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UPS puts brakes on volumes with retailers in face of online shopping surges

UPS truck delivering packages in a city with text 'UPS pumps brakes as online shopping surges'

It’s no secret the restrictions of the coronavirus pandemic has triggered the acceleration of ecommerce, not just for holiday shopping but for household essentials. The holiday volume spikes are catching with carriers.

Earlier this week, parcel and express carrier giant UPS had to take action with several big retailer customers against its overburdened network by temporarily halting package pickups. In fairness, retailer customers were warned by UPS not to exceed the volume capacities they were allocated.  

The move comes on the heels of holiday online purchases breaking the record for the largest U.S. internet shopping day ever, according to Adobe Analytics data, which culminated in $10.8 billion in online spending for Cyber Monday (up over 15 percent from a year ago). 

The handful of retailer customers to UPS which tried to turn over too many packages on Cyber Monday would have strained the integrated carrier’s already bulging network. A UPS spokesman told CNBC that specific capacity allocations were set and communicated to customers over the holiday season. 

Carriers UPS and FedEx advised their retailer customers months ago to spread out their online promotions and processing of packages during the heavy shopping period of Thanksgiving weekend through the holiday season. To be sure, many retailers started their sales as early as October and are clearly stretching promotions beyond Black Friday. For more about extended holiday promotions, see our 4 Things to Know About Black Friday and the 2020 Holiday Shopping Season blog.   

The strategy to smooth out volumes with large retailers by the parcel carriers makes perfect sense. Overburdened networks bog down operating efficiencies. By spreading out shipments over peak and non-peak times, carriers avoid volume spikes and the shipping delays that disappoint end customers.  

The carriers carefully plan far ahead for the holiday peak with additional seasonal labor as well as aircraft and ground capacity, in many cases. But this year carrier networks hit their peak volumes early ahead of the holiday season due to the pandemic, as we noted in our Peak Season Surcharges blog.

What’s in your shipping strategy?

While 3PLs such as retail and omnichannel specialist Whiplash have long-term relationships with parcel and express carriers, they can’t control the rules set by transportation carriers.  But a good 3PL will expect such unexpected events especially in a peak shipping season, already upended by the pandemic. Communicating plans and remedies to such situations early on and updating customers along the way is expected.  

Planning early is always a good strategy in the face of disruptions, and brands and retailers need contingency plans. Who knows what 2021 will bring? FedEx is also experiencing issues yet not as prevalent or as impactful as the UPS situation.

By aligning with a 3PL like Whiplash, brands and merchants can rest assured the support they need will be there in times of disruption. If you are interested in learning more about our fulfillment capabilities, contact us to speak with an expert.

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