DispatchTrack’s Latest Report Signals Trouble for the Last Mile Again This Holiday Season

The 2022 Last Mile Holiday Perspective uncovers worry over sky-high fuel costs, surging inflation, inventory shortages, and missing delivery windows despite reports of oversupply

DispatchTrack, the leading solution provider of right-time delivery management software, introduced the 2022 Last Mile Holiday Perspective. The inaugural report explores how logistics professionals are thinking about and planning for the upcoming holiday season as they grapple with record-high fuel costs and soaring inflation. The report is based on a survey of more than 130 logistics professionals conducted last month.

Contrary to recent reports of oversupply at big box brands, 6 in 10 respondents indicated they’re worried about inventory shortages and the vast majority (82%) fear they’ll miss delivery windows again this year. Yet, only 1 in 3 businesses are preparing for the holiday season earlier than they did last year. To improve operational efficiency, half of respondents indicated that their companies invested in new technology or expanded existing solutions this year. 4 in 10 are planning to rent additional warehouse space or trucks to prevent potential fulfillment roadblocks.

The data uncovered further unease with the upcoming holidays. Fuel costs topped the list of last mile concerns (82%), followed by inflation (50%) and driver shortages (48%). 1 in 3 logistics professionals are worried about delays that are out of their control and 1 in 4 said they fear they won’t be able to keep up with demand.

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Respondents were split on whether business would be up or down this year. For revenue projections, 1 in 4 indicated that they don’t know what to expect this year. A third expected an increase in revenue and another 1 in 3 expected revenue to be down. There was an overwhelming consensus that operating costs would spike even without factoring in fuel cost increases, yet a quarter do not plan on raising rates. The remaining three-quarters said they would raise rates due to fuel costs and inflation.

“Inflation and fuel prices are mounting serious pressure on last mile operators to optimize routes and find new ways to improve efficiencies. Margins have never been this uncertain,” said Shailu Satish, DispatchTrack co-founder and COO. “It comes as no surprise that this report revealed businesses are making aggressive technology investments to improve last mile efficiencies, especially to reduce miles driven and trucks on the road this holiday season and beyond.”

Highlights from the survey include:

Costs & Unknowns

• Businesses are split on revenue projections. 1 in 4 don’t know what to expect. 33% expect revenue to increase this holiday season while another 32% expect revenue to decrease. A quarter are uncertain.
• Businesses are uncertain about achieving more or less business. 35% expect more business this holiday season compared to last year while 32% expect less. 20% are uncertain.
• Operating costs are expected to spike. Fuel aside, 92% of businesses anticipate higher operating costs this year. 56% expect a 10% – 20% increase while 27% expect a 25% – 50% increase.
• Including fuel, 93% of businesses expect operating costs to be higher this year. 29% expect a 10 – 20% increase, 39% expect a 25% – 50% increase, and 17% expect more than a 50% increase.
• Despite steep increases in operating costs, 1 in 4 businesses don’t plan to raise pricing. Yet nearly three quarters will raise pricing due to fuel and inflation.

Notable Concerns

• 6 in 10 businesses are still worried about inventory shortages – contrary to reports of oversupply.
• 82% of businesses are concerned about missing delivery windows again this holiday season. Two-thirds are just as concerned or more concerned compared to last year.
• Driver shortages are still problematic. 64% are just as concerned or more concerned compared to last year.
• An overwhelming 8 in 10 businesses are uneasy with fuel costs this holiday season. Other top concerns include inflation (50%), driver shortages (48%), losing business due to the economy (38%), delays out of control (37%), and keeping up with demand (23%).
• Despite last year’s obstacles, only 1 in 3 businesses are planning for the holidays earlier this year.
• 4 in 10 businesses are still concerned about the business impact of another COVID wave. 1 in 3 are prepared for it.

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Addressing the Obstacles

• 4 in 10 businesses are renting warehouse space and/or trucks to prevent fulfillment roadblocks. 16% plan to rent both warehouse space and trucks, 16% plan to rent warehouse space, and 9% plan to rent trucks.
• 50% of businesses have invested in new technology or expanded their existing technology this year.

Sustainability Picking Up Speed

• Sustainability is a top priority. 7 in 10 businesses are already prioritizing sustainability or planning to. 23% are already prioritizing while 47% plan to prioritize in the coming year.
• EV trucks are not on the radar. 85% do not anticipate adding EV trucks this year or next.