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As online orders soar, businesses, consumers could face shipping delays

Rich Michals, Jr., president of Parcel Management Auditing

Rich Michals, Jr., president of Parcel Management Auditing and Consulting in Farmingdale, believes COVID's effect on the carriers has been overhyped. Credit: Rich Michals Jr.

The surge in anticipated online holiday orders due to COVID is expected to raise shipping challenges for businesses that could cause holiday headaches for customers.

Up to 700 million packages face potential shipping delays as orders exceed shipping capacity by five percent, according to recent data from Salesforce.

On top of expected delays, seasonal surcharges among major carriers will also add to shipper’s woes this holiday season.

"We saw a pandemic bump in the first three quarters of this year in digital sales and we are anticipating a fourth quarter holiday bump translating into an unprecedented holiday season for digital," says Rob Garf, vice president of strategy and insights for Retail and Consumer Goods for San Francisco-based Salesforce, a customer relationship management platform.

A 34% year-over-year growth in digital commerce is anticipated this holiday season in the United States — up from 12% in 2019. All told, digital will account for 30% of all retail sales for the holidays, Garf says.

"It took us as an industry 20 years to reach 15% digital penetration [around when COVID hit] and we’re going to hit 30% for the holiday," he says.

This will put a strain on existing carriers already seeing increased capacity due to COVID.

Subsequently, "small shippers need to set realistic expectations with their customers," about expected delays, which can be double the time anticipated, says Tony Nuzio, founder of ICC Logistics Services Inc., a Hicksville-based transportation and logistics consultancy.

Keep in mind UPS and FedEx haven’t reinstated their delivery service guarantees that were suspended due to COVID, says Nuzio, noting this provided shippers with a refund for late deliveries.

In addition, certain shippers have to contend with seasonal surcharges from UPS, FedEx and USPS this holiday season.

"UPS and FedEx took away the service guarantees and added surcharges," says Rich Michals, Jr., president of Parcel Management Auditing and Consulting (PMAC) in Farmingdale. "Now they have an opportunity to make a ton more money by not guaranteeing service…thereby optimizing networks, it creates the ability to deliver air packages and ground at the same times."

He believes COVID’s effect on the carriers has been overhyped and that "lack of operational efficiencies" on their part is making it even harder for businesses this holiday season. UPS spokesman Matthew O’Connor said "to allow for additional time to make deliveries because of the pandemic, UPS temporarily modified the UPS Service Guarantee, although the vast majority of our services continue with the same time commitments our customers have come to expect." He also noted that UPS routinely adjusts its pricing and peak surcharges reflect the impact of COVID.

FedEx spokeswoman Sederia Gray said: "we expect volume to surge during the upcoming holidays — on top of the peak levels of demand we’ve already experienced during COVID-19." As a result, Gray adds, FedEx has "strengthened its network" and increased capacity to respond to anticipated holiday demand. This includes expanding its seven-day delivery to now reach 95% of the U.S. population and adding capacity on weekends.

Still, local shippers should plan for delays and try incentivizing customers to order earlier to improve chances of getting packages on time, Nuzio says.

They could also promote curbside pickup, leverage store associates to not just pack orders but deliver them and/or partner with companies like Uber, Lyft or DoorDash to get packages to customers' doors on time, Garf says.

Heather Hallam, owner of Manorville-based Sea Glass & Sunsets, which makes and sells sea glass jewelry, says she’s starting to promote her collections earlier with teasers on Instagram stories "so maybe people will buy earlier and they’ll be less of a holiday rush."

She’s pre-making more jewelry in advance so pieces will be ready to go and won’t do made-to-order pieces like she does normally, but stick to in-stock pieces, which can be shipped out quicker.

Hallam, who uses USPS, is also letting people know they can go to certain stores that carry her product if they want items sooner.

It’s good to be proactive, Michals says.

This is also a time shippers should be looking to renegotiate agreements with the major carriers to offset some of the fees and charges considering they’ve taken away delivery guarantees, Michals says.

"As much as carriers say ‘we’re overcapacitated’, they’re looking for new business constantly and not letting go of any old business," he says.

Fast Fact:

According to a recent survey by Ecwid, 55% of U.S. merchants plan to move up shipping deadlines to account for delays.

Source: Ecwid (nwsdy.li/forecast)

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