Holiday peak season could be snarled by capacity shortage as pandemic forces e-commerce spike
As consumers continue to abandon stores for websites, retailers could fall behind on-time delivery goals, CSCMP Edge speaker says.
Americans have rushed to online shopping platforms during coronavirus shutdowns that have kept them out of brick and mortar stores, and that trend could lead to the “peakiest” winter holiday retail rush ever, an e-commerce logistics expert said today.
Neither retailers nor consumers are sure when malls will finally open up, or whether shoppers will feel comfortable walking inside when they do, so much of the usual holiday shopping volume registered between November and January will have to move online. That was the conclusion of Manish Kapoor, founder and CEO of the California-based supply chain consulting firm Advatix, who spoke today in a session at the Council of Supply Chain Management Professionals (CSCMP) EDGE 2020 show.
Under that pressure, retailers could face a “huge shortage of capacity” to meet the rising demand, thus cramping fulfillment operations at package sorting centers and trucks that will be short of warehouse labor and drivers, Kapoor said in a session titled “Innovation in Urban Final Mile Delivery.”
As a result, many companies could fall far off the pace of the usual industry target of 96% to 98% on-time delivery, and slump into the 80% range, he said. That change would force consumers to have to order holiday gifts earlier than ever, and it push retailers to invest in warehouse automation products to help ensure low cost while preserving reliability, quality, and speed.
But while increased DC automation could help companies hold their costs down inside warehouses, they will still face spiraling costs outside, where the last mile of fulfillment is the most expensive mile of the parcel delivery process, said Kapoor.
That added cost comes from the simple economics of truck size, he said. Since retailers can’t fit semis pulling 53-foot trailers in the dense neighborhoods where many shoppers live, they must use smaller trucks. Whereas a full-sized truck could carry a couple thousand packages in one load, the local delivery truck can carry only a couple hundred, meaning that that the fixed costs of the driver and the truck itself can’t be spread over a large number of units.
Technology could also provide some relief in that final-mile leg of the journey, as fleets use optimized routing software to plan efficient trips, but other solutions like drones and robotics are not yet ready for widespread deployment, he said.
