COVID-19 has wrought unprecedented challenges for shippers throughout 2020. With the holiday shopping season already in full swing, retail shippers have a new challenge to overcome in the final quarter of the year: a looming holiday ‘shipageddon.’
According to the New York Times, this holiday season will become a ‘shipageddon’ filled with delays and chaos, due to “the combination of our reliance on online shopping during a pandemic and our eagerness for online shopping during the holidays.”
The increase in online shopping has overwhelmed parcel shipping networks. In response, major parcel carriers, such as FedEx and UPS, are rejecting shipments, especially oversized parcels. This capacity crunch is predicted to continue beyond the peak shipping season. Shippers who routinely ship oversized parcels are at risk for rejected parcels, late deliveries, service delays, significant rate increases, and no shipment guarantees. Many ecommerce retailers have already advised their customers to make their holiday gift purchases earlier than usual this year, in a bid to ensure timely delivery. However, retailers can’t rely on shoppers changing their buying behavior to avoid parcel shipping challenges.
To ensure their parcels arrive on-time and in-budget, shippers will need to seek alternative delivery solutions and partner with logistics providers beyond the major parcel companies this peak season.
Four Factors Contributing To The Small Parcel Shipping Capacity Crunch
COVID-19 completely changed consumer shopping habits, leading to a backup in parcel shipping networks that has resulted in historically high surcharges, parcel rejections, and late deliveries. Below are four factors contributing to the small parcel shipping capacity crunch this peak season:
Ecommerce Order Volumes Are Historically High
Throughout the pandemic, online shopping accelerated due to stay-at-home orders and consumer safety concerns. Since March 2020, consumers have spent an additional $94 billion online, adding strain to major parcel carrier networks. That trend is expected to grow during the holiday season, with Emarketer projecting ecommerce sales will surge 35.8% to $190.47 billion between November and December.
The surge in ecommerce orders has some supply chain leaders worried about having the proper resources to meet customer demand during the holiday shopping season. In a recent study commissioned by GlobalTranz, 59% of supply chain decision-makers reported feeling concerned about not having the proper resources to meet customer demand.
Supply chain decision-makers’ worry over having the proper resources to meet customer demand is valid, especially small parcel shipping resources, considering Salesforce predicts small parcel delivery providers will exceed capacity by 5% across the globe during the 2020 holiday peak season.
Consumers Are Purchasing Heavier and Bulkier Items Online
Since the start of the pandemic, online sales for bulkier items, such as furniture, exercise equipment, and large appliances, has soared. To meet customer demand, B2B companies shifted their final mile delivery strategy to include B2C and residential delivery, adding oversized parcels into small parcel shipping networks that were already exceeding capacity.
In a recent interview with FreightWaves, Karen Tyndall, GlobalTranz’s Director of Customer Solutions, shared an example of a B2B company adapting their final mile strategy. “GlobalTranz was contacted by a company that makes and sells fitness equipment, what they had typically sold into was gyms and fitness centers,” said Tyndall. “But with the onset of COVID-19, all of a sudden, they were receiving sales directly to customer homes because they still wanted to work out.”
Many of these types of oversized shipments are now being rejected by major parcel carriers, like UPS and FedEx, leaving shippers at a loss for small parcel shipping capacity as peak season shipping heats up.
Peak Season Started Earlier And Is Predicted To Last Longer
In an earlier blog, we explained how Amazon Prime Day kicked off an earlier peak season and added strain to an already tightened small parcel network. In addition to peak season starting earlier, supply chain leaders predict the holiday shopping season will last longer than what is typical.
Peak season is already a tough time for small parcel companies. The New York Times reported, “parcel companies, like FedEx and UPS, already struggle to handle extra orders each holiday season, and they’re expecting Christmas 2020 to stretch them to the limits.”
With the 2020 peak shipping season starting earlier and lasting longer, the chances for failed or late deliveries by major parcel carriers are exponentially higher than previous peak seasons.
The Demand For Final Mile And White Glove Delivery Services Has Increased
The growth of ecommerce has caused the demand for final mile and white glove delivery services, particularly to residential locations, to increase faster than major parcel carriers can respond.
In our survey, 72% of supply chain leaders reported their company experiencing an influx of customers wanting last-mile solutions, and 69% of supply chain leaders reported their company seeing a higher demand for white glove services.
With the demand for final mile and white glove delivery increasing, 64% of surveyed supply chain leaders reported experiencing higher levels of late or failed deliveries than typical. High rates of failed or late deliveries are alarming, but supply chain decision-makers took control of their peak season shipping ahead of the small parcel shipping capacity crunch by leveraging relationships with 3PLs and logistics providers.
Supply-chain leaders who were proactive and established relationships with 3PLs before peak season began were ahead of the game. In a recent article, SupplyChainDive reported that UPS is encouraging shippers to find alternatives amid tight capacity ahead of peak season and is even going as far as to encourage customers to “avoid shipping when possible.”
If You Are Experiencing Rejections From Major Parcel Carriers, GlobalTranz’s Doorstep Delivery Program Can Help
GlobalTranz was recently contacted by a long-time customer, a leading home furnishings company, for whom we execute final mile and white glove delivery services. At the start of the peak shipping season, one of the major parcel carriers informed our client that 30,000 of their parcel shipments were being rejected due to their size. Our client was worried their inability to meet customer delivery demand during the peak shipping season would negatively impact their organization’s reputation.
GlobalTranz’s team quickly designed and implemented a responsive Doorstep Delivery solution for our client, ensuring the timely delivery of orders to their customers through peak season and beyond.
GlobalTranz’s Doorstep Delivery Program leverages our best-in-class final mile and white glove delivery network, along with our integrated technology, the GlobalTranz TMS, to ensure your shipments arrive on time while reducing accessorial charges, claims, and damages.
Take Control Of Your Parcel Shipments Today With GlobalTranz’s Doorstep Delivery Program
This peak season is more challenging than ever. Your parcels are at serious risk for delay or rejection, especially if they exceed 50 lbs. and/or are over 60 inches in length. Avoid rejected parcels, late deliveries, service delays, significant rate increases, and no shipment guarantees by taking advantage of our Doorstep Delivery program.
To get started, contact us today.