In this episode, guest Shawn Winter, vice president of Mobility Solutions at Descartes, talks about the concept of the Super Peak Season and how shippers can prepare for it. With the growth of online shopping, shippers and carriers find that there are times when they struggle to keep up with demand, such as the recent holiday season. Winter discusses some strategies for thriving during peak demand challenges.
The food service industry was especially hard hit at the beginning of the Covid-19 pandemic. With restaurants, schools, and other institutions closed or locked down, business fell off the cliff, forcing many food distributors to lay off drivers. Now that demand volumes are returning, they are having trouble finding enough drivers to fill routes. What can be done to assure their deliveries?
And DHL shares some strategies for dealing with a post-pandemic world. How should businesses plan now for the challenges that will occur this year and next?
Articles and resources mentioned in this episode:
Podcast sponsored by Aptean
Other links
In this episode, guest Shawn Winter, vice president of Mobility Solutions at Descartes, talks about the concept of the Super Peak Season and how shippers can prepare for it. With the growth of online shopping, shippers and carriers find that there are times when they struggle to keep up with demand, such as the recent holiday season. Winter discusses some strategies for thriving during peak demand challenges.
The food service industry was especially hard hit at the beginning of the Covid-19 pandemic. With restaurants, schools, and other institutions closed or locked down, business fell off the cliff, forcing many food distributors to lay off drivers. Now that demand volumes are returning, they are having trouble finding enough drivers to fill routes. What can be done to assure their deliveries?
And DHL shares some strategies for dealing with a post-pandemic world. How should businesses plan now for the challenges that will occur this year and next?
Articles and resources mentioned in this episode:
Podcast sponsored by Aptean
Other links
David Maloney, Editorial Director, DC Velocity 00:01
What does it take for companies to survive a super peak? How has the driver shortage made life difficult for food distributors? And how to plan e-commerce supply chains for a post-pandemic world.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Aptean. Aptean is a global provider of mission-critical, industry-specific logistics and transportation management solutions. Aptean routing and scheduling delivers the most advanced transportation management systems to lead world-leading brands, helping to drive operational success, reduce transportation costs by up to 30% while optimizing delivery routes to meet rising customer expectations. For more information, please visit Aptean.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today: How do companies manage through super peaks? To answer that question, here is Ben with today's guest. Ben.
Ben Ames, Senior News Editor, DC Velocity 01:21
Thanks, Dave. Yeah, we're lucky to have with us here today, Shawn Winter, who's vice president of mobility solutions at Descartes. He was previously the CEO of ShipTrack, which was acquired by Descartes last year and is a provider of cloud-based mobile resource-management and shipment tracking solutions. Welcome, Shawn. Thanks for joining us.
Shawn Winter, Vice President of Mobility Solutions, Descartes 01:41
Thanks so much, Ben. Pleasure to be here.
Ben Ames, Senior News Editor, DC Velocity 01:44
Just to start things off, maybe you could give us a quick idea of how the process has gone. I know the acquisition was just in November, I think, of 2020, so it's brand new, but how is ShipTrack fitting into Descartes, and what sort of services do you provide for the last-mile sector?
Shawn Winter, Vice President of Mobility Solutions, Descartes 02:04
Yeah, it's a great question. It's, to be honest with you, it's gone extremely well. We're ahead of schedule with respect to integration of the two businesses and, you know, starting now to engage together on opportunities to help our customers with a broader set of portfolio products, which is really exciting for us. You know, ShipTrack has really been designed for the last mile, which arguably is probably the most complex, and if not, maybe the most expensive part of the supply chain. And we've done really, really well. We've provided our courier customers and others with the ability to track their shipments right to the right to the door, and it's especially relevant now with [the] Covid-19 situation around the world, and certainly enabled the carriers to be a lot more efficient and effective at doing what they do. But, you know, now as part of the Decartes portfolio, in the in the routing, mobile, and telematics group, we've got access to other products that, you know, such as [a] route optimization Area Planner and things like that that really add a lot of value to the portfolio, so we're thrilled to be integrating into those other products and just to add more value and offer our customers a whole lot more choice.
Ben Ames, Senior News Editor, DC Velocity 03:15
Great, thank you for describing that.
Shawn Winter, Vice President of Mobility Solutions, Descartes 03:18
Yeah.
