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How COVID-19 is Affecting the Parcel Industry

Follow this page for weekly FedEx, UPS, and USPS updates, as well as parcel industry observations related to COVID-19.

 Cameron Elliott

In March, we watched the world respond to novel coronavirus (COVID-19), with an astounding number of cases expanding worldwide. As a result and across the parcel industry, we are witnessing an unprecedented time of confusion and increasing change. The rules for what’s acceptable and who’s essential vary country-to-country, state-to-state, and even at times city-to-city, creating new levels of instability in supply chains.

Follow this page for weekly FedEx, UPS, and USPS updates, as well as parcel industry observations related to COVID-19.

Carrier Responses and Updates

FedEx, UPS, and USPS are each considered essential businesses for the U.S. economy. Each carrier is allowed to operate during a state of emergency; however, some service delays may occur. We’ve highlighted some of the notable service alerts from each carrier below.

FedEx Service Impact

April 27, 2020

  • FedEx Express® and TNT International parcel and freight shipments originating in China see surcharge increase from $0.45 per pound to $0.90 per pound ($1.00 per kilo to $2.00 per kilo). Learn more.

April 8, 2020

April 6, 2020

March 31, 2020

March 23, 2020

March 19, 2020

FedEx encourages shippers to visit fedex.com or tnt.com to monitor the status of their shipments as delays occur. FedEx has dedicated a website page for their global response to coronavirus, with details regarding their humanitarian efforts to help eliminate coronavirus. Sign up for service alerts directly from FedEx here.

UPS Service Impact

April 15, 2020

April 8, 2020

April 7, 2020

March 31, 2020

March 30, 2020

March 24, 2020

March 18, 2020

Prior to March

UPS also has a dedicated website page for their global response to coronavirus, with details regarding their humanitarian efforts to help eliminate coronavirus.

USPS Service Impact

While FedEx and UPS appear to be maintaining and picking up operations, the current stability of the USPS remains questionable.

April 10, 2020

March 30, 2020

March 22, 2020

The Amazon Effect

In April, Amazon announced an end to its delivery service for “non-Amazon” items, a move originally designed to increase Amazon’s marketshare and affirm its position as a serious competitor for the Big 2.

Though delivery times have suffered extensions across all industries and carriers, perhaps none is more curious and surprising than Amazon’s – as many Amazon Prime customers have begun to notice Prime packages can be delayed anywhere from 5 days to a month long (the latter becoming more popular). Such realities leave some customers wondering – is an Amazon Prime membership still valuable?

In addition to putting grocery-delivery customers on hold, Amazon appears to be encouraging shoppers to shop less by canceling marketing efforts and sales promotions previously used to increase sales, including upcoming promotions for upcoming Mother’s Day, the removal of popular “You might also like” type widgets heavily featured across the site and on product pages, and even a delayed Prime Day.

April 16, 2020

April 13, 2020

April 7, 2020

April 3, 2020

Who’s Doing Well, and What are They Doing?

Last month, we began to speculate on which industries might be most impacted by COVID-19 based on delays in Chinese manufacturing and exports (see China’s Top 10 Exports and China’s Top 10 Most Valuable Exports).

At that time, manufacturers such as Apple, Coca-Cola, and Under Armour had announced anticipated product shortages and shipping delays due to supply chain disruptions. Today, it’s no secret that delivery service businesses, cleaning services or those offering cleaning products, and grocery providers are high performers in this new world. Information technology companies also appear to be doing well, as they help equip and provide security to companies now predominantly teleworking.

But performing well in this new climate means making adjustments to business-as-usual. Below are a few measures we’re noticing businesses take across the country:

Adjusted in-store experiences.

Whether they’re increasing distance at check-out lanes or limiting the number of guests able to enter, brick-and-mortar stores are taking new measures to tell customers that they’re responding to COVID-19 with seriousness. Last month, we saw an increasing number of grocery stores shorten shopping hours to ensure time for new cleaning regiments, as well as sponsored hours exclusively for elder shoppers.

Employee pay and sick leave.

Many businesses are also taking actions that are two-fold: increasing employee pay and sick leave. To enforce the latter, some are even checking temperatures of their employees. Why? These businesses are seeing new demand for staple and shelf-stable products, increased pay is a necessary step to entice a cautious and possibly fearful workforce. Alternatively, increased sick leave is a critical step to ensure sick employees stay at home rather than risk employee and customer health alike.

Facing increased demand for delivery and online ordering.

