The summer season brings many fun things to our lives: beach vacations, grill-outs, bonfires, warm weather, and the return of outdoor sports. Increased activities and rising temperatures also bring about a less desirable effect: yet another capacity crunch in the freight industry as consumers purchase beverages at the highest rate of the year. Beverage season in freight terms typically arrives in mid-late May and runs through mid-July. During this time, carriers dedicate capacity to the increased demand for both alcoholic and non-alcoholic beverages.
Refrigerated transportation options, which are already at a premium because of produce season, will continue to become difficult to source as carriers do their best to take advantage of their leverage during this season.
Beverage Industry by the Numbers
According to this article from Zippia, the beverage industry brought in $447.4 billion in revenue in 2022. Apart from one down year during the height of the pandemic, the industry has followed a trend of increasing almost $15 billion year over year.
Soft drinks lead the charge, bringing in three quarters of that revenue, with PepsiCo as the industry leader at $66.7 billion in 2022. The trends show that the industry is not slowing down, so we can expect the disruptions from peak beverage season will continue to impact the movement of freight.
In April 2023, beverages and alcohol were out-of-stock on average 13%. The table below shows the money left on the table by beverage brands each week. Keep in mind that these numbers will more than likely rise when we hit peak beverage season.
Out-of-Stock Impact on the Beverage Industry
| Annual Revenue | Weekly Revenue | Average Out-of-Stock Rate (April 2023) | Amount Lost to Out-of-Stocks in One Week |
|---|---|---|---|
| $447.4 Billion | $8.6 Billion | 13% | $1.12 Billion |
Even if your company is not involved in shipping beverages, this capacity crunch can impact your operations as more carriers dedicate their trucks to high-demand (and therefore higher paying) lanes. This causes other freight sectors to see spot-market rate increases as capacity moves with the demand of seasonal sales.
The table below shows the impact of on-time delivery on gross profit. No matter what industry your brand is in, losing money to lackluster logistics is a problem. Fortunately, the difficulties faced from seasonal fluctuations can be avoided by taking the correct steps.
How On-Time Delivery Impacts Gross Profit*
| Annual Revenue | On-Time Delivery Performance | Gross Profit |
|---|---|---|
| $1M | 77% | 346,500 |
| $1M | 95% | 427,500 |
So, What Can You Do to Prepare for Beverage Season?
Plan Ahead
While this is a good rule of thumb for transportation in general, it is especially important when seasonal fluctuations come into play. Arranging shipments as soon as possible for upcoming orders allows for more favorable rates, greater choice between preferred carriers, and better delivery times as opposed to waiting until the last minute.
Overcommunicate
Communication is another general rule of thumb that is crucial during busy times. Accurate and timely communication of your freight goals with your transportation partner will allow the relationship to develop into a partnership rather than being transactional.
If you are working with an experienced 3PL like Zipline Logistics, your partner can schedule freight optimally and assist in identifying inefficiencies in your brand’s supply chain.
Work with Retail Logistics Experts
While general 3PLs may meet your shipping needs in many areas, retail logistics comes with more stringent requirements and higher penalties for brands that fail to meet OTIF standards. These standards vary by retailer and receiving facility.
If your 3PL is not familiar with these standards, your brand could face fines, out-of-stocks, or even loss of shelf space. A provider who has experience in the retail space can help you meet requirements and keep your shelf space by maintaining compliance standards for the most challenging receiving facilities, even during times of uncertainty and market fluctuation.
Zipline is an Experienced, Retail-Focused 3PL
Trying to navigate seasonal freight fluctuations in-house or with a general 3PL can make these obstacles appear daunting.
If you want to mitigate these challenges, work with a specialized 3PL that keeps you informed of seasonal rate fluctuations and the effect it will have on your transportation goals.
Zipline Logistics has an extensive carrier network throughout the U.S. and 15 years of experience in the CPG retail space. Our strong carrier relationships allow our teams to procure capacity in markets tightened by beverage season while keeping you informed of potential problems or changes in the market, and our state-of-the-art shipper intelligence tools allow your brand unparalleled visibility into how your freight is moving. Your transportation goals are our transportation goals.
Beverage season is approaching quickly! Do you feel confident in your brand’s ability to meet retail compliance standards? Reach out to Zipline now to turn your pain points into pride points!
