Retailers, software companies, and logistics service providers are strategizing and automating their way to a smoother returns process—to the benefit of the entire supply chain.
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
E-commerce has cemented its place in the consumer buying process, driving up the number and variety of orders making their way through warehouses and fulfillment centers each day. A rising tide of returns has accompanied that growth in recent years, pushing what was once an afterthought in many facilities to a place of prominence—and forcing retailers, brands, and logistics service providers to get smarter about the way they handle reverse logistics. It’s been a long time coming, but returns specialists say retailers and their logistics partners are finally focused on optimizing all things returns-related.
“I do think [companies] are getting better [at managing returns],” says Tara Daly, senior director of product marketing at Loop Returns, a provider of returns management software (RMS) for retailers and consumer packaged goods (CPG) companies. “It’s the realization that the post-purchase experience is equally as important as the pre-purchasing journey. It’s clear now: We know that [the returns process] needs to be optimized. Also, [third-party logistics service providers] and warehouses are getting more sophisticated in terms of their returns operations and not being only focused on outbound.”
Daly says she expects a steady or slightly lower volume of returns this post-holiday season compared to last year based on Loop’s own data, adding that the RMS provider has recently seen a year-over-year reduction in returns rates among its customers. She attributes some of the progress to strategies the industry is adopting, collectively, to reduce returns. She and others point to retailers’ efforts to create better returns policies through industry partnerships as well as the implementation of automation strategies at all points along the supply chain as important steps in the evolution of reverse logistics.
“It’s fair to say the industry is making inroads in finding efficiencies on reverse logistics,” adds Brendan Heegan, founder and CEO of Boxzooka, a third-party logistics service provider (3PL) that handles warehousing, storage, inventory management, shipping, and reverse logistics for retailers, wholesalers, and subscription-box providers, most of which are in the high-end apparel and CPG industries. “We look at returns just as seriously as the outbound side; it’s not an afterthought for us. [That’s] because returns are important; it can be lost revenue for customers if they’re not dealt with [in a timely manner] and with care.”
BUILDING BETTER PRACTICES AND POLICIES
Like Daly, Heegan believes that broad-based industry strategy is a major part of today’s returns revolution—and he points to UPS’s recent acquisition of software and reverse logistics specialist Happy Returns as an example. UPS announced plans to acquire Happy Returns last October, and the deal was expected to be completed during the fourth quarter. Heegan says the deal is akin to FedEx’s purchase of Kinko’s (now FedEx Office) 20 years ago and Amazon’s purchase of Whole Foods in 2017—moves that expanded each company’s network of parcel collection locations. The UPS/Happy Returns deal adds 10,000 return dropoff points—known as “return bars”—to the UPS network.
“This acquisition … is another example of things the industry has been doing to increase the number of retail dropoff points, and that gives them consolidation opportunities,” explains Heegan. “At the end of the day, if a UPS truck has to go to someone’s home to pick up a return package, that’s going to cost UPS more by having to drive, burn the gas, and spend the time and labor for one pickup point. If we can get consumers to rally together and drop off returns at one location, then you’re gaining efficiency because now the UPS drivers can go pick up 20, 30, 100 packages at one location.”
It’s also a win for companies like Boxzooka, which has a handful of customers that already use Happy Returns as part of their efforts to provide a better returns experience for shoppers. The company’s reverse logistics services include identifying, re-barcoding, quality control, restocking, and disposition of returned items. A client using Happy Returns helps streamline that process by providing consolidated returns delivered directly to Boxzooka’s facilities. An added bonus: Happy Returns removes all packaging and consolidates merchandise into reusable totes, saving Boxzooka the trouble of dealing with all the excess paper and cardboard.
Such efforts reinforce the value of a seamless returns policy among consumers. According to 2023 research from Loop, 98% of consumers agree that if a retailer provides a fast, convenient, and “hassle-free” returns experience, they’ll be more likely to shop with that merchant in the future.
But consolidation via “return bars” isn’t the only strategy contributing to a better reverse logistics environment these days. Both Heegan and Daly say retailers are more focused on efforts to avoid returns altogether. First and foremost, they say, merchants have been working to improve the online buying experience by providing much more information about products than they did in the past—with better website graphics and size charts, and the addition of customer reviews. They’re also analyzing their returns data, much of which can be aggregated in an RMS. Daly offers an example: With access to all of their returns data, merchants can identify patterns—a dress that keeps getting returned because it’s too small, for instance—and then take steps to correct the issue at the manufacturing stage. All of these efforts can help reduce the need for customers to initiate a return in the first place.
