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3 billion parcels test the American logistics industry during the Christmas season

3 billion parcels test the American logistics industry during the Christmas season

A FedEx courier delivers packages in Kenner Bunkerport, Maine. Associated Press)

APNEWS : December 8 that in the past year, people have basically stayed at home and have a great demand for daily necessities, but they dare not go out to buy them. The resulting wave of express delivery has deeply impacted logistics companies. With lockdowns and fewer store customers, the delivery service could either make or break down a group of smaller retailers that were already financially struggling.

Consumers will be disappointed if parcels cannot be delivered before Christmas, and retailers who are struggling will feel a disaster because the coronavirus epidemic has forced them to rely on e-commerce to rebuild their business. The future of retail is increasingly networked, and enterprises do not want customers to have any reason to think that they cannot complete the distribution task.

According to the report, in response to the surge in express delivery, major logistics companies have increased weekend delivery and hired more workers. They also take tough measures against retailers, impose high holiday delivery surcharges, and impose severe restrictions on the daily delivery volume of enterprises.

FedEx and United Parcel Delivery Service are reported to be the two largest private logistics companies in the United States. They have a huge impact on the number and time of parcel delivery, and some retailers are worried that their delivery demand will be rejected.

But logistics companies are also facing pressure, mainly from Amazon. Amazon has been developing its logistics business and has become increasingly independent in distribution. If more retailers struggle to cope with this holiday, it will only strengthen Amazon’s dominance.

It is calculated that the number of parcels that need to be delivered every day during the holiday is 7.2 million more than the processing limit of the system.

For customers who want to receive goods before Christmas, many brands, large and small, have advanced the deadline for placing orders and remind customers to place orders early on their respective websites, the report said.

This holiday season, Beatrice Bakery, located in Beatrice, Nebraska, is expected to sell 750,000 pounds (350,000 kilograms) of fruit cakes. The store will stop booking on December 9, nearly a week earlier than last year. The deadline for Disney stores is December 10.

Generally speaking, distribution during holidays is 30% to 40% higher than at other times of the year, the report pointed out. But this year, people have reached this level long before they began to buy Christmas gifts. In the early stage of the coronavirus outbreak, even Amazon was unable to meet the demand.

Logistics companies say they are more fully prepared for the holiday. FedEx said it would hire 70,000 seasonal employees, and United Parcel said it would hire 100,000. But in the face of Amazon’s preparations, these expansions are overshadowed. Amazon said it would build 100 new storage centers, sorting centers and distribution facilities across North America. To handle the increased distribution, the company has employed 275,000 full-time and part-time workers since the beginning of the year, as well as 100,000 seasonal employees.

According to the report, logistics companies also seem to be walking on the tightrope. Over the past few years, people have criticized them for not having enough employees to process packages, resulting in delays in delivery. But in other years, investors criticized them for hiring too many drivers and sorters, which led to a decline in profits.

Ravi Shankar, an analyst at Morgan Stanley, said: “The resources must be matched with the distribution. It’s easy to get this problem wrong.

“Anxiety about delivery delays is partly real, and partly possibly man-made,” said Dave Gill, vice president of discovery and analysis at Rakuten Information Consulting.

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