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Transportation and Logistics

Oh, the weather outside is frightful, but your packages will still be there on time

What does the gift-giving season mean for delivery, shipping, and logistics?

In our thriving age of online shopping and same-day delivery, the logistics behind today's web-powered marketplace may seem like a marvel that belongs exclusively to living memory. And if one looks solely at the scale of the market, it is.

But in reality, the business of direct-to-consumer mail-order is hundreds of years old and has been aggressively evolving over its lifetime. From 1872 when Montgomery Ward published a single-page mail-order pamphlet, to 1894 when Sears Roebuck distributed a carefully designed 322-page catalog, to the advent of eBay, Amazon, Etsy, and a hundred other online retailers, consumers have grown accustomed to having a world of goods available at their fingertips.

For many businesses, the holiday season amplifies sales opportunities. As far back as 1934, Sears famously published the annual Wish Book, which successfully served two purposes. It promoted the practice of gift-giving, and it gave consumers an easy path to participate (with Sears). Those same traits evolved into modern consumer culture phenomena like Black Friday, Small Business Saturday, and Cyber Monday.

Does it work? North American consumers will spend in excess of $727 billion during the 2019 holiday season. As much as $166 billion of that is expected to come from online sales.

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For some companies, that boost in Christmas sales, represents as much as 20% of annual profit, and as high as 30% for hobby, toy, and consumer electronics stores.

Getting logistic for the holidays

Naturally, online sellers want to send as much inventory as they possibly can, which passes the holiday rush on to shippers and courier services. For those shipping companies, fast delivery isn't just necessary to keep customers happy. With the sudden influx of incoming packages, shippers require fast delivery if only to prevent the mailroom from overflowing.

UPS predicts that between deliveries and returns, they'll handle 32 million deliveries per day, or over a billion shipments in December of 2019. That's seven packages for every single household in the United States...and this is from just one of three major domestic shipping companies.

The uptick in demand for deliveries creates an estimated 155,000 seasonal shipping jobs to keep packages on the road. Amazon has said they would add 50,000 delivery vehicles for the season. Multi-modal delivery services such as DoorDash, Postmates, and Amazon Flex all see seasonal boosts. In short, for shipping, it's the most wonderful time of the year.

Santa's real elves: supply chain managers

Keeping the packages, vehicles, drivers, and delivery assistants in view is only one part of the job. Orchestrating all these elements to work seamlessly and efficiently together is an entirely different task with a different set of factors that must be addressed. Trucks have fuel budgets. Drivers have maximum hours and minimum breaks while traffic changes from hour to hour around them.

For planners, the ability to accurately plan routes for individual drivers such that a whole fleet of vehicles moves at maximum efficiency is a challenge. Overcoming that challenge can create savings in the order of millions of dollars, and we understand that location data is the only way to generate a sustainable solution.

Our roadways are not getting any bigger, but the demand to move things direct from manufacturer to consumer will only grow. Efficiency and sustainability will be the new hallmarks of delivery services well into the future, maybe even the next hundred years.

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