Daly and Heegan say the era of free online returns is largely over as well. Merchants are beginning to strategically apply fees, in some cases offering free exchanges but charging for returns.
“Brands need to focus on [providing] the best experience possible,” says Daly. “And they realize there is an opportunity to drive more revenue—an exchange rather than a return, for example. Merchants are starting to realize that this is an opportunity for them to unlock and increase their profits.”
IMPLEMENTING TECHNOLOGY SOLUTIONS
Automation strategies are proving to be a game-changer as well. More retailers are implementing RMS solutions as a first step toward taming returns because it helps them get control over the entire process, Daly explains. Software systems like Loop’s eliminate the manual, time-consuming process of initiating and managing returns—some estimates say a return can take up to 50 minutes when handled manually—by allowing customers to start a return or exchange anytime via an online platform. In Loop’s case, Daly says the platform can be tailored to automate any existing returns process and also can be integrated into the retailer’s back-end technology tools. Among other advantages, this frees up associates to focus on more-profitable activities, she explains.
Data backs this up: Nearly 80% of merchants surveyed last year by Happy Returns said they have had to choose between shipping new orders and processing returns due to limited warehouse resources. Automation helps solve that problem.
Heegan also considers automation essential to efficient returns management. He notes that Boxzooka, which has focused on returns since its inception in 2014, built its warehouse management software (WMS) with reverse logistics in mind, realizing from the start that “returns have been an ugly part of the 3PL business.
“Consumers can be careless when returning something. Maybe they forgot [to include] the original packing slip or took the tags off the merchandise,” Heegan explains. “We built different ‘hooks’ into our WMS to help us [address those issues].”
Quality control and re-barcoding capabilities are a key part of those efforts, allowing the 3PL to get products back into stock or to an alternative outlet faster. The focus on automating these tasks supports Daly’s observationthat warehousing companies are increasingly focused on returns—to the benefit of the entire supply chain. She emphasizes that 3PLs and warehouses were originally “made for outbound” but says technology enhancements are helping them better handle the inbound side of the equation—a welcome development for their supply chain partners.
“[Merchants] are looking to improve efficiencies,” she says. “So they’re leaning on their logistics and supply chain companies to achieve those goals.”
Editor’s note: This article originally appeared in the January 2024 issue of DC Velocity.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
It’s getting a little easier to find warehouse space in the U.S., as the frantic construction pace of recent years declined to pre-pandemic levels in the fourth quarter of 2024, in line with rising vacancies, according to a report from real estate firm Colliers.
Those trends played out as the gap between new building supply and tenants’ demand narrowed during 2024, the firm said in its “U.S. Industrial Market Outlook Report / Q4 2024.” By the numbers, developers delivered 400 million square feet for the year, 34% below the record 607 million square feet completed in 2023. And net absorption, a key measure of demand, declined by 27%, to 168 million square feet.
Consequently, the U.S. industrial vacancy rate rose by 126 basis points, to 6.8%, as construction activity normalized at year-end to pre-pandemic levels of below 300 million square feet. With supply and demand nearing equilibrium in 2025, the vacancy rate is expected to peak at around 7% before starting to fall again.
Thanks to those market conditions, renters of warehouse space should begin to see some relief from the steep rent hikes they’re seen in recent years. According to Colliers, rent growth decelerated in 2024 after nine consecutive quarters of year-over-year increases surpassing 10%. Average warehouse and distribution rents rose by 5% to $10.12/SF triple net, and rents in some markets actually declined following a period of unprecedented growth when increases often exceeded 25% year-over-year. As the market adjusts, rents are projected to stabilize in 2025, rising between 2% and 5%, in line with historical averages.
In 2024, there were 125 new occupancies of 500,000 square feet or more, led by third-party logistics (3PL) providers, followed by manufacturing companies. Demand peaked in the fourth quarter at 53 million square feet, while the first quarter had the lowest activity at 28 million square feet — the lowest quarterly tally since 2012.
