Why Retailers Are Already Thinking of the Holidays, and the Looming Threat They are Facing
Though months away, the holiday shopping season’s approach has some in retail anxious. The reason? A major shortage of truckers has shipping costs and delivery delays rising fast. Customers are facing down jumps in price in products from the latest smartphones to their dish at local eateries. Empty shelves and incomplete menus could harry retailers and restaurants through next year and beyond. At the very top, corporate profits are being knocked down a notch by reduced sales and interruptions at multiple points in the supply chain that magnify one another. What’s behind this damaging shortage and what effects can Americans expect?
Trucking is a notoriously hard career. Going weeks without seeing family, punishing schedules, and a median pay of $42,000 has depressed recruitment among younger workers. Millennials and Gen Z, groups that place special importance on a balance between work and life, are particularly underrepresented. Combined with a rise in retirements from the Baby Boomers, the industry needs to find more than 50,000 truckers and fast. Projections suggest more than 100,000 will be needed by 2021. An economy rebounding from the Great Recession only compounds the effects of the shortage.
For now, many producers are taking on the spike in shipping costs. That’s a temporary measure and with no solution in sight, prices are bound to rise. Amazon recently lifted its Prime membership from $99 to $119 while citing the recent uptick in shipping costs as an aspect of the decision.
Analysts recently learned from Tom Hayes, CEO of Tyson Foods, that the chicken giant will face $200 million in extra costs that will be passed to retailers. Arguably worse, delays in raw material to processed good deliveries have doubled the time goods spend at shipping ports. That means empty shelves, reduced menus, and losses in sales.
Though autonomous driving technology is seen by some as a boogeyman for the industry, others see it as both a long and short-term solution. Self-driving trucks bypass the need for drivers though the technology likely will not reach that point for several years. In the meantime, the industry can leverage tech like lane-assist and smarter cruise control to make long-haul trucking more attractive to today’s drivers.
Whether technology can alleviate or potentially solve the trucker shortage, this holiday season is turning into a potential minefield of shipping disasters. It remains to be seen what kind of impact the increased strain on the shipping industry will have and if retailers are prepared to adjust.