Ben Ames, Senior News Editor, DC Velocity 03:18
And then, as you say, of course, we talk a lot in the magazine and on the podcast here about the challenges of last-mile delivery, and in the past year, in 2020, in this big pandemic year, we saw that what used to be known as a typical peak volume of parcels is really no longer reserved just for that winter holiday season, but it's happening earlier, spread out sort of throughout the year, and I know that's something that some people call "super peaks," even, when that combines with the winter rush. Can you describe what sort of challenges that you saw happening, that that created for the last-mile performance?
Shawn Winter, Vice President of Mobility Solutions, Descartes 03:53
Well, no doubt 2020 was a very tough year for everyone, but especially in logistics, so... and you're right, peak this year came in March-April timeframe and stayed right through the summer months, where it's usually a little bit lumpy, but it stayed pretty consistent right through. So, we were experiencing Christmas volumes right through spring and summer and into fall, and then once, you know, typical peak timeframe—October through January—kicks in, this is where the coined—the term "super peak" was coined by one of our clients, and you know what, it's absolutely that. I mean, numbers were outstanding as far as volume. But, with that great opportunity also comes with a great number of challenges, and so it was definitely, definitely the year of the delivery economy. You know, on average, one of the biggest changes that the customers have seen, that we've heard about, anyway, is that the you know, the average packages per stop has changed dramatically as well. Just, you know, the buying behaviors that consumers have now engaged in is a little bit different than what it used to be. So, when you're talking last mile to residential, you know, it went from an average to 1.6 packages per stop, give or take, depending on who you talk to, down to 1.1, 1.2 in some cases. ,So really what that means is a whole lot more stops with single pieces, which is taking up time and resources and so on. So, that's something that people had to deal with. And—but, you know, in line with that, also, is the ability for them to attract people—you know, resources, humanware—and vehicles, to be able to augment their existing fleet, you know, one of our customers has hired over 1,000 new drivers and vehicles, and frankly, I'm not even sure where they found them, but the reality is, they had to go get these people to deliver the load, and even then they still couldn't keep up with all the loads, so... . And the other thing, I think that they ran into some challenges with were, because of the glut of opportunity, the drivers, owner-operators, independent couriers, contractors working for the carriers have a lot of choice right now, right? You know, it's it's their, their opportunities to lose, and frankly, if they don't like the processes, or the technology, or what have you, or their job is being constrained by administrative functions slowing them down from getting the job done, which is where they earn their money, they tend to move on. And we've had a couple of situations this year where we've had customers call us up desperate to get ShipTrack deployed quickly, so that they would maintain and retain their talent, because there's so much of a hard time for them to attract new talent.
Ben Ames, Senior News Editor, DC Velocity 06:27
That's so interesting, and, I mean, when you mentioned that the average packages per stop had changed, I would have assumed maybe, that they went up, maybe there were more packages per house., but I guess that if people are buying more often, more frequently than maybe it's sort of one package a day, and instead of a whole lot at once. It's really, the changing conditions, really in the foundation of how the whole thing works.
Shawn Winter, Vice President of Mobility Solutions, Descartes 06:50
That's right.
Ben Ames, Senior News Editor, DC Velocity 06:51
And what sort of lessons did you find out that some companies have learned about how to get through those challenges that you mentioned?
Shawn Winter, Vice President of Mobility Solutions, Descartes 06:58
Yeah, you know, "co-opetition," lately, but co-opetition with partners, I think, has been key, even for the larger carriers out there, that are well established with thousands of employees, they still have underserved areas that they can't get to with their own fleet, and they have a lot of overflow load, each day they have them, that they just can't fit on their own trucks. So, you know, having partners available to them, i.e., smaller couriers, local couriers, and so on, that they can work with has been critical for a lot of our customers. So, we've seen a nice trend going towards that, because it keeps everyone employed and happy and shares the load, but with that comes some challenges, obviously, so technology is no longer a nice-to-have, it's absolute must. And we've been able to provide a lot of our customers with the ability to engage with these third-party partners, and have those people or those companies deliver on their behalf, seamlessly as if they were their own employees. So, you know, the software's really bridged the gap, whereas before, it was a lot of manual or even electronic, but usually through through file transfer, things like that, so all that's gone away now. I think the other thing is dynamic route planning can be a huge win. You know, anecdotally, we've got a couple of customers that had some great successes. There's one client in the U.S. that had a 10% increase in their volume, yet was able to reduce their routes by a solid 1%. So, doing more with less. Another example of a UK medical company who was faced with, you know, three-x increase in their volume due to Covid-19, and the UK government mandating that they ship PPE equipment out due to Covid. Yeah, they were really concerned, obviously. Your business grows by three times, it's, again, difficult to scale like that, but they were able to manage it all with the—all that demand with existing workforce, just by implementing technology to help sort that out. So, the entire suite of products that we brought to the table really helped them out.
