Peak season management

With the busy holiday season just around the corner, shippers may feel it’s already too late to ensure deliveries arrive in time enough to meet customers’ needs.

But for those who haven’t started preparations yet, that might not be the case, although it should be a priority, logistics experts said during the Sept. 18 live stream event “Insights Into the 2024 Holiday Shopping Season,” co-hosted by Supply Chain Dive, Retail Dive and Marketing Dive.

Right now, priorities should focus on carrier capacity, contingencies for service disruptions and long-term planning to establish relationships, so timely deliveries and equitable rates can carry through into the new year, the experts say.

When speaking with shippers today, conversations shouldn’t just just be about peak season, said Ninaad Acharya, co-founder and CEO, Fulfillment IQ, but “the broader outlook going into 2025.”

Acharya pointed to sweeping operational shifts in the U.S. Postal Service, which has led to on-time delivery problems for the financially struggling agency, adding it’s important to start considering contingency plans to avoid disruption. This could involve capacity planning and sharing shipping data with carriers, detailing your needs and expectations, he said.

While it’s important to think long-term, the focus on the present shouldn’t be lost, according to Jonathan Hessney, founder of OnRout, especially with peak season surcharges already implemented by FedEx, UPS and DHL.

“FedEx and UPS already are double-dipping on peak surcharges this year,” Hessney said.

But there is some uncertainty about the 2024 peak season fueled by a shorter holiday shopping period and a persistently weak freight market, he said. If the latter is the case, it could create opportunities for shippers to negotiate a discount on surcharges on the promise of more volume.

“I wouldn’t be surprised if they’re more open to it because they are trying to double-dip on both sides,” Hessney said.

A key to controlling shipping costs is predicting demand, which can have a range of influences including must-have holiday items that could cause a late volume spike. Hessney said shippers should avoid waiting until the last-minute to make arrangements with carriers because it could mean higher costs.

Shippers should also spread out promotions throughout the peak season to avoid delivery delays, according to Hessney.

“So as much as you can influence the marketing guys on being able to spread out peak, please, please, do that,” he said.

Even if a volume spike occurs late in the peak season, Acharya expects 2024 to be a “normal-esque peak coming in right from a general volume standpoint.”

In terms of capacity, both Acharya and Hessney think it’s not a big issue. Acharya said in general, capacity is in good shape. While Hessney said, “Capacity is probably fine. If you want to ship the day before Christmas, it may be a little problematic.”

Delivery problems are still likely even with adequate capacity, Hessney said. He advised shippers to have contingency plans as “little issues are going to pop up” and it's best to be prepared.

“I’m sure you’re going to see some failures here and there,” he said. “It’s just not going to be a widespread mess.”

Peak season surcharges are back in 2024 with numerous changes compared to last year.

FedEx, UPS, OnTrac and GLS US are among the delivery providers stretching their temporary surcharges over a longer period this year, despite a condensed holiday period. Some carriers have added new fees, changed their fee structure or reintroduced the practice after skipping surcharges last year.

Here's a roundup of companies that are instituting holiday surcharges, along with a few alternatives that are opting out of the practice.

FedEx

FedEx is levying new per-package delivery surcharges during the 2024 peak season, including a $1-to-$2 fee for various express services and a $0.30-to-$0.55 fee for ground residential shipments.

The company will also apply a fee for large-scale shippers that see volumes spike during the peak season. That charge ranges from $1.45 to $8.25 per package, depending on the service used and how much more a shipper's volume increased versus their typical shipping activity.

The surcharges will be active from Oct. 28 to Jan. 19, 2025.

FedEx also implemented higher fees for packages that are oversized, unauthorized or require additional handling from Sept. 30 to Jan. 19, 2025.

UPS

UPS will institute surcharges for ground residential, air and SurePost packages ranging from $0.25 to $2 per package.

Like FedEx, UPS will also have a fee in place for high-volume customers that need more packages delivered during the holidays. The charge, which ranges from $1.50 to $8.25 per package, varies based on service used and how much a customer's volume increased.

Both fee categories run from Oct. 27 to Jan. 18, 2025.

UPS already has holiday surcharges in place for oversized or hard-to-handle packages, which started Sept. 29 and will end on Jan. 18, 2025.

U.S. Postal Service

The Postal Service opted for no seasonal rate hikes last year, but the practice is returning from Oct. 6 to Jan. 19, 2025. Prices are slated to increase by an average of 6.4% for Ground Advantage, 5.5% for Priority Mail and 4.9% for Priority Mail Express.

