Managing today’s retail supply chain is no longer just about moving products from one place to another. What used to be a seasonal challenge has become a constant test of operations. With unpredictable energy prices, shifting trade tariffs, diverse customer needs, and added carrier fees, retailers face more pressure than ever to protect their profits.
However, there are ways to tackle these challenges.
Travis Rimel, chief product officer, and Kelsie Foell, director of product management, at ShipStation Global, say that successful merchants now approach logistics in new ways. Fulfillment is no longer just a cost to reduce; it has become an automated, data-driven part of the business that helps protect profits and grow sales.
For years, the fourth-quarter holiday rush was all about marketing and driving demand. Now, the biggest challenge is keeping everything running smoothly. With shoppers spending more in shorter timeframes, delivery networks are stretched thin, and retailers and brands face rising costs even before the first package is delivered.
“Peak season used to be primarily a marketing and demand-generation challenge,” Rimel told Sourcing Journal. “Today, it is an operational stress test. Brands face a compounding storm of carrier peak surcharges, compressed delivery windows, and intense warehouse capacity constraints. The difference between a profitable holiday quarter and depleted margins often comes down to how effectively a business automates their label generation, inventory allocation and post-purchase returns pipeline.”
This yearly bottleneck worsens as changing fee structures make costs hard to predict. During peak season, carriers add complicated surcharges based on package size, weight, distance and destination. Rimel said temporary rate hikes from major postal services during the holidays and returns season make it even harder for retailers and brands to manage their costs.
On top of these seasonal fees, unstable global energy prices add more uncertainty into the mix. Fuel costs change quickly, sometimes every week or month, and this acts like an extra tax on every part of the shipping process, from long-distance freight to local deliveries.
“Rising fuel costs act as a volatile tax across the entire retail supply chain,” Rimel explained. “Because carrier fuel surcharges adjust on dynamic weekly or monthly cycles, merchant margins are hit with variable, moving-target expenses that make Q4 unit economics increasingly difficult to forecast.”
Retailers are stuck between higher shipping costs and customers who watch their spending. If they pass these costs to shoppers, they risk losing sales. But if they absorb the fees themselves, their profits shrink even more. ShipStation’s annual Delivery Benchmark Report shows delivery cost is shoppers’ top consideration, even though 59 percent of consumers polled in North America expect two-day delivery, while only 40 percent of retailers can deliver it consistently.
To handle rising transport costs and meet customers’ need for fast delivery, retailers are moving away from shipping everything from one central warehouse. Now, they spread their inventory across regional logistics partners, small warehouses, stores and drop-ship partners.
This change helps solve delivery speed problems, but it also makes logistics much more complicated. Managing these scattered supply chains means retailers need real-time tracking to avoid stockouts, prevent split shipments, and keep inventory accurate.
Foell said today’s retailers no longer operate linear supply chains that rely on a single carrier. High customer expectations for both speed and cost have led brands to draw on regional 3PLs, micro-warehouses, retail storefronts, and international drop-ship locations.
If retailers and brands don’t use advanced systems to manage these many shipping points, they can run into big problems. Manual order processing or sending orders to the wrong location means longer shipping distances, higher labor costs and slower deliveries. This logistical mess comes at a time when consumers expect smooth fulfillment.
To meet customer expectations and run operations more efficiently, large merchants use automated order routing systems. These tools gather orders from different channels and use real-time data to send each shipment to the best location based on what’s ordered, where the customer is and current inventory.
As Foell points out with regard to the carrying out of international trade, high-volume brands are giving up the Delivered Duty Unpaid (DDU) model and opting instead for the Delivered Duty Paid (DDP) model, since this removes the unpleasant surprise of having to pay duties at delivery and at the same time automates the preparation of customs documentation and the comparison of rates among different carriers.
To reduce extra carrier fees and rising labor costs, top retailers are moving away from manual decisions in the warehouse. Because shipping prices depend on every ounce and inch, old habits like using a single carrier or standard packaging no longer work.
“The single most effective defense against rising carrier surcharges and fuel spikes is algorithmic rate shopping combined with disciplined packaging optimization,” Rimel said. “In a context where every ounce and cubic inch counts, merchants can no longer afford single-carrier lock-in or the luxury of shipping air in oversized cartons.”
Algorithmic rate shopping changes how shipping labels are created by checking multiple carrier networks in real time. Instead of using fixed shipping rules, automated systems compare current rates from different carriers and pick the cheapest option that meets the delivery promise. At the same time, optimizing packaging helps avoid extra charges for package size. By checking package dimensions and using strict product-based rules, retailers and brands stop wasting money on shipping empty space.
Automation also does more than just help with pricing. It speeds up processing and reduces mistakes. With automated rules, teams can print hundreds of shipping labels at once, assign customs forms, add warehouse tags and check items with barcode scans—all automatically.
“Leading merchants are deploying policy-driven automation rules and bulk batch processing to cut per-order shipping expenses by 10 percent to 20 percent and reduce manual fulfillment labor by up to 40 percent, to help offset macro inflation effects,” Foell said. “Faced with rising supply chain and labor costs, successful brands cannot simply pass price increases onto price-sensitive consumers. Instead, they treat fulfillment efficiency as a primary margin protector.”
When shipping decisions are automated, warehouses can process more orders quickly while still keeping quality high. This means orders ship faster and fewer expensive mistakes occur.
Data and clear information is required
Efficient fulfillment helps protect profits, but clear checkout information helps close sales. Shoppers often abandon their carts when they see unexpected shipping fees, unclear delivery times, or surprise international charges.
To smooth checkout, big brands are adding real-time shipping calculations directly into the shopping process. By showing exact total costs at payment, retailers build trust and reduce post-sale issues.
This process starts with checking addresses at checkout. By confirming delivery details and noting if it’s a home or business, merchants avoid extra fees and failed deliveries. Using size and weight calculations in the cart also lets retailers show customers accurate shipping options and prices.
For international sales, clear checkout information matters even more. Selling abroad can boost revenue, but surprise customs fees and extra charges can upset customers and cause them to abandon their packages at the border.
“ShipStation empowers brands to deliver total landed-cost transparency in the shopping cart by embedding real-time carrier rate calculations, dynamic address verification, and upfront duty calculations directly into checkout workflows,” Foell said.
When brands let international buyers pay all taxes and customs fees upfront, the total cost becomes clear. This speeds customs and ensures a smoother cross-border delivery experience. Looking ahead, retail supply chains will continue to face changes in global trade rules and regulations. With shifting tariff rules and trade policies, merchants need to stay flexible to handle sudden political and financial changes.
To stay resilient, brands need to move away from relying on just one supply chain. By spreading inventory across multiple locations, using real-time carrier rate shopping, and setting up flexible automation, they can better handle disruptions.
Centralized management platforms are important for this strategy. They help merchants consolidate their software and cut unnecessary subscriptions.
“ShipStation serves as the central operations hub for e-commerce fulfillment and delivery,” Rimel said. “We level the playing field for brands by giving them access to discounted multi-carrier networks, intelligent rate shopping, and warehouse automation.”
Managing today’s retail logistics means changing how merchants think about it. Logistics isn’t just about reacting to orders—it’s a key part of business strategy. By automating tasks, improving packaging, being upfront about prices, and using multiple carriers, retail leaders can build strong supply chains that protect profits and support growth, even in an uncertain market.
“It is about conserving margins through automated logistics,” Rimel said. “By deploying real-time rate shopping, optimizing dimensional weight packaging and setting up automated workflows, brands can best neutralize peak season surcharges and rising fuel costs.”