Business

This holiday crunch starts early with more packages than the means to provide them

One of the holiday items that are already sold out: Delivery capacity.

Both FedEx Co., Ltd.

And United Parcel Service Inc..

According to transportation consultants and retailers, some of their biggest shippers have already talked about most of their abilities and have to wait for extra trailers with holiday orders to be picked up. Told.

“The holiday season will see the industry exceed its capacity,” FedEx Chief Marketing Officer Bree Keare said in an interview.

With this outlook, retailers are looking for unlucky alternatives. LaserShip Inc. Small US carriers like DH Le Commerce Solutions and DH Le Commerce Solutions have said they will book holiday capacity months earlier than usual and will not acquire new customers until next year.

The final safety valve is the United States Postal Service, which could put further pressure on the financial and network expansion during a coronavirus pandemic, if the shipper dumps the overflow order into the agency’s network.

“Everyone is in a market that demands more capacity,” said Tim Geiken, principal of logistics consulting firm Platinum Circle Partners LLC. “No one has found it, with a few exceptions.”

Between Thanksgiving and Christmas, capacity shortages can average as many as 7 million packages per day, ShipMatrix Inc, a software provider that processes parcel shipment data. Is estimating. The company’s president, Satish Jindel, estimates that during this period, the industry’s total shipping capacity was 79.1 million units per day, with 86.3 million packages looking for space. Last year’s total capacity was 65.3 million packages, with 67.9 million looking for space.

“Consumers need to be prepared to take extra days for delivery, regardless of which carrier delivers the parcel,” said Jindel. With Amazon.com, he added, the shortage could be minimized. Of a corporation

If the delivery network adds more drivers or the postal service delivers more packages on Sunday.

An Amazon spokeswoman said retailers were confident in their ability to serve customers this holiday season after spending billions of dollars on capacity this year, including adding a fulfillment center closer to their customers. I have. “

The shipping crisis is backed by uneven retail. Private consumption has picked up since the pandemic stopped economic activity. However, rebounds are driven primarily by some sectors, such as large retail stores and home improvement chains, and department stores that had to be temporarily closed continue to struggle. Overall spending is below pre-pandemic levels, showing signs that the economic recovery is losing momentum.

Carriers and their shippers spend months planning the holiday season to refine their forecasts of the number of packages they plan to ship. Both sides determine items such as weekly shipping forecasts and the number of trailers the carrier needs to receive from the loading dock daily. Deviations from the quote may result in higher charges per package or penalties for compensating carriers for the need to marshall more resources.

FedEx in recent years has tightened the line when deciding to accept additional volumes so that the network is not overwhelmed. ups,

On the other hand, the recent accumulation of major sorting hubs left room for more wiggles to accommodate additional volumes.

In the past few years, if online sales have exceeded expectations, shippers have usually been able to find space to ship, but at a higher price than the negotiated price.

“There always seemed to be a way to buy more capacity,” said Hannah Testani, Chief Operating Officer of Intelligent Audit, a freight audit and analytics company. “Now it doesn’t exist.”

The main reason for this year’s capacity shortage is that consumers are already at home, avoiding stores and shopping online, so carriers have already been running near maximum capacity for several months. The surge in delivery has strained the network, resulting in longer processing and delivery times. Carriers are often unable to quickly increase capacity at new facilities due to the multi-year planning process required.

Carriers have imposed shipping restrictions and added charges to their customers to offset increased staffing, protective equipment, and other spending during the pandemic. Pricing power quickly transferred to the carrier. Carriers are raising charges and are more cautious about which shipper they want to deal with.

To manufacture some additional capacity, carriers are asking customers to change shipments to move at times when the network may be affordable.

For FedEx customers, that means doing more on the weekends. The company, which has recently further promoted e-commerce, has begun picking up seven days a week, accelerating process changes during the pandemic. We tell our customers that we have more network room on Fridays, Saturdays and Sundays.

“I don’t want to say no to anyone,” said FedEx Keare. But she added, “There will be restrictions on certain days.” The company’s marketing for the holiday season also focuses on early purchase and shipping of orders, a spokeswoman for the company said.

The carrier also requests the shipper for more detailed data on the inbound volume and redirects to a facility that can handle it.

“We work closely with large and medium-sized customers to match volume to capacity and make the UPS network reliable for all customers,” said a UPS spokeswoman.

A spokesman for Japan Post said it was focusing on processing the upcoming election mail before paying attention to the holidays. The agency said its network can handle the expected increase in packages, but it is especially important for customers to ship packages faster this year.

“Our network is designed to handle temporary and seasonal volume increases and is capable of providing those additional holiday packages in a timely manner,” said a spokesman.

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One solution is to make sales more widespread during the holiday season. This is a marketing strategy that carriers are encouraging their customers to pursue. Amazon.com Inc.’s Prime Day and competing sales from other retailers began the shopping season in mid-October. This can cause some shipments to go beyond busy hours.

Meanwhile, retailers are trying to convince shoppers to get the best deals without waiting for Thanksgiving week. Many also promote services that allow customers to buy products online and receive them in stores. This is an option that has skyrocketed in popularity during a pandemic.

In most cases, the shipper can rely on other carriers. However, most people give up their business much faster than usual. According to a spokeswoman, DHL stopped acquiring new customers in early August, as opposed to the usual schedule of waiting until October.

Lasership Chief Commercial Officer Josh Dinneen said carriers servicing the eastern United States need to date shippers seeking help during the holidays back to July instead of September of the previous year. I said there was.

One shipper replied, “Is there an amount to change that?” After Lasership was told not to pick up the package in November and December.

“It’s a great conversation,” said Dineen. “But you’re too late to solve your problem this year.”

Write to Paul Ziobro at Paul.Ziobro@wsj.com

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