Ben Ames, Senior News Editor, DC Velocity 08:57
Gotcha. Boy, and I hadn't thought of the concept—we think about customer satisfaction, of course, with last-mile delivery, and that's usually the end customer, but you know, that there are also the drivers with choice, who can move around as well, as you say. You know, looking at some of the conditions that you've described, do you see them continuing into 2021? The conditions are changing sort of every day, it seems, as vaccines roll out and lockdown conditions change, and how's the future looking?
Shawn Winter, Vice President of Mobility Solutions, Descartes 09:30
Yeah, you know what? I keep rubbing the crystal ball myself to see if I get can get a clear [reading]. You know, obviously, I think it's pretty clear that buying behaviors have changed, so omnichannel is absolutely here to stay, if there was any doubt before. You know, we've, I think, as consumers we've all been retrained on how to purchase and, you know, thanks to Amazon and other online services and last-mile delivery, that's—it's just made things a whole lot more simplistic for people to take advantage of. I think the other thing, too, is that customer care, customer-centricity and service quality has to return in 2021. I mean, last year in 2020, it was all about just getting the loads out, you know, managing the influx of volumes at all costs. But, you know, as things start to settle a little bit, I think the return back to customer focus is—we're going to see that happen. Not that it was horrible, but there was definitely some some opportunities lacking. So, as an example, there are some sacrifices made by—as to time of arrival, for example, or instead of a one- or two-day delivery it might be a three- or four-day delivery, and it just is what it is, right? But I think, also, the couriers need to help the the shippers and retailers and others to be able to satisfy those promises to their clients, and again, technology plays a part in that, obviously, but I think there's going to be a greater focus on that, as we kind of progress through 2021. You know, with any luck, at some point, with restrictions being lifted, I think we'll start seeing a little bit more brick-and-mortar activity happening, but I think even that's going to be different from here going forward?
Ben Ames, Senior News Editor, DC Velocity 11:06
Mm-hmm, yeah, absolutely, yep. It's so interesting to track all this. Yeah, and you're right, I mean, we absolutely saw, I think, some changes in the conditions that some end users and customers were willing to accept when they were getting goods delivered, despite shortages and tough conditions. However, as you mentioned earlier in our discussion, all this isn't cheap, right? It's expensive. So, have you seen any strategies for some of the last-mile carriers deploying, to try to control costs, in the middle of these?
Shawn Winter, Vice President of Mobility Solutions, Descartes 11:40
Yeah, well, there's cost, and there's also opportunities, right?, opportunities for revenue? I mean, one of the things that we're seeing is, you know, we've got one customer, obviously, that's run into this. They're a large retailer, national—international retailer, you know, and they're they're leveraging, like I said, the co-opetition model, so they've got their own fleet, but they've also got a lot of third-party couriers working for them, and what they've done is, they've contracted us to supply multiple products, kind of, as I said, in the beginning of the show. You know, Area Planner, as an example, combined with ShipTrack, and a new product called scan sword, you know, taking these, what used to be independent silo of products, and now merging them together as one offering, and, you know, to be honest, with the comments that we had back from them, was really interesting, because they had looked through the marketplace and, obviously, they had their wish list, and they were having trouble satisfying all the demands of that wish list, like all of us do, but the comments back after we kind of all came together as one company and one solution was that we checked every box on their list. And for me, that was really interesting, but more for them, it allowed them to see their plans move forward without any compromise. So, you know, I think technology has come to a point where it's changing dramatically. I think beyond that, the strategies that they can milk them in, you know, cutting costs, and so on. I mean, obviously, dynamic routing, you know, planning those routes, strategic routes, obviously, it's super important. So, it helps them understand what load, they're expecting, how many how many trucks and people are going to be required, and how they can distribute those loads. So, that that's a key win right there to save some hard costs. But, you know, we've we've run in other situations with customers where we've actually been able to help them win new business, and that's kind of, where I see the new new revenue opportunities. You know, we've got some, obviously some new features that we've got in our portfolio that they can then in turn offer to their customers to add value, such as simple reporting or dashboards, for example, so that their customers can see exactly what's going on, beyond just normal, you know, POD updates and things like that. But we've also been involved with a number of customers in responding to RFPs that they're going after. You know, one of our great customers here in Canada, in Toronto, went after Amazon a couple of years ago, and, and some other large retailers, and they've asked us to speak with them. So, we thought that was fantastic, you know, providing them technology expertise and know-how and opinions to help bolster their RFP, and subsequently, they won those RFP. So, look, it as an opportunity [for them].