In its economic outlook for the future, Colliers said the U.S. economy remains strong by most measures; with low unemployment, consumer spending surpassing expectations, positive GDP growth, and signs of improvement in manufacturing. However businesses still face challenges including persistent inflation, the lowest hiring rate since 2010, and uncertainties surrounding tariffs, migration, and policies introduced by the new Trump Administration.
As U.S. businesses count down the days until the expiration of the Trump Administration’s monthlong pause of tariffs on Canada and Mexico, a report from Uber Freight says the tariffs will likely be avoided through an extended agreement, since the potential for damaging consequences would be so severe for all parties.
If the tariffs occurred, they could push U.S. inflation higher, adding $1,000 to $1,200 to the average person's cost of living. And relief from interest rates would likely not come to the rescue, since inflation is already above the Fed's target, delaying further rate cuts.
A potential impact of the tariffs in the long run might be to boost domestic freight by giving local manufacturers an edge. However, the magnitude and sudden implementation of these tariffs means we likely won't see such benefits for a while, and the immediate damage will be more significant in the meantime, Uber Freight said in its “2025 Q1 Market update & outlook.”
That market volatility comes even as tough times continue in the freight market. In the U.S. full truckload sector, the cost per loaded mile currently exceeds spot rates significantly, which will likely push rate increases.
However, in the first quarter of 2025, spot rates are now falling, as they usually do in February following the winter peak. According to Uber Freight, this situation arose after truck operating costs rose 2 cents/mile in 2023 despite a 9-cent diesel price decline, thanks to increases in insurance (+13%), truck and trailer costs (+9%), and driver wages (+8%). Costs then fell 2 cents/mile in 2024, resulting in stable costs over the past two years.
Fortunately, Uber Freight predicts that the freight cycle could soon begin to turn, as signs of a recovery are emerging despite weak current demand. A measure of manufacturing growth called the ISM PMI edged up to 50.9 in December, surpassing the expansion threshold for the first time in 26 months.
Accordingly, new orders and production increased while employment stabilized. That means the U.S. manufacturing economy appears to be expanding after a prolonged period of contraction, signaling a positive outlook for freight demand, Uber Freight said.
The surge comes as the U.S. imposed a new 10% tariff on Chinese goods as of February 4, while pausing a more aggressive 25% tariffs on imports from Mexico and Canada until March, Descartes said in its “February Global Shipping Report.”
So far, ports are handling the surge well, with overall port transit time delays not significantly lengthening at the top 10 U.S. ports, despite elevated volumes for a seventh consecutive month. But the future may look more cloudy; businesses with global supply chains are coping with heightened uncertainty as they eye the new U.S. tariffs on China, continuing trade policy tensions, and ongoing geopolitical instability in the Middle East, Descartes said.
“The impact of new and potential tariffs, coupled with a late Chinese Lunar New Year (January 29 – February 12), may have contributed to higher U.S. container imports in January,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “These trade policy developments add significant uncertainty to global supply chains, increasing concerns about rising import costs and supply chain disruptions. As trade tensions escalate, businesses and consumers alike may face the risk of higher prices and prolonged market volatility.”
New York-based Cofactr will now integrate Factor.io’s capabilities into its unified platform, a supply chain and logistics management tool that streamlines production, processes, and policies for critical hardware manufacturers. The combined platform will give users complete visibility into the status of every part in their Bill of Materials (BOM), across the end-to-end direct material management process, the firm said.
Those capabilities are particularly crucial for Cofactr’s core customer base, which include manufacturers in high-compliance, highly regulated sectors such as defense, aerospace, robotics, and medtech.
“Whether an organization is supplying U.S. government agencies with critical hardware or working to meet ambitious product goals in an emerging space, they’re all looking for new ways to optimize old processes that stand between them and their need to iterate at breakneck speeds,” Matthew Haber, CEO and Co-founder of Cofactr, said in a release. “Through this acquisition, we’re giving them another way to do that with acute visibility into their full bill of materials across the many suppliers they work with, directly through our platform.”
“Poor data quality in the supply chain has always been a root cause of delays that create unnecessary costs and interfere with an organization’s speed to market. For manufacturers, especially those in regulated industries, manually cross-checking hundreds of supplier communications against ERP information while navigating other complex processes and policies is a recipe for disaster,” Shultz said. “With Cofactr, we’re now working with the best in the industry to scale our ability to eliminate time-consuming tasks and increase process efficiencies so manufacturers can instead focus on building their products.”