Businesses already equipped for online ordering and regional delivery, or those that quickly adapted to these environments, are also likely finding success as increasing stay-at-home ordinances take effect. Unfortunately, new demand also means limited supply. We’re currently waiting to see how stores like Costco, Kroger, and Walmart will sustainably manage bogged-down online ordering systems and potential product shortages.

Philanthropy.

Businesses are also realizing there’s no better time to give back to national and local communities. Resources and spirits remain tight everywhere, and many brands understand that anyone able and willing to give funds and time to pave a path for a better tomorrow will likely be remembered and regarded positively on the other side of COVID-19.

In short, businesses performing well during the outbreak of COVID-19 are likely those we see ramping up hiring, increasing employee pay and sick leave, adjusting in-store experiences, and preparing their customers for delayed shipments.

China’s Top 10 Exports from 2018

 

Chart data from Worlds Top Exports

China’s Top 10 Most Valuable Exports from 2018

 

Chart data from Worlds Top Exports, for a complete and searchable view click here.

Who’s Struggling and What Should They Do?

Concern for the airline, cruise, and restaurant industries is growing, though they’re not the only businesses finding themselves considered non-essential by shoppers today. Speciality business and retailers that have little to do with bodily or home cleanliness and health have shown several signs of wear in the last month.

Perhaps no better model for businesses struggling at this time comes from a speciality type among their rank: restaurants. Small and local restaurants in particular seem most vulnerable to a pandemic like COVID-19 – frequently with limited cashflow or resources, an employee pay system dependent on frequent customers, and a tendency to keep inventory low to minimize costs. Yet, restaurants also lend themselves well to unparalleled levels of flexibility and a quick nature to adapt. Perhaps due to the sheer grit and determination of their founders, we’re seeing restaurants give a clear message to other struggling businesses: don’t give up, get creative, and implement strategies of other successful businesses.

One way restaurants are doing this is by temporarily transitioning into grocery stores – selling their inventory rather than meals. Still, others seek to entice new and current employees to support delivery and carry-out services.

Unfortunately, there is still much unknown about how supply chains will continue to be impacted by COVID-19. For both businesses still performing or currently struggling, there is reasonable concern that businesses managing their parcel networks without a strategic parcel focus are vulnerable to hidden logistical problems just around the corner.

Whether or not your parcel network is already directly experiencing supply chain disruption, we recommend that you:

  • Watch for new carrier service alerts and monitor your shipments closely.
    • Look for unexpected or new surcharges, particularly those labeled temporary for emergency use. If you were impacted by additional surcharges, can they be disputed, or, if not, eliminated for future shipments? See FedEx and UPS rate change alert pages.
  • Stay on top of contact with your vendors – if they anticipate changes, you should, too.
  • Communicate with your customers as soon as possible if you expect delays or lost shipments. If you wait for your customer to report errors, you risk customer loyalty.
  • Seek to optimize the way you ship and prioritize what you ship.
    • Should you offer expedited shipping? Have you eliminated accessorial charges within your control, such as known address errors, necessary or erroneous weekend delivery, etc.? You may also want to consider a priority system for your most purchased or critical products – which of your products do your customers need most right now?
  • Apply lessons learned today to tomorrow. Ask yourself, if a new and similar virus occurs in 6 or 12 months from now, how will you respond differently than you did yesterday?

Any opportunity to fortify or optimize your parcel network against outside influences is worth consideration. GMT’s own Parcel Spend Management solution is uniquely designed to bring increased visibility to your parcel supply chain, so that you’re able to confidently make parcel network decisions faster.

A Deeper (Data) Dive into the Impact of COVID-19 on the Transportation Industry

We were dismayed to announce the cancelation of this year’s Parcel Summit, an annual event where parcel shippers and carriers come together to discuss parcel industry trends and strategies. GMT is excited to announce that we’ll still be offering two webinar presentations overviewing the annual GMT Benchmark Report!

A product of our partnership with the Cleveland Research Center, and a favored presentation amongst summit attendees, this report is an in-depth and data-driven assessment of the transportation industry. Historically, the report looks at what businesses are doing differently and successfully in all markets across the parcel industry, and this year’s report will emphasize the impact of COVID-19, specifically defining which markets are standing strong and which are challenged, as well as the strategic differences between the two.

You don’t want to miss these webinars!

To learn more about the coronavirus including how to protect yourself, visit the Centers for Disease Control and Prevention (CDC).


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