2020 Holiday Shipping Season: The Perfect Storm Could be Brewing.

Here in the US, managing the holiday-shipping-season is always a huge challenge for the parcel carriers, with planning for this short-term surge of shipments starting in January. The unbridled growth of e-commerce, and the resulting one-package residential delivery, requires a disproportionate amount of carrier resources to manage peak holiday volume increases, with a nominal financial return. This holiday-shipping-season, both legacy and new challenges may be blocking the highway to success for the parcel carriers. Some of those legacy challenges include:

•        Investing millions of dollars in temporary package processing capabilities.
•        Hiring hundreds of thousands temporary workers.
•        The financial impact of increased overtime compensation.
•        The on-set of winter-weather conditions that result in route delays/cancellations that drive added cost, inconvenience, and delayed deliveries.
•        Over 15% year-over-year growth in the ugliest service segment, the costly e-commerce driven residential delivery.

However, this holiday season, we have many new factors/conditions that can come into play, and that could make the already difficult-to-manage holiday related surge in shipments, more difficult to manage. Some of those new conditions include:

•        Year-over-year seasonal, plus COVID-19 related growth of over 50% in the e-commerce shipper segment, versus the normal 15% growth rate.
•        A shortage in rental vans needed to support e-commerce growth and resulting residential deliveries.
•        Due to draconian operational changes designed to reduce cost, the USPS is already seeing a significant increase in delayed shipments under current package volume levels, prior to increased peak season levels.
•        E-commerce merchants will likely move some shipments to the already stressed UPS/FedEx networks, out of concern over poor service by the USPS.
•        UPS and FedEx strictly enforcing predetermined maximum volume limitations on both large and small e-commerce merchants.
•        COVID-19 Scenario 1: Seasonally related increased virus cases driving up demand for PPE that sucks-up parcel carrier capacity.
•        COVID-19 Scenario 2: Spread of the virus at carrier sort facilities leads to facility closure or highly diminished sort capabilities.
•        COVID-19 Scenario 3: Much needed temporary and some permanent carrier employees deciding not to report to work due to virus exposure risk.
•        COVID-19 Scenario 4: Early vaccine availability putting e-commerce shipments on hold to allow carriers to dedicate all resources available to deliver vaccines and support saving lives.

Rest assured that UPS, FedEx and Amazon are planning for the worse case scenarios. However, the best laid plans will fail if the resources are not available to support those plans and strategies. You should be making your on-line holiday purchases now which will ensure that you have presents under the tree come December 25th and free-up much needed carrier capacity, if it all goes to hell during the holiday-shipping-season.

Happy Holidays!