The Global Logistics Crisis and What UK Retailers Can Do About It

The world is currently experiencing a crisis in the shipment of goods and it’s affecting UK businesses more than most. A combination of Brexit, Covid-19 and red tape have brought supply chains to a grinding halt, and with Christmas just around the corner, it’s a major concern for retailers.

At ILG we’re working closely with our customers to minimise the impact of the delays. But why is this happening now and how can you best manage the crisis?

Perfect storm

The problem can be traced back to before the pandemic. With the benefit of hindsight, there were growing weaknesses in the global supply chain that may have looked manageable at the time but became unmanageable in the light of Covid.

With e-commerce booming, consumer demand at the end of 2019 was at an all-time high. In the UK, the haulage industry came into the pandemic already under pressure. Lockdown turned the screw, triggering a steeper rise in online shopping and accelerating a growing shortage of lorry drivers, brought on by Brexit, the IR35 tax regulation and slow processing of new driver applications.

Prior to the pandemic, there were around 600,000 lorry drivers working in the UK, a shortfall of around 60,000, according to the Road Haulage Association. In the last two years that shortfall has grown to around 100,000. Drivers have been retiring or leaving for alternative careers and not enough have been coming on board at the bottom of the ladder.

To compound the delays, some of the world’s biggest ports were forced to close this year due to Covid outbreaks, leaving cargo ships anchored at sea, unable to unload for weeks. In August, a terminal at the third largest port in the world, Ningbo-Zhoushan in China, had to close for a month, causing a knock-on effect through other Chinese ports and adding to the backlog still being felt from the Suez blockage in March.

It was a perfect storm of swelling demand, plunging supply and major hold-ups.

Impact on retailers

For UK retailers, the crisis is having a double impact of extensive delays and soaring prices. This month we’ve received two shipments from China that were booked in April. That’s a five-month turnaround on a shipment that would normally take a few weeks. Another shipment booked in June is yet to arrive.

With everyone fighting to secure what little supply they can find, prices are going up on average £500 every two weeks. This has caught many people off guard.

Some of the world’s biggest brands have already declared that there will be shortages at Christmas and some distribution orders will not be fulfilled. And with Chinese New Year bringing its usual slowdown in January, things aren’t expected to improve until the end of Q1 2022. Even that is looking optimistic. We could well be looking at Christmas 2022 before things return to normal.

How to manage the crisis?

Our conversations with customers revolve around managing the crisis rather than finding solutions. In truth, there is no overnight solution. Eradication of the Covid threat, a revision of UK law and a streamlining of the driver qualification process will all make a positive difference, but will all take time.

In the meantime, it’s a case of being aware of the situation, managing your customers’ expectations and making sure your processes are as efficient as possible, so there are no additional delays.

Number one – get your shipment spec exactly right before submitting it. Any late changes will cause new delays, which will be magnified several times over in the current climate.

Number two – give us more notice. Shipments from China and India currently need two to three weeks’ notice rather than the usual one, so try to work to that schedule if you can.

Number three – as most quotes are only issued on a two-week basis, be prepared to book on provisional rates, so that you’re ready to go as soon as your shipment becomes available.

We’re aware that this is far from comforting news for our customers but it’s a global situation that, like Covid, we’re stuck with and must learn to live with. Along the way, we are constantly monitoring the situation, looking for solutions and helping our customers to keep their customers satisfied. It requires patience, understanding and a strong nerve but we’ll get there.

If you have any questions or need advice, we’re always here to help. Please do contact us on 0844 264 8000.

Delivering a Successful Peak – Part 3

Managing your Delivery Expectations

By Mike Jones, Commercial Manager

When I grew up, there was no internet, e-commerce or online sales at Christmas time. The challenges we grappled with then were a world apart from those we face today. Being an excited child on Christmas day was all well and good, as long as my parents had remembered to buy batteries that were compatible with my main present! Back then, whether it be for batteries, spare parts or further bargains, Boxing Day was always the biggest shopping day. But e-commerce and a phenomenon born in the USA called ‘Black Friday’ has all but overtaken any sales records seen on Boxing Day in years gone by.

