To our valued customers, thank you for allowing Visible SCM to be your supply chain partner during these uncertain times. As your partner, we feel it is important to keep you informed of how the COVID-19 pandemic is reshaping the logistics landscape, from changes in carrier policies to the rapid growth of ecommerce. We have also compiled strategies to help you strengthen your supply chain, mitigate risk and deliver a positive experience to your customers with the full support and commitment of our team.
And to all of you who have undoubtedly experienced the unprecedented impact the pandemic has had on the global supply chain, please allow me to explain what has happened, where we are now and where we go from here.
– Casey Adams, President of Visible Supply Chain Management
Prior to the COVID-19 pandemic hitting the United States, the year started off largely as predicted. January shipments consisted primarily of peak season clear-outs, holiday shopping returns and orders from New Year’s sales, with weather being the only major expected cause of shipping delays. Shippers had just experienced the standard General Rate Increase imposed by carriers annually, and no Peak Season Surcharges were in effect for small parcel shipping. Carriers offered money-back guarantees or guaranteed service refunds on shipments delivered later than their commitment time.
In late January and into February, news came that China extended their Lunar New Year holiday due to the coronavirus outbreak. In March, COVID-19 was declared a pandemic. Transportation and Logistics was identified as a critical infrastructure sector that should continue to operate, and workers in this sector were deemed essential. And in the wake of these events, global supply chains around the world were completely upended.
Between the shutdowns, immense surge in demand for essential items and workers falling ill, the pandemic has had dramatic ripple effects across all aspects of logistics, creating massive disruptions and drastic capacity constraints. Airports experienced congestion, ocean carriers announced blank sailings and stores struggled to keep essential products on their shelves.
Here is a high-level look at how the pandemic affected transportation and logistics:
COVID-19 accelerated the growth of ecommerce significantly. Business-to-consumer deliveries skyrocketed as brick-and-mortar stores closed their doors and people began staying at and working from their homes.
Online sales of essential items like cleaning supplies, toilet paper and groceries spiked, and businesses pivoted to adopt models like click-and-collect curbside pickup, allowing shoppers to collect their purchases without leaving their cars. By April, essential categories and some non-essential categories were struggling to keep up with demand.
Ecommerce sales also rose in a category referred to as “new essentials”—products like office supplies, exercise gear, housewares, home improvement-related items, cosmetics and toys/hobby supplies—that make staying home and working from home more comfortable.
According to Adobe Analytics, online sales grew more slowly in July than in June but were still up 55% compared with July 2019, and the holiday season is on the horizon. While increased demand is a good problem for most businesses to have, the rapid ecommerce adoption has caused fulfillment bottlenecks, and carriers continue to experience severe capacity constraints and other challenges.
Since the pandemic started, carriers have communicated disruptions in domestic and international supply chains. Cleaning times at hubs were extended, last-mile deliveries reached peak-season volumes that carriers were unprepared for and workers contracting the virus led to staffing issues. As a result of the demand increase and added expenses, carriers have taken measures such as:
On-time performance for the major national carriers has fallen, largely due to the increase in parcel volume. Delays and extended transit times are now the norm, as illustrated by the graphs below that show the increase in transit times in July compared with earlier this year.
% of Shipments > 7 Days in Transit
% of Packages Delivered by Transit Days and Month
Online shoppers want to be in control of their order delivery options, and supply chain managers want the control to ensure these delivery expectations are met. Although the pandemic has served as a reminder that we cannot control everything, it is important to remember that you have access to options through Visible to help you deliver the best possible service to your customers.
Online Shopper Expectations
Online shoppers have high expectations for information and service. Prior to purchasing an item online, shoppers want to know what their total cost will be (including taxes and shipping), where the seller is located and as much about the product as possible. They do their research, like reading return policies and product reviews.
In addition to information, online shoppers want control over their delivery day, time and location, and they want to own the decision between shipping cost and speed. In fact, sellers find that providing a balance between cost and choice creates the best shopping experience. While some shoppers opt for a slower, less expensive delivery option, others will pay extra to get an order delivered more quickly.
Service Level Options
Visible offers various service level options to help shippers meet their clients’ expectations. While some options are costlier than others, they present a lower risk in terms of delivery and service. The chart below provides an overview of carrier services and their associated cost and risk.
As your supply chain partner, we want to ensure we are doing everything we can to support your business. Our team of experts has put together a list of strategies and options to help you mitigate the impact of COVID-19 and deliver the best possible experience to your customers.
Visible is committed to supporting these efforts by ensuring tracking information is available and that clients have visibility throughout the life of each order.
Although COVID-19 has created supply chain disruptions on a global scale, it has also created opportunity. Companies are reevaluating their supply chains, finding ways to increase resilience and efficiency and build customer loyalty. Visible clients are equipped with options and a dedicated partner for support every step of the way, from strategy development to execution.
We appreciate your business and are committed to helping you deliver the best possible service to your clients. Please contact your account representative if you are interested in exploring service level options or fulfillment strategies. We are here to help.