“This seasonal adjustment will bring prices for the Postal Service’s commercial and retail customers in line with competitive practices,” the agency said in a news release.

The rate increases will not impact Parcel Select, the agency service used by DHL eCommerce, UPS Mail Innovations and other workshare partners for last-mile delivery.

OnTrac

OnTrac will levy a temporary surcharge of $0.75 to all residential packages shipped on Oct. 26 through Jan. 18, 2025 to cover increased operating costs, according to its website. Existing contracted discounts on residential delivery fees won't affect this surcharge.

The flat surcharge marks a departure from OnTrac's 2023 approach, when it levied a fee that ranged from $1.35 to $6.40 depending on how much volume deviated from a shipper's baseline volume.

OnTrac will also levy a supplemental $7.75 surcharge this year for packages that require additional handling and a $84.50 surcharge for oversized packages from Sept. 29 to Jan. 18. 2025.

GLS US

The carrier is implementing a $1.50 peak season surcharge for every residential parcel shipped between Oct. 28 and Jan. 19, 2025. The fee, the same amount as in 2023, will be applied as an additional cost on all home deliveries.

"This surcharge helps us maintain the quality and reliability you expect, even when resources are stretched," GLS US said on its website.

DHL eCommerce

After not applying any seasonal fees during the 2023 holidays, DHL eCommerce is reinstating peak surcharges from Oct. 27 to Jan. 18, 2025.

DHL eCommerce relies on the Postal Service for final-mile delivery. Per-package delivery fees can climb up to $1.25 for the company's domestic SmartMail products, depending on parcel weight and distance traveled. Surcharges will also apply for Ground Advantage and Priority Mail shipments.

Delivery providers with no peak surcharges

Although major carriers are implementing peak season surcharges, several smaller delivery providers are opting out of the practice, including Veho.

"Peak surcharges fall disproportionately on small-medium sized #retail and #ecommerce brands with less negotiating power than industry giants," Veho CEO Itamar Zur said on LinkedIn. "These surcharges destroy their holiday season margins."

Jitsu and Pandion are also skipping seasonal fees.

"Pandion has the capacity to flex with your peak demand and does not charge demand surcharges," according to the company's website.

Dive Brief:

• FedEx's pricier peak season surcharges in 2024 will help the carrier improve profitability after a challenging quarter, EVP and Chief Customer Officer Brie Carere said in a Sept. 19 earnings call.
• While the peak surcharges will impact shippers across the board, most of the pressure will stay on large-scale customers that see volumes spike, Carere said. The company is confident it will be able to levy the fees without scaring too many customers off, and already has fees pre-negotiated with larger shippers.
• "I am optimistic about the capture because I think customers do understand that there's a lot of pressure on the network, especially this year," Carere said, noting the shorter period between Black Friday and Christmas for 2024.

Dive Insight:

Amid weaker-than-expected demand — average daily volume at its Express unit was about flat year-over-year — FedEx is looking to extract more revenue from added fees for shippers. Rival UPS is advancing a similar strategy via its own increases to peak season surcharges.

However, this approach could be challenged in a cost-conscious environment in which businesses are leaning more on slower and less expensive delivery services. That trend persisted for FedEx for the quarter that ended Aug. 31, with its priority services seeing demand decline, while its international economy offering experienced a 35% year-over-year surge in average daily volume.

The delivery giant aims to reduce the impact of this shift to less profitable services "through surcharge management and optimizing our customer mix," the company noted in a securities filing.

One way FedEx will do that beyond peak fees is by increasing its international fuel surcharge calculations starting Oct. 7. This means fuel fee markups on applicable deliveries will increase by 475 basis points despite declines in spot prices for jet fuel, aligning the company with UPS, according to Shipware. The hike will occur a few weeks after the latest increase for FedEx's ground shipping fuel surcharges.

"We think that this is the right mix and the right approach to make sure that we are growing our yield," Carere said of the international fuel surcharge increase.

Higher fuel surcharges helped per-package revenue in FedEx's Express unit in its most recent quarter, with "a significant positive effect on yields across all package and freight services," the filing said.

