The 2023 Last Mile Holiday Perspective signals a mixed business outlook among supply chain leaders; Threats of extreme weather spark heavy concern; Investments in new tech remain steady
CAMPBELL, Calif., Dec. 6, 2023 -- DispatchTrack, the global leader in last mile delivery solutions, released its annual Last Mile Holiday Perspective today, exploring how logistics professionals are thinking about this year's holiday season and the year ahead, homing in on a variety of environmental factors including rising operational costs and an uncertain economic outlook. The report is based on a survey of 101 logistics professionals completed last month.
According to the data, there was a mixed business outlook this year, with 39% expecting business to be down, 29% expecting business to be better than it was last year, and 17% unsure of which way it would go. Nevertheless, an overwhelming majority (86%) of supply chain professionals expect fuel and other operating costs to increase for another year in a row, and, consistent with last year's findings, 4 in 10 plan to pass those added expenses along to their customers by raising fees.
Among the list of grueling challenges identified, fuel ranked at the top again this year among nearly half of respondents (49%) though down significantly from 82% last year. Losing business due to the economy jumped to 43% this year from 38% last year followed by delays outside of their control, which rose to 40% from 37% in 2022. Threats of extreme weather conditions jumped higher up the list of major concerns to 36% in 2023, up from just 14% last year.
Missing delivery windows was once again a primary concern among those surveyed while inventory shortages and oversupply challenges appear to have eased. To improve operational efficiencies, nearly half of respondents (45%) stated that they have invested in new technology or expanded their existing technologies.
"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. A big part of that is ensuring deliveries are consistently made on time, so I'm not surprised to see missing delivery windows flagged as a major concern," said Satish Natarajan, DispatchTrack co-founder and CEO. "CEOs and boards are becoming more actively involved in planning and delivery strategy and championing new systems and tech investments to not only improve operational cost efficiencies but also preserve and grow customer loyalty which are both critical to the bottom line."
Highlights from the survey include:
Costs & Expectations
- Some organizations brace for less business while others expect a better year. 39% expect less business this year while 29% expect more business. A further 17% are uncertain. When it comes to holiday revenue, 35% expect a decrease this year compared to last year while 30% expect an increase. 24% are uncertain.
- Operating costs have continued to increase and not just because of fuel prices. Despite fuel costs, 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.
- Factoring in fuel prices, operating costs are even higher. The vast majority (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.
- Nearly 4 in 10 businesses plan to increase fees again this year. Consistent with last year when 41% planned to increase fees, 39% plan to increase fees again this year. A quarter stated they're increasing fees due to both inflation and fuel, 12% are increasing fees due to inflation and cost increases, and 2% due solely to fuel costs. 37% stated they don't plan to increase fees this year and a further quarter stated they aren't planning further increases because they increased fees last year.
Notable Concerns
- Missing delivery windows remain a primary concern. 4 in 10 are just as concerned about missing delivery windows this year as last year. 14% are more concerned.
- Inventory shortages and oversupply are less of a concern. Nearly half (48%) are not concerned with inventory shortages or oversupply this year. 22% are concerned with inventory shortages this year while 11% are concerned with oversupply. 19% are concerned with both inventory shortages and oversupply.
- It's harder to find and retain drivers. 1 in 2 indicate it's more difficult to recruit and retain drivers this year than last year.
- Some businesses expect more returns. 19% anticipate more returns this holiday season than in past years.
- Economic headwinds remain a significant concern, but there's also mounting concern over extreme weather. Fuel costs remained the top concern this holiday season with nearly half (49%) ranking it as their top concern (down from 82% in 2022). This is followed by losing business due to the economy (43%, up from 38% in 2022), delays outside of their control (40%, up from 37% in 2022), extreme weather (36%, up from 14% in 2022), inflation (31%, down from 50% in 2022), and driver shortages (34%, down from 48% in 2022).
On This Year's Agenda
- Nearly a quarter started planning for the holiday season earlier this year. 23% planned for the holidays earlier this year than last. 67% planned at the same time this year as last year.
- Nearly half 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.
- Dip in truck rentals and extra warehouse space. 26% of businesses plan to either rent trucks and/or warehouse space to prevent fulfillment roadblocks, down from 41% in 2022. 11% plan to rent warehouse space, 7% plan to rent trucks, and 8% plan to rent both trucks and warehouse space.
- Sustainability initiatives decline. 55% are prioritizing sustainability or plan to in the coming year, a decrease from 70% in 2022. 18% are already prioritizing it while 37% plan to prioritize it. 7% stated that they have either added EV trucks or plan to in the next year, down from 15% in 2022.
The 2023 Last Mile Holiday Perspective can be found here.
Survey Methodology
The online survey was conducted via SurveyMonkey October 12th - November 1st, 2023 among 101 logistics professionals. Industries include furniture and appliances, 3PLs, building supplies, agriculture, auto parts, and food, beverage, and grocery distribution. Employee sizes ranged from 1-10, 11-50, 51-99, and 100+.
About DispatchTrack
DispatchTrack is the global leader in last mile delivery solutions, helping top brands around the globe power successful deliveries 1 million times a day. Since 2010, DispatchTrack's scalable SaaS platform has made delivery organizations more connected, agile, and intelligent using highly configurable capabilities designed to empower better delivery management from end to end. Our proprietary AI-powered routing algorithm ensures 98% ETA accuracy in last mile deliveries, and we're constantly innovating to improve performance and better serve our 2,500+ global customers, including Walmart, Coca-Cola, Ashley, Ferguson Enterprises, Cargill, McCain Foods, and many others. When businesses make promises to their customers—DispatchTrack makes sure they deliver.
