How Delivery Businesses Approached This Year's Holiday Season

Last week, DispatchTrack released its annual Last Mile Holiday Perspective, exploring how logistics leaders prepared for the 2023 holiday season and what their expectations are for 2024. At a high level, the report uncovered a considerable amount of uncertainty: 39% of respondents expected business to be down, 29% expected business to be better than it was last year, and 17% were unsure of which way it would go.

This isn’t too surprising when you think about the challenges of the last year. While inflationary pressures have eased somewhat and supply chain issues that began with the onset of the pandemic are finally being felt less by logistics businesses, cost pressures continue to be high and customer expectations are greater than ever. To wit, missing delivery windows was one of the primary concerns of those surveyed. 

As DispatchTrack CEO and founder Satish Natarajan put it: "There's no question supply chain organizations are feeling the squeeze. Not only are they facing immense economic pressure, but they know they have to get the delivery experience right if they want to retain customers." 

Now more than ever, it’s important for supply chain professionals to arm themselves with the right knowledge—and the right tools for grappling with these challenges.  

Costs and Expectations

Like we noted above, many businesses in the delivery sector are bracing for a bad year, and a lot of that comes down to costs. Our survey found that 81% of businesses anticipate higher operating costs in the coming year. 6 in 10 expect to see a 10% - 20% increase while 18% expect to see a 25% - 50% increase—and that’s before you factor fuel costs into the equation. 

Accounting for fuel, 86% expect operating costs to be even higher in the coming year (4 in 10 expect a 10% - 20% increase while 37% expect a 25% - 50% increase). Unfortunately, a lot of this increase is getting passed on to end customers, with 39% expecting to increase fees this year. That number was roughly the same as last year’s 41%. 

The upshot here is that cost pressures have the potential for wide-ranging impacts on delivery businesses. Even when fuel costs are taken out of the equation, economic conditions are potentially thinning out margins and coming to loggerheads with customer expectations. 

Notable Concerns

One of the most striking items from this year’s report compared to last year’s is the increase in respondents who were concerned about extreme weather.

Here were the top concerns for the 2023 holiday season:

• Fuel costs (49%)
• Losing business due to the economy (43%)
• Delays outside of their control (40%)
• Driver shortages (34%)
• Extreme weather (36%)
• Inflation (31%)

While concern about fuel costs dropped significantly from 82% to 49%, worries about the impact of extreme weather more than doubled from 14% to 36%. Again, it’s not too difficult to imagine why. 2023 saw Southern California’s first ever tropical storm warning—and that was after unprecedented flooding during the spring. There’s always been weather delays in last mile logistics, but as they get harder and harder to predict that can become more and more of an issue for last mile operators.  

A large percentage of respondents (40%) also noted that missing delivery windows was a serious concern again this year. As is hiring and retaining drivers—with 1 in 2 businesses reporting that they expected that to be more difficult this year than last. The general picture is one in which logistics professionals find themselves having to do more with less—and with less certainty.  

One piece of good news that came out of the report is that inventory shortages have become less of a concern. This almost certainly reflects the easing of the supply chain crisis that came to a head in the early days of the pandemic. 

On This Year’s Agenda

Nearly a quarter of businesses started planning for the holiday season earlier this year, with 23% planning for the holidays earlier and  67% planning at the same time as last year. 

Compared to last year, sustainability initiatives have declined. 55% are prioritizing sustainability or plan to in the coming year,  down from 70% in 2022. 7% said that they have either added EV trucks or plan to in the next year, down from 15% in 2022.

Since the last time the survey was conducted, nearly half of businesses have invested in new technology or expanded existing technology. 45% have invested in new technology or expanded their existing technology to increase efficiencies this year—and given what we’ve seen above about the concerns that businesses are grappling with this holiday season and beyond, technology can be a powerful tool for weathering storms literal and figurative. 

For instance, take the concerns that many businesses have expressed over extreme weather: There’s nothing that a delivery software solution can do to prevent extreme weather and the delays that can often come with it—but the right technology can go a long way towards enabling businesses to deal with those delays. Your last mile logistics software might make it easier for you to communicate with customers about delays in a timely way. By the same token, it might streamline the process of getting customers rescheduled for later dates and slotting their orders into new routes. 

By the same token, the right technology can help you avoid missing delivery windows. For starters, you can leverage AI-powered  route optimization to generate delivery routes with highly-accurate ETAs. To make this happen, you need to be able to account for factors like service time, driver speed and skill, historical traffic patterns, and more—but with that information in tow, you can create efficient routes that are highly accurate in terms of time estimates. 

From there, you can utilize customer communication capabilities (i.e. text and email notifications throughout the delivery process) to ensure that customers know when to expect their deliveries. If your trucks are running late for one reason or another, you can reach out to customers proactively to make sure they’ll still be able to accept delivery.

Here, it helps to have a real-time visibility dashboard that makes it easy to spot exceptions as they unfold. When you can see the status of every truck and every delivery route in the same place without having to hunt for information, you can turn up issues more quickly and resolve them before they become huge headaches for your customers or the rest of your team. The trick is to leverage a connected platform that enables a steady flow of data from drivers back to dispatchers—and not just data on truck locations and GPS coordinates, but status updates over the course of the route as well. 

When the outlook for the year ahead is mixed, it’s hard to overstate the importance of this kind of investment. When you invest in technology, you’re investing in the flexibility and adaptability that business conditions increasingly require. No one can predict exactly what the year ahead is going to bring—but we can be pretty confident that whatever conditions arise, last mile operators are going to work hard to keep their businesses successful and profitable. That’s why it’s so hard to overstate the importance of the right technology when it comes to grappling with future holiday crunches.