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This festive crunch starts early with more packages than the means to deliver them

One source product that has already been sold: load capacity.

Both FedEx Corp.

FDX 0.62%

and United Parcel Service Inc..

UPS 0.23%

told some of their largest shippers that most of their capacity is already being talked about and that any additional trailers with holiday orders will have to wait until they are picked up, according to trade and retail consultants.

“There will be days in the holiday season when the industry exceeds capacity,” FedEx Chief Marketing Officer Bree Carrere said in an interview.

Prospects drove the sellers in search of alternatives, not having luck. Smaller carriers in the United States, such as LaserShip Inc. and DHL eCommerce Solutions, said they booked bandwidth a month earlier than usual and are not accepting new customers until next year.

The final safety valve is the U.S. Postal Service, whose finances and network were stretched during the coronavirus pandemic and could come under greater pressure if shippers dumped their overflow orders into the agency̵

7;s network.

“Everyone in the market is looking for more capacity,” said Tim Geiken, director of Platinum Circle Partners, a logistics consulting firm. “With few exceptions, no one finds.”

The bandwidth deficit could average up to seven million packets a day between Thanksgiving and Christmas, according to ShipMatrix Inc., a software vendor that processes parcel data. Satish Jindel, the firm’s president, estimated that the total capacity for the industry would be 79.1 million parcels a day during this period, with 86.3 million packages looking for space. Last year, the total capacity was 65.3 million packages, and 67.9 million were looking for space.

“Consumers need to be prepared for delivery, which will take extra days, no matter which carrier delivers their parcels,” Mr Jindel said. According to him, the deficit can be minimized if Amazon.com Inc.

the delivery network adds more drivers or if the postal service delivers more packages on Sundays.

The cost of delivery is at an uneven level of retail trade. Consumer spending has risen since the pandemic halted economic activity. But the rebound is fueled mainly by individual sectors, including retail stores and housing chains, while department stores and others that have had to close temporarily continue to struggle. Total costs remain below pre-pandemic levels, and there are signs of economic recovery.

Carriers and their shippers spend months planning their holiday season and honing their forecasts for the number of packages they plan to deliver. The parties address issues such as weekly delivery forecasts and how many trailers carriers may need from their cargo docks each day. Any deviation from the estimate may result in higher package rates or penalties to compensate the carrier for the need to allocate more resources.

In recent years, FedEx has been queuing tighter, taking any extra volume to make sure its network is not congested. UPS,,

UPS 0.23%

meanwhile, it had more room to swing to take in extra volume due to the recent accumulation of major sorting hubs.

In previous years, shippers could usually find a place to ship if online sales lived up to expectations, although this would have a high rate at agreed rates.

“It seemed like you could always buy more capacity,” said Hannah Testani, chief operating officer of Intelligent Audit, a cargo audit and analytics company. “It doesn’t exist now.”

The main reason for this year’s power shortage is that carriers have been operating at near maximum capacity for months, as consumers have been sitting at home, avoiding shops and shopping online. The delivery jump strained the network and increased the processing and delivery time. Carriers cannot quickly increase capacity with new facilities, as this often requires a multi-year planning process.

Carriers have set delivery restrictions for customers and added fees to offset increased personnel costs, protection of protective equipment and other costs during a pandemic. The power of pricing has quickly shifted to carriers who raise tariffs and are more picky with which shippers they want to do business with.

To make extra capacity, carriers are asking their customers to make changes to try to move a certain amount of traffic to times when there may be more weakness in their network.

For FedEx customers, this means doing more on the weekends. The company, which has recently given a boost to e-commerce, began making pickups seven days a week, a process change that accelerated during the pandemic. This informs customers that the network has more free space on Friday, Saturday and Sunday.

“We don’t want to say ‘no’ to anyone,” said Ms Carrere of FedEx, but added that “certain days will be limited.”

Delivery giants are also asking shippers to get more detailed information about incoming volume and redirecting them to facilities that can handle them.

“We work closely with our large and medium-sized customers to increase the volume and ensure the reliability of the UPS network for all consumers,” said the UPS representative.

A spokesman for the Postal Service said it focused on processing election reports before paying attention to the holidays. The agency said its network could cope with the expected increase in packages, but that this year it is especially important that customers send packages earlier.

“Our network is designed to temporarily and seasonally increase volumes, and we have the opportunity to deliver these additional holiday packages on time,” the spokesman said.


What long-term impact can a pandemic have on holiday shopping? Join the conversation below.

One solution is a wider distribution of sales during the holiday season – a marketing strategy to which carriers push their customers. The main day of Amazon.com Inc. and competitive sales from other retailers began the shopping season in mid-October, which may pull some of the delivery ahead of busy windows.

Meanwhile, retailers are trying to convince shoppers that they don’t need to wait for Thanksgiving to get the best deals. Many also insist on services that allow shoppers to buy goods online and pick them up in stores, an option that grew in popularity during the pandemic.

In most years, shippers could rely on other carriers. But most turn up the business much earlier than usual. DHL stopped accepting new customers in early August, in contrast to its usual waiting schedule until October, the spokeswoman said.

Josh Dinnin, chief commercial officer of Lasership, said the carrier, which serves the eastern United States, had to turn down shippers who sought help during the holidays back in July, as opposed to September of previous years.

One shipper, after being told that Lasership would not take their packages for November and December, replied, “Is there any amount of money that can change that?”

“It’s a great conversation,” Mr Dinnin said. “But I can’t solve your problem this year because you came too late.”

Write Paul Ziobro at Paul.Ziobro@wsj.com

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