Plan early to beat the Christmas rush

[TrueBlueTerrier]

http://www.roadtransport.com/Articles/2 ... s-rush.htm" onclick="window.open(this.href);return false;

Next year's B2C Christmas deliveries will require much better planning and more honesty about capacity, according to logistics firms, if they are to avoid the backlogs caused by market growth and weather.



The e-retail market increased substantially in December last year, with shoppers spending £6.8bn, equivalent to £111 a person, according to figures from the Interactive Media In Retail Group and CapGemini.

But a late peak in shopping patterns - including Mega Monday, in which up to £831m was spent per minute - and heavy snow caused substantial difficulties for home delivery firms that say much more realistic planning will be needed for December this year.
Forecasts

The logistics industry insists its forecasts were solid and there were not inherent capacity problems.

Yodel marketing director Adam Smith says: "We forecast one million parcels a day and allowed capacity in the network for 1.1 million."

However, many companies saw substantial backlogs this year as they struggled to fulfil next-day service promises by retailers. They were not helped by severe weather that saw logistics companies having to reluctantly refuse deliveries for certain areas, starting with Scotland.

Smith says: "We had allowed for extra capacity but, for us, the difficulty was the length of time the weather persisted. The longer it takes to access certain areas, the more freight you accumulate."

By 14 December, Tesco, Sainsbury's and Asda had suspended non-food deliveries into Scotland and the media were reporting 14-day backlogs for some retailers.

Yodel stresses that it worked closely with retail customers to stream freight into those areas that were still accessible. "We didn't turn freight down but we delayed some of it and took off service promises for pre-Christmas delivery. We had to work out with customers when it was reasonable to cut off the Christmas service promise. In the end, we delivered 99.7% of all parcels that had a Christmas delivery promise."
Service promise

Three of City Link's top-five customers are B2C. Duncan Faithfull, sales and marketing director, says that to ensure smooth service next year, the industry must be scrupulously honest with retailers about capacity and service guarantees. He says last year's services were hit by the double whammy of a late peak and heavy snow. "A few years ago, Christmas sales started in October. This year the peak was around 13 December. Then snow came on 16 December. It was an unprecedented 'perfect storm'."

Faithfull says City Link delayed withdrawing service to Scotland for as long as possible and maintained strict honesty with all partners about what was achievable.

However, many retailers were reluctant to withdraw next-day, or even pre-Christmas, service guarantees at the behest of their logistics partners.

"We monitored the situation regionally," says Faithfull. Amazon continued to offer its Prime service with expected next-day delivery and it wasn't the only one. "The communication from us was that it was something we couldn't 100% commit to," says Faithfull.
Lessons learnt

"The learning from all of this has to be that we all need to plan things better, B2C retailers included," says Faithfull.

"There were issues. Everyone knows there were. We are having detailed planning sessions with customers now. It's essential that we collaborate and are completely honest about capacity. It's necessary to say what we can do."

City Link finally cleared its pre-Christmas backlog "early this year".

Amazon will make no comment on its relationships with suppliers or its Christmas sales or delivery figures.

To combat the backlog, Yodel and City Link worked around the clock. Weekend, bank holiday and evening deliveries became the norm. "We added 28,000 man-hours over and above our peak plan just to address the weather," says Yodel's Smith.
Returned deliveries

Christmas deliveries were further complicated by the number of times some parcels had to go out in order to be delivered successfully.

City Link's Faithfull says that while there is a strict operating procedure to ensure the oldest parcels always leave the depot first, the number of returns coming back from deliveries meant a higher-than-normal level of traffic in depots.

He says City Link is looking at how it can maximise its operational footprint to gain flexibility.

In total, £58.8bn was spent online in 2010, an 18% increase on 2009. Growth for this year is forecast to be another 18%, taking total e-retail sales to approximately £69bn. The retailers are likely to remain bullish in trying to keep this growth high and compete with each other not, only on price, but delivery service.

Coupled with this, the meteorological department at Reading University says severe UK winters are likely to become more frequent. Retailers and logistics companies will need to work together on both contingency plans and realistic service offerings if this year's seasonal peak is to be easier than last year's.