Q4 2021 was unprecedented. Consumers shopped earlier to avoid stockouts, delivery expectations increased and e-commerce sales were 26% higher than originally projected, accounting for 20.9% of total sales.
Demand-side disruptions like these were magnified by equivalent—if not larger—supply-side disruptions: labor shortages, port congestion, warehouse capacity and parcel constraints. Retailers and brands were stuck in the middle between consumer demands and supply chain bottlenecks.
Given current market conditions, Q4 2022 may be as challenging as 2021, or worse.
Industrial capacity is scarce and expensive: With industrial vacancy rates at all-time lows and rents at all-time highs, 32% of retailers say securing warehouse capacity is a top supply chain challenge (Flexe Institute, 2022 Omnichannel Report).
Transportation costs are up: Diesel fuel prices rose 63.6% year over year as of April 2022, increasing parcel fuel surcharges (U.S. Energy Information Administration, May 2022). And 43% of retailers list transportation costs as a top supply chain challenge (Flexe Institute, 2022 Omnichannel Report).
Labor is hard to come by: Unemployment remains low and with wages up 5% year-over-year (Bureau of Labor Statistics), 70% of logistics companies have difficulty hiring (Flexe Institute, The Economics of Labor and Supply Chain Disruptions).