How COVID-19 Affected the Parcel Industry

In March 2020, the greater U.S. began to respond to novel coronavirus (COVID-19) and started to feel the impact of an astounding number of cases worldwide. During an unprecedented time of confusion and increased change for everyone, the fast-changing and always-evolving parcel industry began to move. But this time had many unique challenges – the rules for what was acceptable and who was considered essential (an important term for businesses that wanted to stay open as cities and towns began to shut down) varied country-to-country, state-to-state, and from town-to-town. All of this created new levels of instability within even the largest supply chains. Below is a historical summary detailing the earliest responses of key parcel influencers (FedEx, UPS, USPS, Amazon, etc.).

FedEx, UPS, and USPS are each considered essential businesses for the U.S. economy. Each carrier is allowed to operate during a state of emergency; however, some service delays may occur. We’ve highlighted some of the notable service alerts from each carrier below.

April 27, 2020

April 8, 2020

April 6, 2020

March 31, 2020

March 23, 2020

March 19, 2020

FedEx encourages shippers to visit fedex.com or tnt.com to monitor the status of their shipments as delays occur. FedEx has dedicated a website page for their global response to coronavirus, with details regarding their humanitarian efforts to help eliminate coronavirus. Sign up for service alerts directly from FedEx here.

April 15, 2020

April 8, 2020

April 7, 2020

March 31, 2020

March 30, 2020

March 24, 2020

March 18, 2020

Prior to March

UPS also has a dedicated website page for their global response to coronavirus, with details regarding their humanitarian efforts to help eliminate coronavirus.

While FedEx and UPS appear to be maintaining and picking up operations, the current stability of the USPS remains questionable.

April 10, 2020

March 30, 2020

March 22, 2020

In April, Amazon announced an end to its delivery service for “non-Amazon” items, a move originally designed to increase Amazon’s marketshare and affirm its position as a serious competitor for the Big 2.

Though delivery times have suffered extensions across all industries and carriers, perhaps none is more curious and surprising than Amazon’s – as many Amazon Prime customers have begun to notice Prime packages can be delayed anywhere from 5 days to a month long (the latter becoming more popular). Such realities leave some customers wondering – is an Amazon Prime membership still valuable?

In addition to putting grocery-delivery customers on hold, Amazon appears to be encouraging shoppers to shop less by canceling marketing efforts and sales promotions previously used to increase sales, including upcoming promotions for upcoming Mother’s Day, the removal of popular “You might also like” type widgets heavily featured across the site and on product pages, and even a delayed Prime Day.

April 16, 2020

April 13, 2020

April 7, 2020

April 3, 2020

Last month, we began to speculate on which industries might be most impacted by COVID-19 based on delays in Chinese manufacturing and exports (see China’s Top 10 Exports and China’s Top 10 Most Valuable Exports).

At that time, manufacturers such as Apple, Coca-Cola, and Under Armour had announced anticipated product shortages and shipping delays due to supply chain disruptions. Today, it’s no secret that delivery service businesses, cleaning services or those offering cleaning products, and grocery providers are high performers in this new world. Information technology companies also appear to be doing well, as they help equip and provide security to companies now predominantly teleworking.

But performing well in this new climate means making adjustments to business-as-usual. Below are a few measures we’re noticing businesses take across the country:

Whether they’re increasing distance at check-out lanes or limiting the number of guests able to enter, brick-and-mortar stores are taking new measures to tell customers that they’re responding to COVID-19 with seriousness. Last month, we saw an increasing number of grocery stores shorten shopping hours to ensure time for new cleaning regiments, as well as sponsored hours exclusively for elder shoppers.

Many businesses are also taking actions that are two-fold: increasing employee pay and sick leave. To enforce the latter, some are even checking temperatures of their employees. Why? These businesses are seeing new demand for staple and shelf-stable products, increased pay is a necessary step to entice a cautious and possibly fearful workforce. Alternatively, increased sick leave is a critical step to ensure sick employees stay at home rather than risk employee and customer health alike.

Businesses already equipped for online ordering and regional delivery, or those that quickly adapted to these environments, are also likely finding success as increasing stay-at-home ordinances take effect. Unfortunately, new demand also means limited supply. We’re currently waiting to see how stores like Costco, Kroger, and Walmart will sustainably manage bogged-down online ordering systems and potential product shortages.

Businesses are also realizing there’s no better time to give back to national and local communities. Resources and spirits remain tight everywhere, and many brands understand that anyone able and willing to give funds and time to pave a path for a better tomorrow will likely be remembered and regarded positively on the other side of COVID-19.

In short, businesses performing well during the outbreak of COVID-19 are likely those we see ramping up hiring, increasing employee pay and sick leave, adjusting in-store experiences, and preparing their customers for delayed shipments.

Concern for the airline, cruise, and restaurant industries is growing, though they’re not the only businesses finding themselves considered non-essential by shoppers today. Speciality business and retailers that have little to do with bodily or home cleanliness and health have shown several signs of wear in the last month.

Perhaps no better model for businesses struggling at this time comes from a speciality type among their rank: restaurants. Small and local restaurants in particular seem most vulnerable to a pandemic like COVID-19 – frequently with limited cashflow or resources, an employee pay system dependent on frequent customers, and a tendency to keep inventory low to minimize costs. Yet, restaurants also lend themselves well to unparalleled levels of flexibility and a quick nature to adapt. Perhaps due to the sheer grit and determination of their founders, we’re seeing restaurants give a clear message to other struggling businesses: don’t give up, get creative, and implement strategies of other successful businesses.

One way restaurants are doing this is by temporarily transitioning into grocery stores – selling their inventory rather than meals. Still, others seek to entice new and current employees to support delivery and carry-out services.

Unfortunately, there is still much unknown about how supply chains will continue to be impacted by COVID-19. For both businesses still performing or currently struggling, there is reasonable concern that businesses managing their parcel networks without a strategic parcel focus are vulnerable to hidden logistical problems just around the corner.

Whether or not your parcel network is already directly experiencing supply chain disruption, we recommend that you:

Any opportunity to fortify or optimize your parcel network against outside influences is worth consideration. GMT’s own Parcel Spend Management solution is uniquely designed to bring increased visibility to your parcel supply chain, so that you’re able to confidently make parcel network decisions faster.

We were dismayed to announce the cancelation of this year’s Parcel Summit, an annual event where parcel shippers and carriers come together to discuss parcel industry trends and strategies. GMT is excited to announce that we’ll still be offering two webinar presentations overviewing the annual GMT Benchmark Report!

A product of our partnership with the Cleveland Research Center, and a favored presentation amongst summit attendees, this report is an in-depth and data-driven assessment of the transportation industry. Historically, the report looks at what businesses are doing differently and successfully in all markets across the parcel industry, and this year’s report will emphasize the impact of COVID-19, specifically defining which markets are standing strong and which are challenged, as well as the strategic differences between the two.

You don’t want to miss these webinars!

To learn more about the coronavirus including how to protect yourself, visit the Centers for Disease Control and Prevention (CDC).