PEAK SEASON – The New Normal
Peak Shipping Season, which used to be predictable, is not anymore
Posted: December 14, 2020 |
COVID-19 has upended the “normal” way businesses and individuals had conducted their business for the past decades. COVID-19 has created a “new normal” for businesses and individuals forcing both to function in ways never envisioned, with ensuing tremendous effect on the domestic USA and world economies. For shippers, the “new normal” means that Peak Season, which used to be predictable, is not anymore.
A shift from commercial delivery to residential delivery as businesses have closed their offices and have their employees working from home, with office supplies and other items now being shipped to employees’ homes, rather than to the office.
Since many retail stores have reduced their shopping hours, and in some cases, have closed their store, consumers are forced to order goods online, and have the freedom to conduct their shopping online both during and outside normal business operating hours.
Black Friday and Cyber Monday have basically merged since COVID-19 has consumers homebound and reluctant to venture out to the few open retail stores due to all the pandemic related restrictions and social distancing requirements.
The carriers have had to adjust to this different demand of delivery, from commercial to residential. Due to COVID-19, freight cycles are occurring much more rapidly as compared to past years, including 2018’s economic growth spike for shipping carriers. Per the United States Department of Commerce, e-commerce sales grew 37% in the third quarter of 2020 compared to the same period in 2019.
This has led to increases in charges per pound by the three major freight carriers: UPS, FedEx, and DHL. There is no expectation that increased shipping charges might come down anytime soon.
There are no more delivery “Service Guarantees”. The freight carriers are struggling to adjust their delivery resources to cope with the massive increases in residential deliveries as a result of the pandemic.
COVID-19 has changed the travel industry tremendously encompassing new requirements of travelling with masks, sanitizers, as well as temperature tests taken at airports and hotels, and the mandatory COVID-19 tests. Different countries require different tests and vary as to the number of days they are valid for prior to travel.
The once inflexible airlines are now forced to be more flexible with customers due to the uncertainty of COVID-19. Bookings for the high travel periods of Thanksgiving and Christmas are down by more than 60% compared to previous years.
With so much underutilized capacity commercial airlines are carrying more cargo in their planes to generate alternate streams of revenue to help them survive the COVID-19 crisis.
International travel for leisure and business will continue to be down for the duration of 2021 and beyond. Domestic travel will slowly increase as vaccinations becomes more widely administered.
Group tours have declined significantly while people are switching to travel with family members or very close friends.
Due to social distancing and hygiene restrictions, it will also be at least mid-2021 before people start to resume some level of attending sporting events, weddings, conferences, and other local events.
The ones who peer into the crystal ball don’t see the old normal returning soon. As stated above, with the rollout of the vaccine, this should inject confidence into the economy and cascade into the lifting of restrictions, which will restore traditions, and revitalize the patterns of attending sporting events and physically shopping in malls. For shippers, 2021’s holiday season should begin to resemble a bit more of the “old” normal instead of the current 2020 normal.
Call CPC for expert advice and direction during these unprecedented times. It all starts with a free assessment on how CPC can help your company return profit to the bottom-line.