable freight is one of the most important factors for success - but 2 out of 3 say they’re not fully confident in their carriers today. Having unreliable carriers can be a major business hindrance for shippers. Our study found that on average, up to 30% of shipper company time is wasted each week finding backup carriers due to tender rejections or missed pickups. When I talk to shippers, what they really want is to feel secure about their partnerships and carrier commitments. When I hear this, I’m not shy about pointing out that shippers are equal participants in this problem. All too often, I see procurement divisions fight to get rock bottom prices without properly weighing the benefit of reliable service and value-add services which may come at a slightly higher premium. Then, when the market turns, their transportation partners have to scramble to cover loads when carriers start rejecting them. This results in a massive increase in cost and time spent to ensure loads are covered to meet customer expectations. It’s critical to get the right partners at the table from the start. Further, I really think this industry needs to rethink the model. Smart shippers and carriers think beyond the transaction to a long-term partnership that can provide mutual stability and enable growth. But don’t underestimate the role of technology in fostering stronger relationships as well. Our industry is rife with opacity, but digital freight platforms can help bring data-driven load predictions and more seamless communication into the process, both of which help build a system of trust between shippers and carriers.