Spiraling e-commerce volumes could swamp parcel networks, lead to peak delays

Parcel carriers already swamped by a massive jump in volumes sparked by pandemic e-commerce patterns could soon start reporting delivery delays as the winter holiday peak cranks up further pressure on their networks, experts are warning.

Although many business have stumbled during tumultuous changes in both supply and demand during the health crisis, consumers have still continued to spend. That trend has created a jump in e-commerce shopping, after buyers found more cash in their pockets due to the canceled costs of commuting, vacations, and entertainment, economists say.

In turn, the package delivery sector has seen a shortage of warehouse space, a tightening freight market, and rising fees from parcel carriers in recent weeks.

Tracking those statistics, carriers think those trends are here to stay. For example, a FedEx executive said last week that the annual holiday surge will layer “peak on top of peak,” since many online retailers say business is good despite the economic recession sparked by coronavirus lockdowns.

And the Canadian package courier Purolator is expecting to pick up and deliver 46 million packages this peak season, an increase of almost 20% over last year. "Purolator has a year-round process for managing periods of significant volume fluctuations, and this approach has enabled our team to adapt quickly during the pandemic to meet the needs of businesses and consumers," Purolator President and CEO John Ferguson said in a release. "During this year's 'peak' season, we expect to pick up and deliver over 46 million packages, averaging 1 million processed each business day.”

While Purolator says it can handle the surge, other parcel carriers are not so sure. Canada Post said last week that the continued shift to online shopping due to Covid-19, on top of the traditional late holiday surge of parcels, “could result in significant parcel volumes and overwhelm capacity,” Chief Customer and Marketing Officer Rod Hart said in a video statement.

In response, Canada Post is asking Canadians to break with tradition this year and shop earlier, which could help spread volumes out over the season and allow businesses to fulfill orders on time. "We know how important these items are to you and we want to deliver,” Hart said. “We also know there are many retailers of all sizes gearing up for your early shopping. We're gearing up to help you and to help them have a great ending to a very challenging year. So this holiday season, please shop early. Support your favorite retailers. And most importantly, stay safe."

The flood of holiday parcels could even swamp the nation’s biggest e-tailer, because Seattle-based Amazon.com doesn’t have enough inventory storage to handle increased demand, according to Jason Boyce, author of a book on e-commerce trends called “The Amazon Jungle.”

“Amazon is going to break. They don’t have don’t have enough square footage, and there will be inventory failures,” Boyce said in a release. “Typically, Prime is 99.5% delivered on time. That will drop to 80%. Massive packages will be arriving late. We’re going to see a lot of unhappy holiday shoppers this year.”

In a year where so many Canadians have shifted their shopping online, we are preparing for a Christmas season like no other. And we want to make sure you are too. Shop early to avoid disappointment, and please stay safe this holiday season. pic.twitter.com/Lyhj643VfK

— Canada Post (@canadapostcorp) October 29, 2020