Whilst Black Friday is well established as the unofficial start of the Christmas season in the USA, the UK has only seen its impact on retail in recent years. No one really knows who was responsible for this trading period becoming such an important part of our working and personal lives, but companies with strong US connections such as Amazon UK and Asda were the first to give us a flavour of what to expect. However, it is fair to say the courier market experienced the same challenges as Black Friday in March 2020, and the delivery networks have never really slowed down since!

Year on Year growth

It is almost certain that this year, from Black Friday bargains through to last minute Christmas shopping, will be a wholly digital peak trading period. With the ongoing pandemic and the possibility of further restrictions, shopping patterns are likely to revert to online and digital platforms rather than traditional methods which, at the moment, many of us can only dream of. These patterns are impacting ILG too, with many of our clients selling exclusively online. With so much uncertainty still ahead of us, I am very concerned about the future of our High Streets.

At ILG, our UK shipping spikes can be tracked across our peak trading period through 2019 but, as you can see below, the pandemic has given us more than a flavour of what is just around the corner for UK shipping in 2020:

Since the e-commerce boom in May the volumes have levelled out, albeit at numbers well above any we expected at the start of the year. In the six-month period from March to August 2020, the growth for UK shipping compared to our 2019 figure was a staggering 448%. If this trend continues, we expect our parcel shipments to UK addresses to total 1,156,211 in November and 1,370,604 in December. We will soon find out if these figures turn out to be a reality, however we are expecting to ship record numbers. If this is the impact ILG is having on the courier network, imagine what the figures are like nationwide, both since the pandemic began and for forecasted peak.

Nothing is ever ‘Guaranteed’

I find it mildly amusing when a new service provider approaches me with the promise of deliveries being guaranteed. In my opinion, any service provided by any supplier in any country cannot be guaranteed and should not be sold or advertised as such. This is because I have witnessed a parcel’s journey from point of dispatch to point of delivery. Even when the process and route it takes are planned and supported with world-leading technology, there are still multiple factors (both within and outside our control) that could contribute to success or failure of a delivery on any given day.

In 2010, eruptions of Eyjafjallajökull in Iceland caused air travel in Europe to come to a standstill for six days. This meant that shipments destined for Europe could not fly and carriers were forced to route nearly all traffic via road, which caused huge backlogs and untold delays to express shipments. Of course, there are often clauses that sit behind a ‘guaranteed’ service to protect businesses against these types of events financially. But I cannot imagine what the fallout would have been for companies (and their clients) that passed on guarantees to win and retain business, only to come unstuck from such an event.

Set realistic expectations and don’t over deliver

This is far easier said than done for many reasons. Everyone wants to be one step ahead of the competition. Delivery service, price and transit can be the difference between winning or losing a client. But I see many companies that overstate and fail to manage client expectations against what is realistic. Often, they lose more than they gain, and it is understandable why. If realistic expectations are set early, then there should not be any nasty surprises further down the line. It would be easy for me to say that everything will be fine in this peak period, and I sincerely hope it will be. But in reality, and from what we have seen this year already with the increase in UK parcels since March, it is vital that we understand what could happen over the next two months.