Dive Brief:

• A shorter holiday shipping stretch and anticipated volume growth justifies UPS' heightened peak season surcharges, CEO Carol Tomé said during a July 23 earnings call.
• The later timing of Thanksgiving this year, falling on Nov. 28, will result in fewer days for orders between Black Friday and Christmas to be delivered than in previous years. That means the 2024 holiday shipping season will be the most condensed since 2019, Tomé said.
• UPS is expecting to encounter "the highest volume ever in our network" on Dec. 18, she added. "We think that the prices are going to stick because of what the environment is telling us from a demand perspective."

Dive Insight:

Even as shippers seek out lower-cost delivery options, UPS will implement surcharges for the 2024 peak season that are pricier compared to previous years. The amount of some surcharges varies by date, with prices peaking between Nov. 24 and Dec. 28. 

Fee hikes will start Sept. 29 for bulky and hard-to-handle packages. On Oct. 27, demand surcharges will take effect for UPS Ground Residential, Air and SurePost packages. The added fees are slated to end on Jan. 18, 2025.

The two demand surcharges are "a double whammy this year and will drive up costs" for customers that don't mitigate them, Onrout founder Jonathan Hessney said in a LinkedIn post.

"UPS has nicely given shippers more time than usual to prepare by releasing these in July (or it could be said they're moving first to try to get other carriers to follow)," he said. "Either way, there's still time to try to onboard alternatives, or negotiate discounts on the peak surcharges."

On UPS’ earnings call, Wolfe Research Managing Director and Senior Analyst Scott Group told executives that the size and magnitude of the surcharges came as a surprise. But the amount of volume UPS anticipates it will handle during peak justifies the pricing, according to Tomé.

UPS is grappling with a surge in volume from new e-commerce customers leveraging its SurePost service, CFO Brian Dykes said. The company's network capacity will soon be tested further by the emergence of its new contract with the U.S. Postal Service. The company expects to fully onboard the Postal Service as an air cargo customer before the holidays.

"When you have that kind of volume flowing to your network, you actually have to charge to service them well, because you have to hire people and lease aircraft and delivery vehicles, so on and so forth," Tomé said.

UPS rival FedEx is also confident in its ability to capture added revenue from peak season surcharges, EVP and Chief Customer Officer Brie Carere said during a June earnings call. As of July 26, FedEx had not yet released its 2024 peak season surcharges.

"The team has done a really good job in getting the increase we need to deliver an amazing peak where we do have to expand capacity," Carere said.

The e-commerce experience doesn’t end when a shopper clicks buy. Retailers must be prepared to offer status updates as well as properly address late deliveries to turn first-time gift buyers into long-term customers.

The impact of a bad delivery experience can be significant, particularly during the holiday season. Three-quarters of consumers said that the reliability of delivery impacts where they shopped online in a holiday 2023 survey of 3,000 adults by Shipt.

"We have a lot on our plates,” said Jadah Hawkins, SVP and global market leader for retail and e-commerce at Alorica. “Places to go, people to see, desserts to eat, gifts to buy. So for the consumer, there's a lot of immense planning that takes place to accomplish all of these things."

"For the retailer, there's a tremendous amount of planning they have to do to meet higher expectations from the consumer,” Hawkins said.

This emphasis on planning contributes to nearly 7 out of 10 consumers wanting to know when their online order will arrive by looking at the estimated delivery dates, according to data from Parcel Monitor and Rakuten Insight Global.

The study found almost all consumers would be willing to switch to a competitor after just one instance of subpar customer service.

Take advantage of every channel

Holiday communications are a two-way street, and companies need to have options in place to efficiently handle incoming inquiries.

A proper mixture of self-service and live agents is key to assuaging last-mile doubts or troubleshooting issues.

“I think companies should invest in automation and nudge customers into that channel for the transactions that make sense to deliver through automation and self-service, and refocus their live agents on the remainder of services that are offered where customers prefer to talk to a person,” said John King, partner in the business transformation practice of Lotis Blue Consulting.

Self-service is great for simple tasks like tracking order status where speed is of the essence, according to Hawkins. However, websites can’t offer empathy like a real human. This is where live agents come into play.

“Self-service is good when things are easy and customers don't have a lot of time — they just want to get the general basic question or inquiry solved,” she said. “But when it comes to more complex, human-centric situations, you have to have a live agent.”

Live calls are more expensive than visits to an order tracking page, but if a customer can’t connect when they feel the need, it will lead to a miserable delivery experience. Don’t hide the number or otherwise discourage making the switch.

Consumers also need a voice throughout the delivery process, according to Hawkins. This includes letting them choose how they will receive updates or check their order status.