Ben Ames, Senior News Editor, DC Velocity 14:18
Yeah, for sure, for sure. Great. Those are some wonderful thoughts. Shawn, I really appreciate your walking us through the details, there, and talking about some of the issues here that really touch all of us, whether you're in the logistics industry performing these things, or whether you're at home keeping an eye on your front step for that parcel arriving. Thank you so much for being here with us today.
Shawn Winter, Vice President of Mobility Solutions, Descartes 14:37
Yeah, thank you, Ben. Appreciate it.
Ben Ames, Senior News Editor, DC Velocity 14:39
We've had Shawn Winter with us, who's vice president of mobility solutions at Descartes. And back to you, Dave.
David Maloney, Editorial Director, DC Velocity 14:45
Thank you, Shawn and Ben. Now let's take a look at some of the other supply chain news from the week. Victoria, you wrote this week about the driver shortage and how it is creating particular demands on the foodservice industry. What did you discover?
Victoria Kickham, Senior Editor, DC Velocity 15:00
Yes, thanks, Dave, and this echoes some of the challenges Ben and Shawn were just talking about. We've done a lot of reporting on the growing need for truck drivers across the logistics industry, but there hasn't been too much to report on the subject over the last 10 months or so, and that's because of all the other challenges posed by the pandemic. But some industry groups are keeping the issue alive, especially as business begins to pick up in some industry segments where it had slowed. The International Foodservice Distributors Association, or IFDA, is one of those groups, and I spoke to leaders there this week about the problem. Foodservice distributors were really affected by lockdowns in the early days of the pandemic, and these are businesses that sell to restaurants, schools, and other institutions, so closures and reduced capacity obviously affected their need for supplies, and as a result, distributor saw business drop off. That led to an abundance of drivers, in some cases, as companies cut back on routes. Now, in 2021, conditions are improving, IFDA tells me, and they say the need for drivers is kind of becoming acute once again, and it's also drawing attention to previous efforts in the industry to attract talent.
David Maloney, Editorial Director, DC Velocity 16:10
Victoria, when did the industry start to feel the pinch for drivers again?
Victoria Kickham, Senior Editor, DC Velocity 16:15
Yeah, so IFDA leaders say it really started, as early as January, sort of mid- to late January. Restaurant restrictions are starting to ease in some areas, as we know, and along with that, many in the industry had worked to diversify their business over the last year. So, they're saying things are really starting to pick up. And as companies get bigger, they need to add drivers, and of course, you know, as we heard a little while ago, there's a lot of competition out there in that last-mile category. So, what they say, the leaders I spoke to, is that it's all beginning to draw attention once again to what industry groups have referred to as a truck-driver shortage, nationwide. And a little bit of background: Some estimates show there'll be a shortage of about 160,000 drivers by 2028, and that the industry will need to hire about 1.1 million drivers over the next 10 years to keep pace with turnover and retirements and things like that. But there's hope, they say. Both IFDA and the American Trucking Associations, as well as some other groups, support something called the DRIVE-Safe Act, and this is something that they mentioned to me. It's a bipartisan bill, last introduced in Congress in 2019, and they say it will help companies attract younger drivers to the industry. We've reported on this, as well, in the past. Essentially, this bill aims to lift age restrictions that prevent drivers from crossing state lines, and it also aims to improve safety and training through an apprenticeship program. Proponents like IFDA and others, they say it will help open doors to new career paths for younger workers, while also filling this vital industry need that they're talking about. So, when I spoke to IFDA this week, they said they're hopeful that this the DRIVE-Safe Act will be reintroduced in the new Congress. There's no timeline for that right now, but we're certainly keeping an eye on it, and, you know, it seems like the labor issue, employment issue in general is is one to keep an eye on, and certainly the driver issue.
