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Delays in holiday deliveries, delays in returns, plague small businesses

Delays in holiday deliveries, delays in returns, plague small businesses

LATEST FINANCIAL NEWS

Delays in holiday deliveries, delays in returns, plague small businesses

Michael Braga
 
| USA TODAY
For Mark Baker, the president and CIO (chief idea originator) for The Vermont Flannel Co., delays in deliveries of flannel blankets, pajamas, shirts, hoodies and scarves to customers this holiday season was just one more blow in a year packed with punches.First, his homegrown manufacturing operations had to shut down for four months, which was hard to recover from. Then, his five Vermont retail stores were hit by the drop in tourism.Thankfully, online sales made up some of the difference.”But we had numerous delivery problems the last couple of months with UPS, with FedEx and with USPS,” Baker said. “We used all three depending on where our flannel blankets were going and how many people were buying.”Stimulus check Q&A: What happens if payments go from $600 to $2,000?Free shipping: 30 retailers still offering free shipping after the holidaysBaker said a U.S. Postal Service employee told him that parcels had not been touched at one of the distribution facilities for three weeks – and that was in November.”That made us scramble to do more with FedEx,” Baker said. “We also changed out our marketing, encouraging people to purchase gift certificates that could be sent instantaneously via email.”All across the country, small businesses and their customers faced the same dilemma. Thanks to the coronavirus pandemic, shoppers purchased far more than usual online all year long, and the holiday season only added to the surging demand for e-commerce deliveries.FedEx Ground alone handled 45.5 million packages during the 12 months ended Nov. 30, up 24% from the same period a year earlier. UPS moved 67.6 million packages for the 12 months ended June 30, a 13% jump from a year earlier. Meanwhile, spikes in COVID-19 illnesses and quarantines among delivery workers contributed to processing delays. Nearly 30,000 of the Postal Service’s 644,000 workers, tested positive for COVID-19 this year, according to the Postal Service.”The Postal Service delivered a record amount of packages this holiday season in the midst of the pandemic which significantly impacted our workforce availability,” said Kim Frum, senior public relations representative for the Postal Service. “Capacity challenges with airlifts and trucking for moving this historic volume of mail also led to temporary delays. These challenges were felt by shippers across the board.”Angry messages With more and more packages piling up between Thanksgiving and Christmas, the Postal Service was soon buried under parcels. At some distribution facilities, workers found it difficult to walks around and trucks were unableto unload others.Customers sent angry messages because orders didn’t arrive by Christmas, demanding their money back, and small businesses faced their wrath.”Now, here we are right after Christmas, and we’re in return season, which will last till the end of January,” said Cathy Roberson, a former UPS employee who runs Logistics Trends and Insight, a market research firm based in Atlanta. “But the post office needs to finish delivering Christmas packages first. Keep in mind this has been an unusual year. Volume is up by a lot. Delays were expected, but not by this amount.”Roberson said if she was a customer and hadn’t gotten her Christmas package yet, she wouldn’t be a happy camper. But she added that too much of the blame for the delays is being laid at the feet of small businesses and the Postal Service, and that’s not fair.Like everything in business, delivering packages comes down to supply and demand, and UPS and FedEx are in a much better position to manage surging demand than the Postal Service, Roberson said. That’s because they’re able to say no.When demand increased for their services this year, UPS and FedEx raised rates, capped volumes and limited the number of trailers available for large and small customers. As a result, much of their excess business got shunted over to the Postal Service, and it wasn’t ready.The Postal Service knows it needs to upgrade its package operations to support the increasing volumes, Roberson said. However, the upgrades have been slow.”The post office cannot turn down mail,” Roberson added. “They can turn down packages, but it’s very, very rare that they do that. They’re trying to build up their parcel capacity. They know that’s where the money is and there are expectations from the government and from the market that they get there. So they’re stuck between a rock and a hard place.” Plus, amid a contentious election with a massive increase in mail-in voting, the topic of mail and delivery turned political in 2020.”If they had come out and said they couldn’t handle the volume, can you imagine the political backlash?” she said.The Postal Service became the catchall provider, Roberson said. Not only did it catch all or most of the excess packages. It caught all or most of the blame for the delays.Raising spirits For OTT Enterprises LLC, a St. Louis company that makes Big O Ginger Liqueur and Habondia Peach Brandy, it was UPS that was responsible for delivery delays during its all-important Christmas season.”We understand they’re trying to deal with this huge volume and more workers are getting sick,” said Bill Foster, a former English professor who founded the company with his wife in 2009. “But we had more shipments get damaged this year than ever before. We even had some things disappear, literally fall off the truck.”Foster added that UPS also took longer to pick up palettes from the distillery, which made the product slightly more expensive, causing someone, somewhere down the line to pay a little bit more.Overall, Foster said his sales are down 23% this year from 2019, which is not terrible for a fledgling spirits manufacturer at a time when bars and restaurants have been closed and face-to-face marketing and tastings have been impossible.The holiday season was critically important, Foster said. That’s when his company does 50% of its business, and fortunately, shipping delays did not cost him customers.”We did have a number of folks contact us that shipments took longer than expected, though,” he said.David Malka saw the same problems on a much larger scale.The chief sales officer of goTRG, a company that processes returns for some of the biggest retailers and manufacturers in the country including Walmart, Lowe’s, Dell and Lenovo, Malka uses UPS, FedEx and the Postal Service to ship packages to e-commerce customers, stores and manufacturers, and 2020 saw a more than 40% increase in its already massive shipping volumes.Then, the Christmas season came.”Nobody had a crystal ball and knew how hard carriers would be slammed with packages, but we certainly weren’t expecting that limits would be put on clients,” Malka said. “We were ready at our facilities and were fulfilling orders as quickly as possible only to find out that FedEx and UPS capped the number of packages we could send per day because there were too many packages in the network.”Malka said if he had known that ahead of time, he would have diverted the packages to another carrier. But he didn’t find out until after Cyber Monday when the packages were already sitting on the loading dock. “Now it seems USPS is the one paying the price for all the delays,” Malka said. “But it was the other carriers that first put limits on what they would pick up, and then that businesses got diverted to USPS.”As an example of the scale of the problem, Malka said that the FedEx facility in Lowell, Arkansas had a capacity to handle 60,000 packages a day, and goTRG alone handed them 25,000 packages on Black Friday.”If we gave them that volume, imagine how many packages they were getting from all their other vendors,” Malka said.Northern lights Up in Anchorage, Alaska, however, the mail has been one of the few bright spots this dismal year.Jana Hayenga, who owns and operates three gift stores – Cabin Fever, The Quilted Raven and Wooly Mammoth – that once profited from the lucrative cruise business, said the Postal Service did a good job getting quilting kits, calendars and other gifts to customers this holiday season.”Customers told us they were getting packages in a day or two,” Hayenga said. She couldn’t explain it. Maybe it’s an Alaska thing. But it certainly was welcome in a city where she has not ordered any new inventory since March 2019, where she’s just been selling what she has because tourism traffic has completely dried up and she’s not sure when people will be willing to go cruising again.”There’s a lot of businesses up here that aren’t going to make it,” Hayenga said. “We could be one of them.”At least online sales of quilting kits have taken off and there haven’t been any problems with deliveries.

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