The shipocalypse is looming. Carriers are at their capacity but there is an entire peak package volume season upon us. I am sure you are wondering what that term even means. In this article we will share with you what is about to occur during the holiday shipping season, which has already started but will intensify over the next few weeks.
COVID-19 really took a grip of the United States starting in March and has continued ever since. There have been highs and there have been lows. Unfortunately, as of writing this piece, we have had three back-to-back-to-back records reported cases of 120,000+ cases. It is clear that the impacts of this virus have been very serious. Over 9.8 million Americans have contracted the virus and tragically over 237K individuals have passed away. The worldwide impact has obviously been far greater in reach. When writing this article I wanted to be sure not to make light of the seriousness of this matter. However, we are a logistics company and we report on shipping, fulfillment, and retail news and opinions.
When the outbreaks stateside started occurring earlier this year there was a slow wave that moved individuals to quarantine themselves and their families. Essentially, millions of Americans were staying home every day. There were a lot of companies that shut their doors, either temporarily or permanently. Restaurants, churches, schools, and retail locations were closed for several months. Many still today have changed operating hours or have opened and then re-closed as the virus has had a growing secondary wave. The greatest impact on the logistics world was a combination of the closing of retail locations and the fact that many individuals don’t feel safe going out in public at this time.
Frankly, the past several months have been hell for the national carriers (USPS, UPS, FedEx, and DHL). They have essentially been dealing with peak package volume that would be typical from mid-November to mid-December (literally, no more than 4-6 weeks) since April/May. There has been degradation to on-time delivery percentages throughout the summer. On most days the carriers are at their maximum capacity. There is simply more demand than capacity. So what you have seen is a combination of increased fees from the carriers to try and reduce the number and the size of the packages within their networks. UPS and FedEx both started penalizing large customer accounts that were ‘X’ percentage above their pre-COVID-19 daily average shipping volumes. Some customers starting shifting volume from FedEx and UPS to DHL and USPS, which in turn, weighed down their networks. A couple of months ago DHL stopped onboarding any new business until at least Q1 2021. UPS has been communicating with some of their customers to be prepared to send volume elsewhere as they can’t guarantee it will all be picked up during peak. When is the last time we have seen carriers publicly turn down business like this?
If you thought the delays and inconsistencies with the carriers were bad before you have no idea what is in store in the coming months! It really comes down to simple math. If the carriers are already at peak levels what happens when you had another peak on top of the situation? Shipping anarchy! The carriers have been able to expand capacity by using additional facilities, vehicles, and labor but all three of those core necessities are at or above capacity. To be clear, this would have happened in any previous year if there was a double peak event like we are all getting ready to experience.
For carriers to work efficiently they have to either scale and expand with or in front of the coming volume. Now the e-commerce volume has lapped the carrier’s capacity and is getting ready to do it again! The only real hope is the demand is more smoothed out with Christmas shopping starting earlier this year. A longer, smoother peak season would be better for all involved. However, it is not likely.
Over the years, many brands have been pushed the envelope on being promotional during peak periods. Many of these brands are omnichannel and have brick-and-mortar elements of their business that have been decimated by the impacts of COVID-19. These brands are going to be desperate to book as many sales as possible to help recoup some of the lost retail sales from the past two quarters. And these brands have the perfect captive audience — you and I sitting at home shopping and looking for deals. It is the perfect recipe for increased e-commerce volume as a percentage of overall retail for this holiday season. So what does this mean to you, the online shopper?
Shipocalypse is Looming
The following list are some things that shoppers might see over the next several weeks:
- Longer fulfillment center processing times. The carrier impact backs up the entire supply chain. If a business is only allowed to hand over ‘X’ number of packages per day your package may be sitting on their dock longer than normal.
- Longer in-transit times for all carriers. The service-level guarantees have been postponed indefinitely due to COVID-19. During the peak, these are usually turned off temporarily, as well. With no guarantees in place, you can expect the carriers to generally take longer to deliver your package. We expect up to 1-3 week delays in some areas.
- Stalled tracking. We love tracking our packages and we expect and want to see event-level updates on our packages as they make their way to us. You will certainly see an increase in packages that either seems stuck or lost-in-transit. This will cause more WISMO (‘Where Is My Order?’) inquiries for customer service.
- Re-routed packages. Do you ever get a package and check the tracking and can’t figure out why it is going across the country in the wrong direction? Some times this is due to a miss-scan or a miss-sort. Other times it is a strategic play for the carriers to shift volume to re-balance their network. You can expect to see a lot more of the latter during this holiday season. The volume will be moved all across networks in what will seem to the consumer as being nonsensical.
- Extended Delivery Hours and Days. All the major carriers are now delivering seven days a week. This can be expected throughout this peak season. You will also see extended delivery hours. You may be putting the kids to bed by the time a package is being delivered on your front step.
- Contract Deliveries. I remember when Amazon first start shifting some of their home deliveries to their internal employees vs. using a national carrier like UPS. They were showing up in unmarked vehicles and with no branded clothing. Since then, Amazon has started and is continuing to roll out branded fleets and employee gear. This year, expect to see people in unmarked vehicles delivering for UPS and FedEx.
- Longer Quoted Times Online. Many brands will be overwhelmed with customer inquiries that they will create banners and pop-up messaging advising about shipping delays. This could be a natural deterrent for brand sales, but a strategy the carriers would embrace.
So What Should Shoppers Do?
- If you are shopping with a direct-to-consumer e-commerce pure-play brand, be sure to order EARLY. We cannot stress this enough. Don’t wait for the Black Friday/Cyber Monday sales. If you want/need before Christmas you should be ordering now.
- If you are shopping with an omnichannel brand that has a brick-and-mortar location consider shopping in person if, and only if, you feel comfortable, wear protective coverings, and social distance.
- Shop on reliable platforms that have good shipping records. Amazon will inevitably have delays too, but wouldn’t you feel more comfortable that they could deliver sooner vs. a smaller direct-to-consumer brand? They have the resources and buying power that others simply do not.