With the novel coronavirus still wreaking havoc on the economy, holiday shoppers are naturally anxious about gifts they have ordered arriving on time. And the expected surge in online sales this year means shippers will likely be facing a crush of deliveries. Alan Amling, Distinguished Fellow with the Global Supply Chain Institute in the University of Tennessee, Knoxville’s Haslam College of Business and an expert on matters related to the small-package carrier business, recently addressed these issues in a short question-and-answer session.
Regarding holiday shipping, are there any specific concerns about supply chains of which consumers should be aware?
Air cargo capacity will be constrained more than usual this year. A lot of holiday packages typically travel in the bellies of passenger aircraft. With passenger traffic down due to COVID-19, airlines have grounded thousands of planes, reducing belly capacity for packages. With pharmaceutical companies filing for emergency approval of COVID-19 vaccines, delivering those vaccines will take priority over holiday packages on commercial aircraft. All of this adds up to a critical truth bomb for consumers: if your parcel requires air service to make a delivery deadline, you may be out of luck.
With more people shopping online, is there an extra burden on supply chains?
Online shopping has exploded during the pandemic. Walmart saw online sales skyrocket 97 percent in the second quarter, while Target’s eCommerce sales nearly tripled. More holiday packages will be delivered to homes this year than ever before. Fortunately, UPS and FedEx have invested billions of dollars in expanding capacity and automating processes over the last few years.
What steps are retailers and shippers taking to ensure package delivery?
One of the pandemic-fueled megatrends from retailers is the rise of hyperlocal fulfillment. Two forms of this are local fulfillment and ship-from-store. Local fulfillment includes private or shared warehouses where fast-moving items are stored for same-day or next-day delivery. For example, Amazon is building hundreds of local delivery stations as they move Prime’s delivery commitment from two days to one day. At the same time, Walmart, Target, and dozens of large retailers are leveraging their retail footprint as local fulfillment centers. Walmart has been shipping from 2,500 stores during the pandemic and is expanding this capability to new stores.
One of the critical consequences of hyperlocal fulfillment is reducing retailer reliance on the national carrier networks like UPS, FedEx, and the US Postal Service. Local pickup/local delivery opens up hundreds of potential contractor networks and gig workers to carry the load of last-mile delivery. So while increased online shopping will challenge supply chains this year, expanded carrier networks and new local delivery models should enable orders made by retailer and carrier deadlines to arrive on time.
What is the best advice you can give to people sending holiday gifts this year?
Ship early. For guaranteed delivery by December 25, you need to ship by December 13 for UPS ground, by December 14 for USPS parcel post, and December 15 for FedEx ground.
This promises to be a holiday shopping season unlike any preceding it. Do you have any thoughts on how it will be different or similar?
If 2020 has taught us anything, it’s that anything can happen at any time. Make sure you leave a cushion to pad unexpected events and always have a backup plan.
CONTACT:
Scott McNutt (865-974-5061, rmcnutt4@utk.edu)