Our preparation for this peak trading period is complete. We have submitted forecasts to our carriers based on your feedback and extended working hours and shift patterns to cater for the expected volumes, whilst retaining safe working practices. I have to say I am incredibly proud of what our operations and transport teams have achieved in the most difficult of circumstances since the pandemic began. I have no doubt they will continue to exceed all expectations. Here are my 5 key points and insights into how you can successfully manage delivery expectations this peak:

  1. Review your own delivery promise and service offering. Make it realistic – We all want to be successful this peak but take time to review your delivery options and decide whether they are realistic. Will you meet the expectations set, or do they need revising and brought into line with the challenges the industry are facing this year? If you are unsure or need advice and guidance, please feel free to get in touch with me on this subject.
  2. Prior planning prevents poor performance – There are many variations of this well-known military adage, but this could prove to be critical for your peak deliveries. Take a minute to reflect on your peak planning. Have you thought about the delivery services you are offering, and will these be the deciding factor between success or failure? It is never too late to make revisions and ILG can help with our multi-carrier solutions.
  3. Limit your premium options – I applaud any carrier that removes timed deliveries and premium services from their offering over peak, as this sets a clear expectation in line with their capabilities. We are seeing more carriers suspend premium services due to the high volumes forecast, and this will help them achieve their goal of delivering what is realistic and achievable. Are premium services part of your offering? If so, understand what is available to you now so you can plan for the weeks ahead. Please reach out to me if you need to review!
  4. Know your client – The technology available in the industry today is mind-blowing and carriers are spending millions of pounds to be recognised as market leaders. But the success of technologies and overall first-time delivery success rates, is only as good as the data supplied. Consumers are set to be given more control over their deliveries, but if key pieces of information are missing, these mechanisms will be useless. Make sure you obtain your client’s mobile number and email address so our carriers can use the technology as intended. This could be a deciding factor in the success of your deliveries.
  5. Prepare for the unexpected – Winter is almost here. Shorter daylight hours and less predictable weather will only add to the challenges facing the industry. At ILG, we try to plan and cater for events that we have no control over and always provide options should there be issues within the network. Stay in touch with ILG this peak as we will be providing updates to notify you of delays and uncontrollable events as they arise. Some of the most challenging times of my ILG career have been when the weather takes a turn, especially in peak. But thankfully we have always had options available to us if one of our suppliers struggled to deliver. Be prepared, stay in touch and talk to us if you come up against any challenges!

I truly believe that, in many ways, this year will shape our industry for years to come. We have all had to adapt to what has been thrown at us and will continue to do so to stay ahead of the competition. This industry, more so than many others, has seen unprecedented volumes and challenges. We have done all we can to prepare for this peak trading period and our Client Services Team will do everything to rectify your delivery issues as these arise. Please keep in touch with our communication channels and Client Services Team this peak – we are all in this together!

Delivering a Successful Peak – Part 2

Self-serving

By Mike Jones, Commercial Manager

This will be my tenth peak at ILG. Each has presented challenges on a scale never seen before. Yet, somehow, these unprecedented conditions end up being considered the norm for the following year. As time passes and ILG and our clients continue to grow, each peak period throws up new challenges which we must prepare for and overcome. This week’s theme is ‘Self-serving’, and the mechanisms ILG have in place to allow you to take control of your deliveries.

Our introduction to a new way of working

When I started my career at ILG as a Fulfilment Account Executive, many of the tasks and queries I received from clients in my first peak trading period were the same as our Client Services Team experience today. As our industry evolved and our carriers introduced new ways of working and the ability to self-serve, it became obvious that we needed to bring ILG’s capabilities in line with those of our competitors. In 2018, ILG partnered with Metafour, a company specialising in courier-related software. Integration with Metafour revolutionised the way we interacted with our carrier partners and gave us a platform to design our own online portal for clients to self-serve.

Implementing change to our client base

For many years, ILG’s delivery fleet has collected shipments from our local clients and brought to our facilities where our staff would process, label and send them on their way with the chosen suppliers. The introduction of Metafour software gave our clients the tools to self-serve and ensured that all parcels destined for ILG were labelled with the correct carrier label prior to pick up. This was a huge step-up for ILG’s service offering and bought us into line with our industry competitors. It also enabled us to start looking at future developments to enhance the delivery experience for all.

Your ability to self-serve through peak in 2020

I often reminisce with colleagues who have experienced previous peak periods with me over the last 10 years. It is hugely satisfying to see how far we have come in that time. What we are capable of today seemed impossible only a few years ago. Thanks to these advances, we are now in a fantastic position to continue to work through peak and focus on what is important for our clients.

