Christmas Shipping

All signs point to record holiday shopping season

E-commerce sales continue to force changes to the supply chain.

Retailers and parcel delivery companies are projecting a record holiday shopping season, fueled by strong e-commerce growth.

The National Retail Federation (NRF) expects holiday sales to jump between 3.6% and 4% from last year to about $680 billion.  

E-commerce sales are projected to top $100 billion during the 2017 holiday shopping season. (File photo)

“Our forecast reflects the very realistic steady momentum of the economy and overall strength of the industry,” said Matthew Shay, NRF president and CEO.

E-commerce sales will reach $111 billion to $114 billion this holiday season, an 18% to 21% increase from 2016, according to a forecast from Deloitte Consulting.

Rachal Snider, vice president of customer supply chain for Illinois-based logistics firm AFN, said the truckload carriers she has spoken with are expecting a “busy - and certainly at times challenging - holiday season.”

She noted the growth of e-commerce is pushing shipping patterns for the holidays out to the end of the year. As a result, retailers are setting up more distribution centers.

“Supply chains have been built to service the big box retailer ecosystem,” she told Fleet Owner. “E-commerce flips that model on its head, and changes the shipping strategy from large volume/low frequency shipments to low volume/high frequency shipments.”

The Postal Service expects to delivery more than 15 billion pieces of mail and 850 million package between Thanksgiving and New Year's Day. (Photo: USPS)

FedEx Corp. said it expects to deliver between 380 million and 400 million packages during the holiday season.

“Changing market dynamics related to the growth of e-commerce are expected to once again drive the highest surges in demand on Mondays, and FedEx is expecting three Mondays during peak to more than double our average daily volume,” the company said.

About 26 million packages are projected for those three Mondays as consumers place online orders during the weekend.

FedEx is adding 50,000 seasonal workers and investing $1.5 billion to enhance automation and efficiencies across its FedEx Ground network. It is also adding more aircraft and drop-off centers at Walgreens, Albertsons and Kroger stores.

UPS Inc. said it will deliver more than 750 million packages globally in the 25 days between Thanksgiving and New Year’s Eve. That is about 5% above a year ago, aided by the new UPS Saturday Ground service, offering customers additional delivery days.

“Online and mobile commerce has transformed the retail industry, and UPS is ideally positioned to serve both our consumer and business customers during even these busiest of times,” said Kate Gutmann, chief sales and solutions officer.

Gutmann said the new Saturday operations will add about 6,000 permanent jobs once fully implemented. During the peak season, UPS will employ 95,000 temporary seasonal workers.

Also projecting a record holiday season is the U.S. Postal Service, which said it will deliver more than 15 billion pieces of mail and 850 million packages between Thanksgiving and New Year’s Day.

To handle the rising volume the Postal Service is expanding Sunday delivery operations to more locations on Nov. 26. It already delivers packages on Sundays in most major cities, and anticipates delivering more than 6 million packages on Sundays this December.

The Postal Service said the increase in online shopping means there is no long a “busiest day” for in-person shipping. Instead, the busiest time is spread over the two weeks ahead of Christmas, with Dec. 18 the busiest day online with more than 7 million customers seen visiting the USPS web site for shipping help.

To prepare for the holidays, XPO Logistics said it is hiring more than 6,000 seasonal workers, about 20% more than last year.

“Our growing network in last mile puts us in an excellent position going into the holiday peak,” said Scott Malat, XPO’s chief strategy officer. “We have strong capacity, and we opened eight new hubs ahead of Black Friday, bringing our e-commerce network to a total of 53 hubs in the U.S.”

Amazon.com plans to hire 120,000 temporary workers in the U.S. this season, the same as last year. They will be spread over 75 fulfillment centers in 33 states. The company continues to increase use of its private fleet for deliveries, as well as the “Seller Flex” program, which gives Amazon greater control of deliveries from warehouses of third-party merchants to customers’ homes.

Based on current market conditions, AFN’s Snider recommended shippers consider diversifying their portfolio of carriers to gain greater flexibility. She also stressed the importance of communicating sudden changes in volumes with carriers and logistics firms as quickly as possible.

“If shippers have spot loads that take precedence over primary freight, they should let their 3PLs know so they can act accordingly,” Snider said.

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