Fluctuating and unpredictable volumes: the new reality for logistics players
- January 22, 2025
- 2 mins
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The logistics sector experienced rapid growth in e-commerce during the COVID-19 pandemic, followed by a marked slowdown. However, beyond this decline, it is the unpredictability that has now become the norm, challenging logistics players. In an unstable economic environment, traditional forecasting models are inadequate against erratic volume fluctuations. Carriers thus struggle to adjust their resources to meet demand while maintaining profitability.
From rapid growth to slowdown: the evolution of the e-commerce landscape
Before the pandemic, e-commerce saw steady and predictable growth, with well-anticipated seasonal peaks. However, COVID-19 lockdowns led to a massive and sudden surge in volumes, severely testing industry capacities. This exponential growth was followed by a period of decline, yet volumes remained significantly higher than pre-pandemic levels.
After the pandemic, inflation presented a new challenge for the sector: forecasting volumes became extremely challenging for carriers. Concurrently, operational costs saw significant increases, driven by rising fuel prices and labor costs. Delivery companies face a double challenge: stagnant or declining volumes alongside rising costs.
“I think if you look at transformations in the industry today, we are in what I call the post-COVID era where we have to manage completely new growth projections. During COVID, it was all about managing very strong growth. Today, it’s about managing almost nil growth in a climate when lots of our financial metrics have severely changed. Inflation is at its highest and labour scarcity is a big problem. And as the volumes are not really growing we are not able to offset the cost increases by our volume growth.“
Eric Dietz, COO Europe and Executive Vice president of Geopost, in an interview with Post & Parcel in November 2023.
A logistic year anything but linear
Over the course of a year, volumes experience significant fluctuations for logistics players. Specific events like the peak season (November-December) lead to massive demand spikes.
During this critical period, which notably includes Black Friday, carriers face a substantial influx of parcels to deliver. This phenomenon has intensified in recent years with the rapid growth of e-commerce. In the UK, for instance, online sales represent approximately 30% of total sales during November.
However, beyond these recurring seasonal peaks, annual volumes have become extremely difficult to anticipate for logistics players. In an unstable and shifting world marked by rampant inflation, geopolitical tensions, and health crises, establishing reliable forecasts is a daunting task. Traditional forecasting models struggle to adapt to the unpredictability and volatility that have become the new norm.
Logistics players uneven in the face of economic unpredictability
Both shippers and carriers experienced mixed performances in 2023.
Online retail giants were not immune: Asos saw its total orders drop by 15% for fiscal 2023, Zalando expects revenue to decline between 0.5% and 3% compared to a projected worst-case decline of 1%, and while H&M experienced a 6% increase in net sales for fiscal year 2023, it saw a 4% decline in the fourth quarter, against the 3% anticipated by analysts. In contrast, Inditex (Zara) saw a 16% increase in online orders. José Antonio Ramos Calamonte, CEO of Asos, also acknowledges that “the subsequent re-balancing of the economy has exposed weaknesses in our old ways of doing things“.
Volume fluctuations are also observed among carriers. Some, like bpost (+6.3%) or InPost (+21%), saw volume increases, while others experienced slight decreases such as Geopost (-0.6%) and Swiss Post (-4.6%). These variances can be explained by differences in competitiveness in local markets and strategic choices of companies.
In the face of a complex and ever-evolving environment, companies must therefore rethink their supply chains and operational models to adapt to this new reality.
Disrupted resource planning
The evolution of e-commerce and the resulting volume fluctuations directly impact resource planning for carriers. Previously, volume forecasts followed a relatively predictable cyclical trend with known peaks that facilitated planning. Today, this model has significantly changed.
The profitability of carriers depends on their ability to adjust resources according to volume and service requirements. Increasing resources when volumes rise and reducing them when volumes decline are essential to maintaining profitability. However, this task has become more complex due to unpredictable market fluctuations. At the heart of this issue lies the need to remain competitive while offering quality service.
To meet these challenges, carriers must adopt agile strategies capable of quickly adapting to volume changes and service requirements. This involves investing in advanced forecasting tools and developing flexible planning models. This is the focus of our next article: “What strategies to tackle the challenge of fluctuating and unpredictable parcel volumes?“.
