Last week, Bloomberg reported that both UPS and FedEx are facing a shortage of delivery vehicles heading into the 2020 holiday season.
Typically, this time of the year, courier companies hire additional helpers and drivers in addition to leasing more equipment to handle last-mile deliveries.
But with the second surge of the COVID virus, the shift to online shopping could be more dramatic than expected, resulting in delivery companies scrambling to find last minute last-mile capacity.
Add to this problem that earlier this year the COVID pandemic slowed production of vans, there is now a shortage of vehicles available with truck and van leasing companies.
“If there’s a cargo van out there, we’re trying to buy it,” said Brendan Keegan, CEO of Merchants Fleet. The company provides vehicles to package delivery companies and this year expects to have 15,000 vans out for lease compared to 6,000 last year.
“There is definitely a shortage of units in the market, specifically raised roof cargo vans for delivery,” added Joel Eigege, vice president of rental products for Ryder System Inc.
If this trend continues, and there is no reason to believe it will slow and shift to retail sales, delivering millions of packages on time may become a challenge for all delivery companies as their logistics networks are being stretched to the maximum.
Impact On Delivery Capacity
Both UPS and FedEx claimed to Bloomberg that they don’t expect the shortage of vehicles to impact delivery capacity but they also didn’t say if they are expecting more delays than usual during this time of year.
Typically, both companies remove delivery guarantees during the busy holiday season, only leaving it in place for express service level shipments.
Amazon reportedly said it hasn’t seen signs of a shortage, but the company also has a large number of contractors that can deliver with personal vehicles, minimizing its exposure of the van shortage.
The article did not include USPS, but unlike courier companies that may impose some limits on the number of packages it will accept, especially from smaller accounts, USPS has to take every parcel.
With many small and micro businesses relying on USPS more than large online retailers, there is a possibility delivery delays at the U.S. Postal Service could increase during the holiday season.
USPS is already struggling to restore capacity that started during the COVID pandemic and became a political and legal hot potato regarding its ability to deliver mail-in ballots on time for the November 3 national election.
Therefore, it is unclear how prepared the postal service is to handle an extraordinary additional surge of parcels from small shippers when questions about its “normal” operations continue to linger.
Managing Delivery Expectations Before It’s Too Late
In years past, many online retailers could rely on shipping carriers to deliver packages on-time, even if ordered the week before Christmas. Especially courier companies improved their logistics networks to reduce transit times of orders, but late winter storms have always added to the angst of shippers.
This year, it may be necessary to promote last-minute deals earlier and disclose to customers that shipping delays due to COVID may impact orders. Unlike winter storm delays that may only last a few days, this year, the entire holiday season could face delivery delays.
Being honest and upfront will probably be the best strategy. Hopefully, many shoppers realize that ordering early is the best option to avoid a gift not showing up on time.
It will be a holiday season like none before and being a bit pro-active will be good for sellers and buyers.
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