Delivery

FedEx Imposes Limits To Stem Flood Of Deliveries

FedEx Corp. could be the first major delivery company to limit the number of items retailers can ship to protect its network from being overwhelmed during COVID-19, The Wall Street Journal reported.

Among the two dozen retailers who have been notified by FedEx of the unusual limits include Kohl’s, DSW, Nordstrom, Neiman Marcus, Hobby Lobby, Eddie Bauer and Bed Bath & Beyond.

“These customers have seen significant volume growth since the spread of COVID-19,” FedEx wrote in a notice to its workers reviewed by the WSJ. “In a time of already high-volume growth, capping the number of packages to be picked up at these locations will limit any negative impacts to the FedEx Ground network.”

FedEx told the news service they are taking steps similar to what they do during the holidays to ensure continued safe and reliable service during these unprecedented times. “Those include hiring in certain markets, delivering more packages on Sundays and working with shippers to manage capacity,” the firm said.

The shipping company’s decision to cap deliveries comes as temporarily shuttered retailers have turned their stores into distribution centers to fulfill a surge of online orders, which has flooded FedEx and other shipping companies with packages, the news service reported. 

Typically, FedEx manages volume by getting forecasts from companies months in advance for how many packages they intend to ship during certain periods. But the onset of the coronavirus and its impact on shipping took everyone by surprise.

Online sales increased by nearly 50 percent in April, according to Adobe Analytics. That spike has put pressure on the nation’s shipping firms to stay fully staffed and solve other challenges as most shipments are going to homes instead of businesses.  

Competitor United Parcel Service Inc. (UPS) told the news service they have experienced a 70 percent rise of deliveries to U.S. homes. A company spokesman declined to say whether they were imposing limits. 

For now, the impacted retailers say they are coping. Some stores contacted by the WSJ said they will rely on other carriers in the short term or establish alternate delivery times to get goods delivered.

Target has taken a novel approach to solving its delivery challenges. PYMNTS reported last week that the retailer is negotiating to purchase portions of Deliv Inc. Before its planned closing this summer, the California startup was best known for offering same-day delivery for Best Buy Co., Macy’s Inc., Mercato Inc., Walgreens and others.

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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