“If I choose to communicate in text, don't ask me for my email,” Hawkins said. “Don't communicate through the different channels that I opted out of. Use and respect my choice.”

Companies should start to think of social media as a channel for communication as well, according to Hawkins. Younger shoppers in particular are making purchases on TikTok, Instagram and Facebook, creating natural platforms for further interactions.

“I think that brands need to embrace and really leverage this as a form to reach out to new consumers and to solve problems for the consumer in real time where they want to be met,” Hawkins said.

Handle hiccups with speed and transparency

Even the most efficient last-mile operation can’t deliver every package on time, often due to factors outside of a retailer’s control. Companies need to be prepared to deal with this inevitability while minimizing the negative experience it can create for holiday shoppers.

“Retailers, over the last few years, have gone through many disruptive changes,” said Kassi Socha, director analyst at Gartner. “They should be prepared for a snowstorm to hit or an item to go out of stock. Those are two common scenarios that have occurred year after year, so retailers should have plans in place if one of those scenarios arises.”

Managing expectations starts at the checkout page. Estimated delivery dates are important, but companies should include the caveat that weather and other factors could mean shipping providers may not be able to hit these timelines, according to Socha.

Retailers with control over their own last miles should be proactive about problems they can detect, according to Hawkins. A transparent message sent ahead of time that lays out why the package is delayed and offers potential remedies can head off a frustrating experience.

This is also a great opportunity to suggest alternatives, such as picking up the item at a nearby store instead. Letting the shopper choose the new delivery date can also help salvage the experience by putting them back in control.

However, retailers can’t always get a message out ahead of a late delivery. In these cases, Hawkins and Socha agreed that quick and empathetic communication is essential. Lay out what happened and how the issue can be resolved, whether with a discount or another form of compensation.

“Don't blame the UPS or FedEx driver, because even though that may be a true statement, [customers] don't remember the logistics supplier,” Hawkins said. “They remember the brand. We need to own it. We need to fall on the sword. We need to take care of them for shopping with us.”

Dive Brief:

• Freight forwarders are working with shippers to strategize how to manage a shifting air cargo market landscape as peak season approaches, Xeneta’s Chief Airfreight Officer Niall van de Wouw said in a Sept. 5 report.
• E-commerce volumes remain a major market indicator, with exported goods from China already up 30% this year, Xeneta reported. In July alone, there were reportedly 37 million downloads of the Temu app.
• Van de Wouw said that shippers should be “nervous” for Q4. “We expect to see a seller’s market out of Asia and across the Atlantic due to the latter’s reduction in winter capacity. We’ve had a hot summer, and we may have an even hotter autumn ahead.”

Dive Insight:

The average air cargo spot rate reached its largest year-over-year growth of 24% to $2.68 per kilogram, Xeneta reported.

On a corridor level, rates on shipments bound for North America saw the largest monthly increase from July — which is typically regarded as the industry’s “slack season.”

Rates from Europe to North America, for instance, were up 7% month over month to $1.77 per kilogram in August, possibly due to the “surging transshipments originating from Asia,” according to the report. Meanwhile, Southeast and Northeast to North America rates were up 6% MoM and 4% MoM to $6.15 per kilogram and $4.68 per kilogram, respectively.

While rates benefited from ongoing balance in supply and demand, global air cargo demand was impacted by the modal shift from ocean to air due to Red Sea disruptions in addition to strong e-commerce growth, per the report. In August, cargo demand was up 11% YoY.

“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season,” said van de Wouw. “This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red hot peak season materialises.”

As preparations for peak season unfold, some companies announced surcharges as shippers and freight forwarders look to secure capacity. DHL Express, for instance, plans to implement surcharges starting Sept. 15, and van de Wouw speculated whether “the peak surcharges some carriers plan to implement will hold.

Other companies are creating more market capacity, including freight forwarder Dimerco Express Group which is launching a new weekly air freight charter service on Sept. 15 between Shanghai and Chicago. CMA CGM Air Cargo, meanwhile, recently launched its first Transpacific connection connecting Hong Kong and Chicago.

Dimerco Express Group is launching a weekly air freight charter service from Shanghai to Chicago as the freight forwarder anticipates a tighter than usual peak season, according to a July 10 blog post.

The charter service will be operated by Cathay Pacific and run from Sept. 12 to Dec. 5 using a Boeing 747-800F. The flight leaves PVG in Shanghai each Thursday morning before stopping in Hong Kong on its way to ORD in Chicago. Dimerco will then leverage its truck carrier network for final-mile delivery from Chicago.

