It’s not every day that a major shipping carrier tells retailers to stop sending packages its way. From a business perspective, the more a carrier ships, the more revenue it generates. This week, however, that’s exactly what FedEx did. Due to the overwhelming amount of online orders in the recent eCommerce surge, FedEx is capping shipments from roughly two dozen retailers until at least May 19th.
What FedEx Capping Shipments from Retailers Means for the Shipping Industry
The fact that FedEx had to cap shipments from major retailers is yet another telling sign that shipping networks have no choice but to rapidly expand in order to adapt to the changing landscape. The fact of the matter is, the Coronavirus pandemic has caused more people to turn to online ordering now than the industry ever predicted, and carriers are overwhelmed. In order to meet this growing demand, FedEx has expanded to Sunday deliveries and is hiring more delivery drivers. However, the shipment cap proves the carrier’s response didn’t happen quickly enough.
Currently, FedEx decided to cap shipments from online retailers with huge order growth in order to “limit any negative impacts to the FedEx Ground network.”
The following are some of the retailers whom FedEx has capped shipments for:
- Abercrombie & Fitch
- Bed Bath & Beyond
- Eddie Bauer
- Hobby Lobby
- Neiman Marcus
This Trend is Here to Stay
While the surge in online ordering may be putting strain on shipping carriers’ networks, many analysts believe this trend will be here to stay permanently. In the past, most online shoppers only used the Internet to purchase non-essential goods. Now, Americans have shifted to buying essentials such as groceries and household items online, as well. In fact, during mid March, Adobe Analytics reported a 100% jump in online grocery orders that led to a 25% increase in overall online orders compared to a period earlier in the month.
The uptick in shipments ins’t exclusive to just FedEx. Amazon, UPS, and USPS have also reported a staggering increase in shipments that have forced each of their networks to respond accordingly. In March, Amazon halted all non-essential shipments, and USPS has even gone so far as to extend their service commitments by one day for both First Class Package and Priority Mail parcels.
When asked about the uptick in orders, FedEx Chief Marketing and Communications Officer told eMarketer:
“The number one thing that we have seen is an explosion in e-commerce due to the physical store closures. If we thought eCommerce was growing faster before, we’re going to see even greater acceleration.”
In order to meet this “greater acceleration” head on, all the major shipping carriers and Amazon will have to respond accordingly to the function properly in the New Normal.