Shipping had a brief moment in the public spotlight last month when a tanker ship became stuck in the Suez canal, an event that had ripple effects throughout global trade—not to mention one that became fodder for internet memes.
But dig a little deeper, and we see that shipping and logistics has gone through a more tectonic change in the last year. The causes might not be as newsworthy, but they are not likely to go away any time soon, either.
The following trends in shipping will specifically and directly affect wineries who ship direct to consumers. Proactive planning with the right partner can help overcome these challenges and help protect and/or improve customer expectations.
High Demand for Shipping Creates Carrier Pain Points
The coronavirus pandemic increased the demand for consumer shipping overnight. This put a strain on carriers, who saw demand for their services far exceed the capacity they had built in their networks. We had traditionally seen seasonal holiday shipping spikes, but nothing compared to the historic shifts driven by a stay-at-home economy. The end results were noticeable – carrier performance levels were not always met, limitations instituted on package volumes for certain sized accounts, adult signature requirements were laxed, and additional peak season surcharges were added. Most everyone expects many of these conditions will continue well into the future.
Demand for Packaging Supplies Has Skyrocketed
The drastic increase in DTC shipping has also affected demand for packaging in ways that suppliers did not anticipate—the latest shortage of ketchup, for example, has been driven by a lack of those little plastic packets you get with your take-out. The increased demand, coupled with COVID production protocols at manufacturing facilities, has created issues for a normally stable commodity. Shortages on certain items are commonplace, delays in getting materials from Asia persists, and double-digit price increases on just about everything are being felt.
Pressure to Address Landfill Waste
The frenzy in shipping and delivery has also led to new levels of packaging waste making its way to landfills. One estimate reported by the University of Southern Indiana claims that roughly one-third of the average dump is made up of discarded packaging material. Shipping partners and fulfillment centers have traditionally felt the pressure to minimize waste. An eco-friendly posture is not only good for the environment, but is an effective marketing tool with younger demographic buyers. It will be interesting to see how the increase in packaging related waste will impact our environment and customer behavior.
We here at Copper Peak noticed this trend even before the pandemic, and outlined several things wineries can do to offset their environmental impact when shipping.
Stop-Go for Imports
Logistics is a game of planning and prediction, but global events have been making this extremely difficult. Production of cars might be halted, for example, because a critical part has been tied up in transit, or because makers of that part in other regions of the globe are themselves waiting for supplies. Supplies coming from China and South-East Asia are currently delayed. Kitting and special projects that rely on overseas packaging materials might be impacted. There are also back-ups in both the Los Angeles and Oakland ports driven by labor shortages, and import wine brands and other products using these points to enter the US will face delays.
In short, it is extremely difficult to know when and where there will be a disruption in the supply chain, which means that logistics these days is more about agility than anything else.
What Can Wineries Do to Meet These Challenges?
Proactively hitting these trends head on is usually the best approach to take. We suggest doing a combination of things –
- Preplanning. Conduct a thorough review of your supply chain and identify mission critical elements that could present problems if they become strained or hard to find. If possible, create relationships with multiple sources to procure items and/or purchase buffer stock. You never know when you may need to use them.
- Over Communicate with End Customers. Make sure that email notifications are giving timely information to wine buyers. Reinforce the use of alternative delivery points, with consumers receiving updates from FedEx Delivery Manager or UPS My Choice.
- Maintain or Start a Sustainability Focus. It’s good for the environment and good for business. Most of the approved wine shipping packaging can be worked into this effort, and customization can be accomplished by using simple tactics.
- Review Your Shipping Timeline. Now is a good time to look at drop dates for clubs and releases. Are they set to occur when you have the best chance of end user satisfaction, or can they be moved to a less active period? Is there any thought to changing to a true subscription model that starts shipping with signup? Level volume versus peak volume is simpler on everyone.
- Using the Right Locations. Now might be the time to review using multiple locations for shipping. It removes some of the bottlenecks that can occur with one point of origin and can improve time in transit for consumers.
Wineries should lean on a fulfillment partner who has cultivated an efficient and experienced team capable of managing supply chain hiccups and turning things around quickly. They need to be big enough to have superior technology, multiple facilities, and buying power. Yet small enough to provide personal attention. If you are looking for a partner for your DTC wine shipments, talk to us. We’ll let you know what to plan for, and how to stay ahead of the game. Please feel free to contact us here if you’d like to learn more!