Holiday cheer is beginning to once again fill the air, which means it’s time for the delivery industry to gear up for another busy season.
Beginning in October and extending through the New Year, the annual phenomenon known as the peak season always has retailers and delivery companies navigating parcels, presents, and an unprecedented increase in demand.
Join us as we dissect the economic impact of peak season on the broader U.S. economy as well as individual aspects of the shipping industry, including retailers, delivery companies, drivers, and 3PLs.
Large and small scale economic effects
Retail spending experiences ups and downs throughout each quarter of the year. Although it would theoretically make sense for spending to clock in at 25 percent for each quarter, that is almost never the case.
In fact, for most retailers, spending reaches its peak during the holiday season. Depending on a business’s industry, it may expect higher or lower sales in the peak season, with industries like hobby, toy, and game stores, department stores, souvenir stores, and clothing stores bringing in more than 30 percent of their sales in November and December.
As a result, the holiday shopping season has a substantial impact on the U.S. economy each year. In 2016, consumer spending made up 70 percent of gross domestic product, with a fifth of overall retail sales taking place during peak season. This time of year represents an important opportunity to boost the nation’s economy and support small or mid-sized businesses all over the country.
The National Retail Federation (NRF) has predicted that holiday spending will reach a record high in 2023, especially during November and December. The forecast expects consumer spending to increase by 3 to 4 percent compared to 2022, reaching as high as $966.6 billion. Just under 30 percent of that spending will most likely come from online sales, with the rate of online shopping increasing by 7 to 9 percent to reach $278.8 billion.
Though the rate of online shopping is not as high as it was mid-pandemic, delivery companies can still expect a day in the midst of peak season to have double the shipping volume of an average day during the normal season.
Drivers in demand
The holiday season also generates a high number of new jobs in the economy each year.
In 2022 alone, U.S. retailers added over 500,000 jobs during peak season. The year before that saw an even greater increase, with more than 700,000 jobs entering the economy over the holidays in 2021. Seasonal employees can usually expect higher hourly wages than employees typically earn throughout the year and excellent benefits.
To prepare for this year’s holiday season, the NRF forecasted that retailers will pick up between 345,000 and 450,000 seasonal workers. Though this number is not as high as previous years, these seasonal hires will be instrumental in providing the extra push retailers and delivery companies need to meet the substantial increase in consumer spending predicted by the NRF.
Amazon alone has indicated that it will hire up to 250,000 additional warehouse workers and delivery drivers this year to manage the holiday rush. The company will also dole out a higher average hourly wage, increasing hourly pay for warehouse and delivery workers from $19 to $20.50. Some new hires could earn up to $28 an hour and enjoy a signing bonus between $1,000 and $3,000 depending on location.
Similarly, UPS plans to hire 100,000 seasonal workers to help the company navigate peak season this year. Seasonal package drivers will receive extra benefits on par with normal part-time and full-time employees as well as a starting hourly wage of $23.
Clearly, delivery drivers are in high demand at both major shipping companies and retailers during the holiday season. For this reason, independent drivers and company drivers can expect to earn more than usual. With higher hourly wages, better benefits, and more shifts available, delivery drivers can take advantage of this rush to bring in extra cash before the year ends.
However, drivers should also keep in mind the often intense working conditions and high stress that comes with working the peak season. Inclement weather may make driving unsafe while tight schedules and longer shifts place overwhelming expectations on drivers. All drivers must remember to put their own physical safety and mental health first when navigating the stresses of driving during peak delivery season.
Working with 3PLs
3PLs often see a notable increase in business during the holiday season as well. This increase is most likely a result of retailers and delivery companies needing to develop and manage more complex shipping strategies in order to meet peak season demands.
The managed freight services, shipping data analysis, and last-mile delivery options provided by 3PLs take some of the stress off major delivery companies as they navigate a higher volume of shipments. Having access to analytics tools and KPI reporting allows these companies to manage their supply chain more effectively and maintain on-time delivery standards while taking steps to strategically drive down shipping costs.
As we welcome this bustling season, it’s important to show support for delivery companies and their drivers. Fluid Truck offers flexible vehicle rental options that can help businesses of any size scale up or down to meet their holiday shipping demands. Reach out or download the app today to learn more!