Enabling our clients to self-serve through peak will ensure our Client Services Team is on hand to deal with urgent requests and ensure we respond to and resolve queries within our advertised SLAs. Here are ILG’s five top tips on how you can self-serve without contacting the Client Services Team:

  1. Review who exceptions are sent to – One of the key advantages of the ILG system is the ability to inform you of an exception when we are notified by our carrier. Over the years, this feature has proven to be a great benefit and we strongly suggest you review who within your company receives notifications and tell us if this point of contact needs updating. This will help us to optimise the way we communicate exceptions through peak.
  2. The ability to quote online – One of the most common requests we receive is for a shipping quote. Your own unique ILG Portal provides delivery rates information for any courier service provided via ILG. Here you can obtain shipping quotes for export and import courier shipments via the Quote function. This gives you a real-time price on shipments without having to contact ILG. If you are looking for quotes on freight shipments or ‘Cross Trade’ services, please feel free to get in touch with the team.
  3. Book your imports and third-party collections online – The ability to book collections and imports via the ILG portal has been one of our most successful enhancements over the last few years. We are making significant progress with further improvements to the booking process. However, to ensure a timely and efficient booking we recommend you book all courier-related imports and third-party collections online.
  4. Pickup Manager – a complete self-service tool available to all clients – Our newest and quite possibly best enhancement yet, Pickup Manager enables you to fully self-serve on your imports and third-party collections. Currently accessible through a DHL Express service, you can now obtain the shipping label and schedule the pickup of all imports and third-party collections via the Pickup Manager option. This gives you complete control and frees up our team to focus on your urgent queries.
  5. Detailed order tracking – Believe it or not, the tracking capabilities on the ILG website are as good, if not better, than the tracking on any carrier website. Our integration allows us to tailor the information displayed via the ILG Portal and ensure visibility across all areas of your shipments journey, from start to finish. All tracking of your courier shipments is available online and I strongly encourage all our clients to take full advantage of ILG’s transparent approach to your shipments. If you do receive exception notifications from ILG, we urge you to check the tracking of the shipment prior to contacting the team, in case an update has already been supplied to our carrier.

The Pickup Manager option is currently being rolled out, but if this is something that would benefit you today, please get in touch with the team and we will look to implement immediately.

Our ability to push the capabilities through a multi-carrier offering will continue to challenge us. However, I am confident that our current systems and options give you the tools and information you need to enhance your own service offering to your clients. There is still much to be achieved, but what is in place currently is built specifically for you and allows us to share delivery information with you simultaneously and in the same format.

Please continue to feedback on future enhancements and pass on any suggestions you may have for further improvements. I am certain that by following these five tips you will help us to deliver a successful peak in 2020!

Safe-Sign for Safe Signing and Deliveries

As lockdown continues, keeping our distance and avoiding contact with non-householders are still our best protections against Covid-19 infection.

Now, ILG customers are benefitting from a new contactless technology that enables our delivery drivers to collect proof-of-delivery signatures at a distance, quickly and safely.

Safe-Sign, part of the MetApp delivery app developed by ILG’s technology partner Metafour, uses QR codes to capture delivery signatures on the doorstep, without the need for recipients to touch the driver’s PDA or mobile phone. For each delivery, Safe-Sign generates a unique QR code on the driver’s device. The recipient uses their smartphone to scan the QR code, access a signature webpage and sign for the package on their own device. Safe-Sign scanning even works through window glass, so householders can choose to stay indoors for extra safety.

Thanks to Safe-Sign, all ILG’s home deliveries are operating efficiently, complying with government social distancing guidelines and keeping recipients and drivers safe.

Has COVID-19 Turned Europe into an Online Market? And What Should You be Doing About It?

