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Holiday Shipping will Cost More and Be Slower This Year

Holiday Shipping will Cost More and Be Slower This Year

Nov. 4, 2024
Pricing will increase given that FedEx and UPS surcharges are more aggressive and have longer peak durations, says Coresight Research.

A recently released report from Coresight Research, Holiday 2024: The Last Mile—Trends and Challenges as We Enter the Holiday Shopping Season,  predicts the holiday season “ to pose challenges for logistics and shipping processes, although improved planning and less unplanned packages should help make the impact more manageable for both retailers and parcel carriers.“

Pricing will increase given that FedEx and UPS released peak shipping surcharges and fees that are more aggressive and have longer peak durations than in previous years, according to the report. Also, this year, the two companies have adopted a phased approach to surcharges, spreading them across three periods rather than using a single-rate, single-period system as in previous years. The highest surcharges will apply during the “peak of peak” period, November 24–December 28, 2024.

Another issue is that of continued labor shortages in the logistic and transportation sectors. The latest data from the Bureau of Labor Statistics indicate that there were 359,000 US job openings in the transportation, warehousing and utilities sector compared to 277,000 total hires, revealing 82,000 unfilled vacancies.

The report notes that there has been some variation in hiring numbers from August 2023 through August 2024, but the overall trend points to a sustained gap between job openings and hires. Given this, retailers will turn to technology to fill in the gaps.  

As far as purchasing patterns are concerned, consumers are spreading out their holiday purchases, resulting in more evenly distributed pressure on shipping networks.  There will be fewer last-minute surges from both retailers and carriers, which will reduce the risk of delays or capacity issues.

Overall, the 2024 holiday season should experience a much easier and smoother fulfillment process this year compared to last year.

With regard to sales, the group is forecasting that Q4 will see total retail sales grow by 3% year-over-year and online retail sales increase by 9% year-over-year.

As far as how shopper receives purchases, the group found that 75% will use regular delivery. Thirty-four percent will use same-day delivery and 32% will order online and pick up at the story. Twenty-three percent will use curbside pickup, with 11% using locker distribution.

“This suggests that, despite the increasing availability of faster delivery options, most shoppers are comfortable with standard shipping timeframes—many shoppers prefer to plan their deliveries in advance as regular deliveries align with their schedules better, provide predictability and convenience, and offer a sense of control over the delivery process.”

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