The charter service is a response to expected freight capacity constraints on both air and ocean lanes during peak season from China to the U.S. While charter services are common in the industry, added peak season services provide regularly scheduled additional space during times when capacity is strapped.

Dimerco has launched charter services in the past — during the pandemic and another during peak season 2023, Kathy Liu, VP of global sales and marketing, Central Service Center of Dimerco Express Group, told Supply Chain Dive in an email.

Like during the pandemic, shippers this year are "scrambling for high-priced cargo space," Dimerco said in the blog post. But unlike in 2021, market constraints today are due more to high-volumes from ultra-fast fashion brands like Shein and Temu, and its ripple effects on capacity.

Typically, 30% to 40% of carrier capacity is pre-allocated under forwarder contracts, with the remaining space available to the rest of the market, according to Dimerco. However, this year, that pre-allocated percentage is much higher as e-commerce companies in China are asking forwarding partners to have at least one Block Service Agreement with a carrier.

In turn, several small- and medium-sized forwarders signed minimum volume contracts with carriers of around 25 to 50 tons per month, leaving very little available capacity to the open market, per the blog post.

The limited open market led Dimerco to secure its own capacity through a charter deal with Cathay Pacific. The service adds roughly 149 tons of weekly capacity to the market, according to a Cathay Cargo aircraft fact sheet.

“Traditional air freight shippers will be searching for added capacity, particularly brands launching new products for the holiday season, since they can’t afford inventory delays that would jeopardize a major selling day, like Black Friday,” Liu said in the blog post.

A turbulent ocean market is also contributing to air freight capacity constraints. Shippers are facing longer transit times and significantly higher rates as a result of the Red Sea crisis. The combination of factors is making some consider shipping goods by air instead.

“Air freight is typically 12–16X more expensive per kilo than container shipping,” Liu explained. “But right now that gap is just 6–8X and shrinking. Couple that with a China-to-USA, door-to-door transit time for container freight of up to 40 days and brands will be open to alternative modes.”

Dimerco is also considering adding a charter service from PVG to AMS in Amsterdam, due to the Red Sea crisis, Liu told Supply Chain Dive.

Industry experts are prompting shippers to start peak season planning now to avoid capacity concerns. In a July 5 report from Xeneta, Chief Airfreight Officer Niall van de Wouw said that there is a “consensus it will be a hot Q4 for air cargo in many Asian markets.”

According to the report, shippers and forwarders who are not preparing for peak season will be at “the mercy of the market,” with June spot rates on the Southeast Asia to the U.S. trade lane seeing the largest spot rate jump of any other corridor.

The nation’s top seaports should continue to expect elevated import levels this year as strong levels of consumer spending persist, the National Retail Federation and Hackett Associates said in a May forecast.

The organizations forecasted that loaded import volumes at the top 12 container ports will remain above 2 million TEUs through October 2024, marking the highest sustained volumes in years. The groups credited continued consumer spending on goods as the cause of continued freight demand.

“We haven’t seen numbers this high for this many months in almost two years,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Regardless of what headlines about the economy might say, consumers are shopping and retailers are making sure they have merchandise on hand to meet demand.”

May is projected to be the first month to reach the 2 million TEU threshold since October 2023, a sign of a potential cargo recovery this year.

Such high volumes were rare prior to the COVID-19 pandemic, with much of 2018 and 2019 falling below the threshold. Then, demand surged during the global health crisis, leading the top ports to handle well over 2 million TEUs every month, from August 2020 to October 2022.

However, the past few years have seen significantly lower volumes, with ports only surpassing the milestone during two months: September and October 2023, according to the report. Consumers may turn that trend around this year.

“We are still seeing a strong volume of goods flowing into ports despite global geopolitical turmoil, high interest rates and a slowdown in economic growth,” Hackett Associates Founder Ben Hackett said, noting the surge has been spread across all three coasts, though Gulf Coast imports have grown the most.

“The issue now is whether this surge will continue or level off,” Hackett said.

Many companies have been pinning their hopes on an anticipated turnaround in the manufacturing market this year, with economists forecasting demand bumps, stabilized inflation and lower interest rates.

Those hopes helped ease some of the anxiety manufacturers were having over rising material, labor and energy costs at the outset of the year. But as of July, the forecasted industry turnaround has yet to materialize. The Federal Reserve hasn't dropped interest rates, and a focus on cost management has grown across the industry. 