It won’t come as any surprise that e-commerce has experienced a major spike during the coronavirus pandemic. Customers confined to their homes have taken comfort in the ability to find the goods they need readily available online and delivered safely to their door within a few days.

In the UK we have experienced sales of Black Friday proportions. This is phenomenal but not altogether surprising. The UK is the world’s third biggest e-commerce market after China and the US – people here are used to shopping online.

The eye-catching news is coming from mainland Europe, where consumers have, until the lock-down, been much more reticent about online shopping. This table shows the spike in year-on-year growth during April for the nine biggest e-commerce markets in Europe.

FranceGermanyIrelandItalyNetherlandsPolandSpainSwedenSwitzerlandUK
Apr-192046287323342038528468100117332
Apr-2011472828889010791110162793120198293756
% Growth YoY462.25%350.32%1114.48%223.05%446.80%90.59%179.23%76.47%98%15.36%

A rebirth for e-commerce?

These statistics show clearly that buying habits in Europe have been forced to change. France, Germany and Italy have long been seen as having significant growth potential for online retailers, yet consumers there have been slower to come to the table. The lockdown has changed all that, and now the question is: Are we seeing a rebirth for e-commerce in Europe? Or will things go back to the way they were once life returns to normal?

There are two good reasons to assume this is a permanent trend: firstly, once consumers form a habit, they rarely go back; secondly, this is a trend that we’ve seen across a range of sectors – cosmetics, footwear, clothing, baby wear, children’s clothes, skincare – and at all price points and basket values, suggesting a widespread shift in attitudes, rather than an isolated blip.

How brands can benefit

If the April figures do herald a long-term growth in the European e-commerce market, now is the time for brands to put their best foot forward. Brand loyalty is arguably easier to safeguard online than it is in-store, where shoppers may walk past all your competitors on their way to your display. Once you’ve got a customer buying from your website, you can capture their data and get them coming back again and again without any distractions.

By the same token, the Internet is designed for flitting around. Customers are inclined to browse, try new things, visit places they’ve never been before. How can you attract them to your brand and make them settle?

See below for specific European marketing tips

The customer experience is crucial. The journey you take them through on your website, the delivery experience, the unboxing, the communication, the after-sales… all these factors combine to create a loyalty-building customer experience – and failure in any one of them can undo it at a stroke.

We’ve been helping our clients to add value for their online customers with the fulfilment of gift sets, sales on certain products and a range of delivery options. It’s important to find the right balance between rewarding customer loyalty and over-promoting, which can create expectations that are hard to undo.

Delivery and returns expectations

Speed of delivery and the ease of returning unwanted items have been two key selling points for brands in recent years. The restrictions of the last two months, however, have forced a change. Customers know they can’t expect Next Day delivery and so that is no longer a selling point. Similarly, on the advice of our H&S consultant, we have introduced a 72 hour holding period for returned goods to protect our employees, which has slowed the pace of that aspect of our service.

Could this spell a change in buying habits among consumers? The growing expectation for super fast deliveries and rapid returns undoubtedly created false buying habits, while also driving inflation for suppliers. Perhaps brands can use this period of change to reset their customers’ expectations and encourage them to focus on quality of product and service instead.

Taking the in-store experience online

One of the biggest challenges for brands selling online is how to replicate the in-store shopping experience for people coming to a website. Personality, presentation, discounts, try before you buy… can e-commerce really compete with bricks and mortar retail when it comes to these selling points?

Our e-commerce clients are regularly coming up with new ways to enhance the customer experience online. Bespoke packaging, personalisation, gift sets, delivery communications, messaging in the box… these are all services that we provide as their 3PL, helping to build a unique and fulfilling customer experience that puts the focus on quality and cements brand loyalty.

With a whole new European market having broken through their reluctance to shop online, the opportunity for brands to grow their e-commerce customer base in Europe looks very attractive indeed. This is a time for new models and bright new ideas. So how will you make the most of it?

