Rise in E-Commerce Means Peak Season in the Spring

May 5, 2020


The coronavirus pandemic has sparked a rise in e-commerce spending as stay-at-home orders held much of the world captive for over a month. The result has been a 129% year-over-year growth in U.S. & Canadian e-commerce orders as of April 21 and an 146% growth in all online retail orders according to CCinsights.

Rise in E-Commerce Brings Caps on Customer Volumes

The result has been a boom in volumes for last-mile delivery providers - perhaps a bit too much as some struggle to keep up. Spend Management Experts has learned that FedEx has placed volume caps on some customers’ volumes. Details are sketchy but it’s not surprising. We usually hear of such practices occurring during peak season but it typically follows months long planning and communications with customers. However, time is precious for FedEx or others for that matter, as events unfold rapidly. An email, phone call or video-chat has resulted in several businesses scrambling to find additional last-mile carriers to pick up and deliver volumes.

Indeed, various publications suggests other carriers are experiencing ‘peak season’- like volumes due to the rise in e-commerce.  CEO of DHL Express Canada commented, “It is a time of the year right now that feels quite a bit like the holiday season, in a way, in terms of shipment volumes, and yet the composition of those shipments is quite a bit different…” In addition, the CEO of DHL Express Canada noted that the company has observed an increase in the amount of deliveries into Canada from outside the country as a result of Canadians shopping online.

In its home country, Germany, DHL told Reuters that it was handling more than 8 million parcels a day, similar to pre-Christmas trade and compared to an annual average of around 5.2 million.

A press release from Canada Post noted that on April 20 alone, it delivered more than 1.8 million parcels to Canadians. “That’s similar to the biggest delivery days we see during the Christmas season.” The result, according to Canada Post, is delivery delays.

B2C Volumes Remain High

As noted by the CEO of DHL Express Canada, the composition of shipments has changed. Although we have not heard of any volume issues at UPS, in UPS’ first quarter earnings release, it reported that 70% of its total volumes in March, were B2C. For the first couple of weeks in April, the percentage of B2C volumes remained high.

FedEx and UPS’ alternative delivery locations have been impacted by retail closures and stay-at-home mandates. These locations help both carriers convert B2C volumes into B2B volumes, thus, making it easier and more cost effective for them to sort and deliver.

In a creative way around this, UPS and Michaels recently announced contactless curbside pickup of packages and return drop-offs. A temporary solution, according to the press release,  “customers simply need to call the store upon arrival, provide the Michaels Team Member with their name, along with a description of their car and the items, and have their ID ready when they pull up and pop the trunk.”

As last-mile delivery providers such as FedEx, UPS, DHL, post-offices and others, look to take advantage of rise in e-commerce, each will need to ensure their networks can handle such volumes, profitably, in ‘normal’ times as well as in ‘peak’ times and, more importantly, factor in risk mitigation measures into strategies.


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

Share this article:

Blog Posts

  • Categories

Rise in E-Commerce Means Peak Season in the Spring

May 5, 2020


The coronavirus pandemic has sparked a rise in e-commerce spending as stay-at-home orders held much of the world captive for over a month. The result has been a 129% year-over-year growth in U.S. & Canadian e-commerce orders as of April 21 and an 146% growth in all online retail orders according to CCinsights.

Rise in E-Commerce Brings Caps on Customer Volumes

The result has been a boom in volumes for last-mile delivery providers - perhaps a bit too much as some struggle to keep up. Spend Management Experts has learned that FedEx has placed volume caps on some customers’ volumes. Details are sketchy but it’s not surprising. We usually hear of such practices occurring during peak season but it typically follows months long planning and communications with customers. However, time is precious for FedEx or others for that matter, as events unfold rapidly. An email, phone call or video-chat has resulted in several businesses scrambling to find additional last-mile carriers to pick up and deliver volumes. Indeed, various publications suggests other carriers are experiencing ‘peak season’- like volumes due to the rise in e-commerce.  CEO of DHL Express Canada commented, “It is a time of the year right now that feels quite a bit like the holiday season, in a way, in terms of shipment volumes, and yet the composition of those shipments is quite a bit different…” In addition, the CEO of DHL Express Canada noted that the company has observed an increase in the amount of deliveries into Canada from outside the country as a result of Canadians shopping online. In its home country, Germany, DHL told Reuters that it was handling more than 8 million parcels a day, similar to pre-Christmas trade and compared to an annual average of around 5.2 million. A press release from Canada Post noted that on April 20 alone, it delivered more than 1.8 million parcels to Canadians. “That’s similar to the biggest delivery days we see during the Christmas season.” The result, according to Canada Post, is delivery delays.

B2C Volumes Remain High

As noted by the CEO of DHL Express Canada, the composition of shipments has changed. Although we have not heard of any volume issues at UPS, in UPS’ first quarter earnings release, it reported that 70% of its total volumes in March, were B2C. For the first couple of weeks in April, the percentage of B2C volumes remained high. FedEx and UPS’ alternative delivery locations have been impacted by retail closures and stay-at-home mandates. These locations help both carriers convert B2C volumes into B2B volumes, thus, making it easier and more cost effective for them to sort and deliver. In a creative way around this, UPS and Michaels recently announced contactless curbside pickup of packages and return drop-offs. A temporary solution, according to the press release,  “customers simply need to call the store upon arrival, provide the Michaels Team Member with their name, along with a description of their car and the items, and have their ID ready when they pull up and pop the trunk.” As last-mile delivery providers such as FedEx, UPS, DHL, post-offices and others, look to take advantage of rise in e-commerce, each will need to ensure their networks can handle such volumes, profitably, in ‘normal’ times as well as in ‘peak’ times and, more importantly, factor in risk mitigation measures into strategies.
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

Share this article:

Blog Posts

  • Categories