Elevated supply costs and stagnant demand are lowering companies’ expectations for a rebound in the second half of the year ahead of a pivotal presidential election. Many manufacturers have tightened their belts, holding off on major spending, including investments in production and labor, until some of the uncertainty in the market wanes.

"As the year's gone on, it's really converted from a 2020, core performance year, which is really profit focused, to more concern about liquidity in the absence of any real reduction moves, which opened up financing obviously for companies," Timothy Fiore, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee, said on a June 3 media call for ISM’s May Purchasing Managers’ Index. "Uncertainty is the devil of business, and that’s exactly where we’re sitting today."

Political uncertainty can heighten supply chain costs

Stability isn’t likely to arrive in the coming months as the U.S. gears up for the presidential election, said Ted Stank, co-executive director of the Global Supply Chain Institute at the University of Tennessee Knoxville. 

Geopolitical risks, including the impact of the U.S. presidential election as well as the ongoing wars in Ukraine and Gaza, can affect both supply and logistics costs for manufacturers. As the presidential election approaches, Stank anticipates raw material costs will rise for precious metals such as gold, silver and copper. 

"I bet gold is going to skyrocket because everybody's going to think ‘we're going to Civil War 2.0, and let’s get rid of our stock and buy gold instead or precious metals,’" Stank said. "So if you're manufacturing with those, that's going to have an impact.” 

Election uncertainty can also hurt the value of the U.S. dollar, further driving up costs. 

"As we get closer to the elections, if things continue to look the way they are now, and there's all this uncertainty, the dollar will probably weaken against some other currencies," Stank said. "And that's going to impact manufacturers' ability to buy [supplies] if your currency is weaker than the places that you're buying from."

Looking at logistics costs for shippers, Stank added that disruptions in the Red Sea have caused ocean freight rates to rise, which he doesn't see abating in the coming months. Domestic freight rates will also soon rise as the industry heads into peak shipping season. 

"As we start hitting the holiday season, the harvest season, domestic freight costs will probably start going up," Stank said. "Manufacturers that have been shipping on the spot market should maybe be looking at locking in some costs for this fall."

Labor costs could stabilize, but scarcity to remain

Labor continues to be a top issue for many manufacturers and their budgets. Labor costs were up year over year in Q1, according to the Bureau of Labor Statistics, as companies navigated rising wages. Companies also expect employee wages to rise another 2.8% over the next 12 months, according to the National Association of Manufacturers' Q1 2024 survey. 

As inflation and therefore wage costs come down, Stank noted that labor constraints aren't likely to ease in the industry. The challenging recruitment market means companies often need to spend more on automation to fill the gap. 

"The cost of talent — that's going to be with them forever," Stank said. "I've been working on a couple of projects with some manufacturers that are really investing quite a bit in automation, because of not just wage increases, but lack of availability of talent."

The inability to attract or retain labor was also the top challenge for more than 65% of manufacturers that responded to NAM's Q1 survey. That percentage, however, dropped to its lowest since the end of 2020, a sign of possible cooling in the labor market.  

In addition, investments in headcount are among the budgets some manufacturers are reevaluating amid the still high interest rates, according to ISM.

"Given the uncertain demand here in the lack of new orders coming in, there is no really significant hiring going on," Fiore said on the June 3 call. "We've returned to a much more cautious hiring environment, because the future is a bit uncertain."

Preparing for the months ahead

In preparing for the final months of the year and peak season, manufacturers should keep a sharp focus on quality, even as they manage their bottom line and cut costs, said Lindsey Berckman, a principal at Deloitte. 

Berckman, who leads Deloitte’s U.S. Aerospace and Defense practice, encourages companies to keep prioritizing supply continuity and renew their focus on "producing it right the first time."

"Focus on quality. You need to have supply lines, but you also need to be producing quality parts," she said.

She also encourages manufacturers to take advantage of tax incentives and government funding available through the Department of Energy and elsewhere to help with costs. 

Stank, meanwhile, urges companies to maintain robust cost models that can help them forecast for budgeting. 

"The more robust their cost models are, the better off they're going to be," Stank said. "Over the last 30, 40 years we've been guilty of focusing on one cost above all others, mainly labor costs. If nothing else, over the last five years with COVID, we've realized there are a lot of things that can reach up and bite us if we haven't included them in our cost models.”