Top tips for acquiring new customers and making sure they come back

By Emily Power, Strategic Lead at Reload Digital

Localise all marketing efforts – as brands engage customers in new geographical markets, it’s now more important than ever to ensure you localise your communication and marketing efforts. Consider how you can tailor:

  • Language: If possible, translate website copy, paid advertising and any marketing communication to better engage the local market and support local SEO strategy.
  • Currency: There are plenty of apps out there to help with this, such as Currency Switcher on Shopify.
  • Delivery and returns information: Do delivery times and returns processes change from country to country? If so, it’s so important to communicate this.
  • Product performance and marketing focuses: Dive into what products are selling best across each of your core markets and tailor your marketing efforts based on this.

Use email and content to build relationships – Once someone has made their first purchase, that’s just the beginning of the relationship. By segmenting your email database based on purchase behaviour, you can deliver tailored con-tent (both education and product-specific), keeping them engaged until they are ready to buy again.

Take advantage of customer referral schemes to acquire new customers – by working with your existing customer base to incentivise friend referrals through tools such as Loyalty Lion and Yotpo, you can increase your new customer acquisition up to 30% at an extremely low cost.

Key Considerations when Importing Stock

Lee Simmons, Head of Projects and Development

Many of our clients have their products manufactured or sourced abroad and shipped to the UK, where they are assembled, repackaged and redistributed to their customers. This requires an understanding of the import and customs clearance process, including the range of carrier options, the documentation required and the costs involved.

As part of our series of tips covering the key concerns of our clients when they first start outsourcing their fulfillment, this blog offers some advice on the key considerations for importing goods and clearing customs without any hitches.

If you have specific questions about importing stock, please call ILG and we will be happy to pass on our experience.

Where are you sourcing your products from?

The process of import and customs clearance differs depending on where you are sourcing your products from. Most manufacturers will provide pricing ‘ex works’, which means the freight costs will be your responsibility. The further they have to go, the higher the cost will be, but you might need to go further afield to seek the quality and price you’re looking for. In which case, be aware that shipping from beyond Europe is likely to cost more and involve customs clearance.

Set up your EORI number in good time

Similar to a VAT registration number, an EORI number is required when importing goods to the UK from outside the EU. This number will be required by Customs when the goods arrive in the UK. The HMRC will use it to invoice your company for any duty and taxes that might be levied.
EORI numbers are free to set up but this needs to be done in good time, ready for your first import. The set-up can take some time, so make sure you set the process in motion as soon as possible so you have the number ready when the goods arrive. If there are any delays to the clearance process, you are likely to start incurring storage fees after a period of 24 hours.

Planning ahead saves time and money

It’s important to consider the speed with which your goods can be imported versus the cost. As you might expect, the faster methods cost more, so with good forward planning you can opt for slower shipping and save money. Check lead times from your manufacturers so you can plan ahead and are not forced into using the fastest, most expensive transport option.

Airfreight, sea freight and courier options each come with their own cost and delivery window. Sea freight is usually the most economical choice when importing large or heavy consignments but you will find that minimum volumes apply, which you will need to account for, as well as being very aware of the longer transit times.

Duty, taxes and commodity codes

When goods arrive in the UK from outside the EU they will be required to go through customs clearance. Each product moves under a commodity or tariff code, which should be provide by your manufacturer. HMRC will use this code to determine the level of duty applicable and invoice accordingly. In addition, you will be required to pay any VAT, which is calculated on the total value of the shipment combined with the freight costs. You can find an explanation of how the customs charges are calculated on the HMRC website. These fees will need to be paid before delivery can take place, so you need to consider all of the costs involved and do your research.

Buying large quantities of stock from overseas can be daunting when you start doing it for the first time but, like any process, once you’re armed with the facts and a good logistics partner, there is really nothing to worry about. At ILG we have many years of experience in freight transport and customs clearance and can help you with all the advice you need to make your import of stock a smooth operation every time.