David Maloney, Editorial Director, DC Velocity 17:57
Yeah, those are definitely issues that we will continue to track. Thank you, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 18:02
You're welcome.
David Maloney, Editorial Director, DC Velocity 18:03
And, Ben, you reported this week on how companies are starting to plan for e-commerce logistics challenges in a post-pandemic world. Can you tell us more?
Ben Ames, Senior News Editor, DC Velocity 18:11
Of course, Dave, yeah. A lot of these issues really span all the different parts of the supply chain operation, here. So, I talked this week with DHL, the international parcel carrier and third-party logistics provider, they had released a look into 2021 that listed some of the four specific trends that they're tracking, and, you know, that a lot of them were right on target with our talk so far today on the podcast: tight capacity, both of trucks and of drivers. DHL said that even before the pandemic, a lot of shippers had begun to diversify the number of carriers they used, which had come up in our talk earlier today with Shawn, and that trend accelerated quickly over the past year, and again, that was because the swamped sort of primary carriers like UPS or FedEx had actually begun placing caps on the number of parcels they would accept from shippers, so folks had to scramble to find some way to deliver them. As well, [DHL] said that as business-to-consumer shipping keeps growing, as opposed to B2B, another trend they expect to emerge is that online shippers, therefore, they might start paying a premium just to secure winter peak-season capacity, and that would even follow rate hikes that we saw temporarily over the winter holidays from most of the major carriers, so it doesn't look like it's going to get any cheaper for shippers in the coming months.
David Maloney, Editorial Director, DC Velocity 19:43
Yeah, that is interesting. Is DHL predicting any other trends for the remainder of the year?
Ben Ames, Senior News Editor, DC Velocity 19:49
They are. That's the foundation that we've talked about, those challenges, but, you know, as if that's not enough, e-commerce firms—which is where a lot of that growth's coming from—also facing a growing threat from cybersecurity. So, that's emerged because, as brick-and-mortar stores have built up their online presences during the pandemic and the growth of the general sector, that acceleration of their digital transformations, you know, opens up some vulnerabilities. So, they need better cyber defenses to be able to ensure a safe online shopping experience. And the fourth trend that DHL talked about was, many stores have been shifting their fulfillment strategies as they close some of their brick-and-mortar stores, and some of them have shifted to a "dark store" model, some call it, like converting a traditional retail store into a local fulfillment center. It's either a dark store, or sometimes they can do that while continuing the brick-and-mortar operations at the same time. But that supports some of the popular customer trends, like buy online, pick up in store; curbside delivery; parcel lockers. So, in fact, even this week, we saw some examples of that happening, you know, in the real world. The big grocery distributor, Ahold Delhaize, has said that it would expand its microfulfillment-center technology through a pilot in the Philadelphia market, using technology from some names that we've often heard in the logistics space, like Swisslog and AutoStore. So, you know, these trends are happening, and they're really playing out, you know, right before our eyes.
David Maloney, Editorial Director, DC Velocity 21:29
Yeah, it'll be interesting to track, and I agree that automation will play that key role in our post-pandemic supply chains. Thanks.
Ben Ames, Senior News Editor, DC Velocity 21:36
For sure.
David Maloney, Editorial Director, DC Velocity 21:38
We encourage listeners to go to DC Velocity.com for more on these and other supply chain stories. And check out the podcast Notes section for some more direct links on the topics that we discussed today. Thanks, Ben and Victoria, for sharing highlights of the news this week.
Ben Ames, Senior News Editor, DC Velocity 21:53
Thank you, Dave. Always fun.
Victoria Kickham, Senior Editor, DC Velocity 21:55
Yeah, thank you. Good to be here.
David Maloney, Editorial Director, DC Velocity 21:57
And again, our thanks to Shawn Winter of Descartes for being with us today. We encourage your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to rate this podcast, if your podcast platform allows for that. We do appreciate your feedback.
And a reminder that Logistics Matters is sponsored by Aptean. Forged from decades of industry experience, Aptean routing and scheduling supports logistics and delivery fulfillment operations with the tools needed to master supply chain challenges, optimize route plans, and reduce fleet costs. Learn more about how Aptean can help you get ready to deliver operational success. You can visit Aptean.com.
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We'll be back again next week with another edition of Logistics Matters, when we'll look at more of the problems facing food distributors. so be sure to join us. Until then, please stay safe, and have a great week.