Logistic Challenges Loom Over Holiday Shopping Season

This holiday season, getting products from vendors to customers could be a tough proposition, with major shippers already announcing surcharges and closing out service slots while international replenishment faces backups as retailers try to build inventory after having to deal with COVID-19 pandemic issues.

Coresight Research pointed out that FedEx and UPS have added capacity after they and other shippers experienced surges in residential package delivery concurrent with the increase in e-commerce across the U.S. in the pandemic. FedEx and UPS seem confident that the peak shopping/shipping season will provide high-quality business, partly due to the implementation of holiday shipping surcharges, which run between 24 cents and $5 per parcel from mid-October 2020 to mid-January 2021, the market research firm observed. It added that USPS is implementing a holiday surcharge of $1 to $5 per package,

In the circumstances, Coresight pointed out, Target encouraged customers to start holiday shopping in October, something that got a further and firmer nudge by the shift of Amazon’s Prime Day to the middle of the month and the promotions that other retailers, including Target, launched simultaneously.

Although it makes sense to encourage early shopping, retailers that are touting delivery and pick up services as solutions to holiday shopping in a COVID-19 impacted season still may be faced with significant disgruntlement if they can’t live up to customer expectations. Loqate, a location intelligence provider, sponsored a survey of 1,200 consumers in the U.S., one determining that 73% of consumers plan to shop primarily online. In the survey, 68% of consumers said they expect the coronavirus crisis to impact holiday shopping, suggesting that they recognize that retail service will suffer challenges, and 88% are concerned about packages not arriving on time.

In a webinar, Tyler Brock, vp/Loqate, said, “We’re expecting delivery delays.”

The trouble is, consumers are focused on on-time delivery and are likely to be dissatisfied with retailers who can’t live up to expectations. Brock said consumers have a plea.

“All I want for Christmas is on-time delivery,” he said. “It really is absolutely essential. Timely delivery will be a really key part of the season.”

Younger consumers are particularly concerned about on time delivery. In the study, 10% of shoppers overall are extremely unlikely to purchase from a retailer that doesn’t deliver on time. Younger consumers were particularly  concerned about late deliveries, with 34% of Millennials and 38% of Gen Zers saying they would be unlikely to buy anything from a retailer who failed to hand over a package at the appoined time. Indeed, 13% of GenZers would be extremely unlikely to consider a purchase from a retailer who didn’t live up to delivery promises.

Even worse, Brock pointed out, more consumers are likely to ship gifts directly to recipients this holiday season, adding a social dimension to dissatisfaction with late deliveries.

Problems with the distribution pipeline are hardly confined to the last mile. The impact of COVID-19 in China and the inventory disruptions caused by shopping restrictions in the U.S., as well as shifts in consumer buying patterns, have resulted in troubles for retailers gearing up for the holiday season.

Now, logistics firm Kuehne + Nagel International is warning about getting products into the U.S. West Coast.

The company specifically warned that the ports and terminals of Los Angeles/Long Beach are having challenges keeping up with record cargo volumes, and it expects the rush to continue causing problems for the foreseeable future.

Kuehne + Nagel noted that vessels are waiting offshore for berth space as labor falls short of volume and, as a consequence, earliest receiving dates changes for export cargo have caused difficulties for truckers looking to turn in export containers in a timely manner, resulting in turn-times of between four and 10 hours per move. Truckers are seeing earliest appointment times to pick-up import containers coming after cargo last free day, which is generating charges and affecting release of cargo. Container/chassis shortages are worsening, truckers are assessing higher rates and the earliest availability of drivers for truckers is now averaging three to four weeks, Kuehne + Nagel pointed out, all pointing to more time and trouble taking as regards the movement of goods into the U.S.