Could Shipping Costs Threaten Black Friday Success?
Now Halloween and Bonfire Night are behind us, its time the logistics sector turns their heads to Black Friday - though, of course, the preparation that goes into making the consumer shopping experience so seamless is a year-round process.
It seems, however, that operations may not run so smoothly this year, with the annual increase in shipping costs around Black Friday (29 November) presenting challenges for supply chain businesses.
Last year, nearly one-third (32%) of firms in the sector faced cost hikes, with some seeing their carrier rates soar nearly 25% over the week of Black Friday. This drove average per-item delivery expenses from £3.50 to £4.37, according to a recent report by Mintsoft, an order fulfilment software provider.
During peak shopping seasons, carriers impose surcharges from mid-November to early January. This extra charge is a response to the pressure on shipping networks during Black Friday, Christmas and January sales.
Yet, consumer expectations for affordable delivery mean many fulfilment companies and retailers may feel forced to absorb the costs rather than risk alienating shoppers.
Beth Chapman, Managing Director at Starlinks Global, a cross-border delivery service, criticises the surge pricing tactics employed by carriers: "The bad behaviour of profiteering from some carriers that goes on during the peak season is frustrating.
"Retailers are struggling with price pressures and we should be working together to grow volume in a sustainable way. Not hiking prices as soon as it turns October 1st."
Staffing and stock challenges
For many logistics companies, higher delivery charges are just one part of the seasonal challenge. Labour shortages create additional issues, as more than 90% of supply chain firms report needing temporary workers to meet demand spikes. Yet nearly 18% of these firms struggle to find enough workers for the role, further straining operations.
Last year’s data from Mintsoft also shows that firms using its software processed a record 1.2 million orders on Black Friday alone. This marked a 35% increase in dispatched orders, a figure Mintsoft experts expect will rise another 14% this year. With consumer demand rising, operators feel the pressure to ensure quick, accurate fulfilment.
"Retailers should be able to rely on their fulfilment partners and carriers to ensure they don’t face huge price increases during peak season," comments Ruhksar Ahmed, Director at Green Fulfilment, a third-party logistics provider.
Meanwhile, Claire Carter, Managing Director of ERP at The Access Group, the parent company of Mintsoft, emphasises the importance of strong partnerships and technology: “Although peak season surcharges are nothing new, they certainly add to the cost pressures already impacting small and mid-sized firms.
"We’d urge firms to review the contracts they have with all of their carriers and strengthen their partnerships with them to ensure they’re getting the best deal, as well as timely collections and deliveries to meet consumers’ expectations.”
Claire also suggests technology could play a role in easing these seasonal challenges: “Without the right combination of software and data intelligence, identifying the opportunities for peak efficiency can be difficult – it’s never too early to prepare your tech stack for busy periods.”
Aramex adopts an agile approach to handle peak season uncertainty
While most logistics providers rely on long-term projections to prepare for peak shopping seasons, Aramex UK has adopted a more flexible strategy.
Amid shifting consumer habits and geopolitical disruptions, Aramex is moving away from rigid forecasts.
Instead, it has developed a demand-driven approach to adjust shipping capacity as needed and offers tailored solutions for both established retailers and start-ups.
This strategy ensures that the firm can handle rapid shifts in consumer demand and avoid disruptions during high-traffic periods like Black Friday and Cyber Monday.
Umar Butt, CEO for the UK and Europe at Aramex, describes this dynamic approach as essential in an unpredictable retail climate:
This year has been an extremely challenging time for retailers. Increased competition as a result of reduced spending, shifting consumer attitudes and expectations and a never-ending cycle of disruptions to the global supply chain are just some of the issues they have been forced to contend with, making the pressures of peak shopping seasons like Black Friday and Cyber Monday even greater than previously.
“Smaller retailers often lack the resources and analytical capabilities that larger firms possess, making it even more difficult for them to anticipate demand fluctuations," Umar continues.
"By adopting a more agile approach, logistics providers can diligently adapt to these changing demands and provide tailored or even last-minute, logistics solutions that ensures retailers both large and small can meet demand, whether that be during Black Friday, Christmas or any other peak shopping season.”
As the retail sector enters its busiest period, companies across the supply chain are feeling the strain of peak season pressures.
Still, providers like Aramex, Green Fulfilment and others remain committed to finding strategies to ensure their partners maintain service levels and meet rising consumer expectations.
As Umar concludes: “The world we’re living in now is changing at a rapid rate, which is why embracing an agile and flexible approach to logistics is more critical than ever as the old methods are fast becoming redundant.”
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