We will keep this blog updated as we follow the effects of Coronavirus on the supply chain.
The U.S. supply chain has responded admirably to the COVID-19 outbreak. After the initial panic, grocery store shelves are well stocked with food and most essential items except paper products. In fact, consumer packaged goods sales, both in-store and online, jumped $8.5 billion for the two weeks ending March 21, compared to the prior period. That’s 15X the average rate of change.
With stores closed, online sales and deliveries have been surging. To meet the demand for increased online and store shopping, Walmart plans to hire 150,000 people, followed by Amazon looking for 100,000 to staff distribution and fulfillment centers.
Listen as Rhonda Moon, from APL Shipping, describes upstream bottlenecks that supply chain leaders should expect to see. Learn how it will affect JIT supply chains (‘JIT’ is short for ‘Just In Time’ supply chains).
With capacity constraints and quarantine policies changing frequently, retailers who ship big and bulky deliveries must manage customer expectations in this tumultuous environment. In hard-hit regions, including New York City, truck drivers have been exempted from hours of service regulations while delivering essential supplies, such as personal protective equipment and medical devices.
Effects of Coronavirus (COVID-19) on Large-Item Delivery
As COVID-19 ripples throughout the supply chain, fulfillment times for big and bulky items are going up. Some LTL carriers (LTL is short for ‘Less Than Truckload’) are adapting policies to maintain social distancing. Given the disruptions across the country, it’s never been more crucial to communicate shipment status with your customers. Access to real-time data on North American network performance can help you cut through the confusion. Read on for more information on managing customer expectations during this crisis.
LTL shipments are different than lean supply chains for manufacturing and retail delivery, with items fulfilled just in time. Large-format deliveries are impacted by the supply chain slowdowns precisely because they require custom handling or may be “made to order” items not usually held in inventory.
As capacity is taken up by shipments of food and medical supplies, LTL may sometimes have to take a back seat. With the restrictions on social distancing and the recommendations to clean packaging and products, everything is just taking longer.
With our data of over 3B shipping events, we’re seeing fulfillment time for large-format deliveries continue to rise, more than doubling from 20.1 hours on Feb. 23 rising to more than 60 hours through April 7. This rise results in slow shipping times downstream, as the overall rate of delays has risen from 2.9% of all shipments on Feb. 23 to 7.9% on April 7.
Live updates of ‘Fulfillment Time By Mode’ – All data is proprietary. Reproduction, alteration, and distribution without written permission is prohibited. Time is measured in hours.
Freight Carriers Adapt Policies for Social Distancing
Many white-glove carriers have adapted to the social distancing requirements by allowing only curbside deliveries. Threshold and white-glove deliveries are off the table until authorities relax the isolation requirements.
White glove carriers with curbside service only:
- Pilot Freight Services (effective 3/18)
- CEVA (effective 3/21)
- EFW (effective 3/23
- NSD (effective 3/23)
Some carriers like Metropolitan continue to make white-glove deliveries unless the customer or driver feels uncomfortable. Then the customer or driver can opt for a different level, such as threshold or curb delivery. The customer will only be charged for the service level they receive. If the customer or the driver does not feel comfortable with a threshold delivery, Metropolitan will return the shipment to the final mile hub and hold it without fees for up to 60 days.
Carriers have relaxed proof of delivery requirements. No-touch delivery receipts are allowed if the receiver or driver is uncomfortable with getting close enough for a physical signature. Other options include a driver recording the consignee’s name on the delivery receipt, or using a mobile app or website. Signature release is also an option, allowing the driver to make delivery without direct contact with the consumer. AIT allows drivers to take a photo as proof of delivery.
LTL carriers like YRC have suspended guarantees for shipment services and refunds of the guaranteed fee for failure to meet delivery deadlines. Congested terminal docks and the uncertainty of whether businesses are open or closed contribute to the delays. However, carriers are still working to abide by guaranteed service commitments.
Because cities and states may announce and enforce business closures very quickly, a carrier may be stuck with undeliverable freight. LTL carriers may send the shipment back to the origin or store it on their dock for a fee. Keep in mind, carriers are facing challenges far beyond their control. New Jersey imposed a curfew on non-essential, non-emergency travel between 8 p.m. and 5 a.m. That could raise problems for deliveries scheduled after working hours. Drivers would have to meet more precise schedules to navigate the curfew times. So far, New York City has not restricted truck deliveries, but the CDC issued guidelines to help drivers self-isolate if they make deliveries there or have to overnight in the city.
Manage Customer Delivery Expectations
Customers understand that deliveries might be delayed, and are willing to be flexible‚ up to a point. They still want their items in a reasonable time frame. That’s why it’s crucial to communicate the shipment status as delays occur. In fact, in times of uncertainty, 68.5% of shoppers said they prefer more communication around the item availability and delivery status. It’s like waiting at the departure gate for a delayed flight. It makes you feel better if the gate agent tells you the reason for the wait. It doesn’t change the amount of time you’ll wait, but the wait is more tolerable when you know what’s going on. [Understand when, why, and how shoppers want post-purchase communication here.]
Be upfront with customers about what level of service they should expect. Add alerts to the shopping cart or the product description about current delivery options. Let your customers know that delivery appointments beyond the threshold are no longer available for most of the large white-glove carriers mentioned earlier. A customer may not have the means to manage a curbside delivery, so you could avoid disappointing the customer and complicating the shipment for a carrier by being proactive. You could reduce WISMO calls with proactive shipping updates.
You can also manage the situation by diversifying your carrier mix. It may make sense to shift some loads to regional carriers to move away from the overwhelmed national truck lines. [Learn more about the benefits of carrier diversification in your network design.]
Keep A Pulse on Your Delivery Network
Convey’s Network Pulse Dashboard provides retailers with an unprecedented level of supply chain visibility. While the dashboard helps retailers spot last-mile fulfillment disruptions affecting parcel eCommerce deliveries, Convey has data on freight shipments and policy changes. With this information, you can inform customers what to expect concerning delivery times. Contact us for more information.
As the retail and supply chain community continues to manage the COVID-19 situation, visibility into shipments is vital. Your customers understand the challenge and will be forgiving of delays. The foundation for a long-term relationship will lie in how you communicate and recover on issues.
Are you wondering how you can get more visibility into your last mile operations during the COVID-19 outbreak? Check out some of our available resources on the coronavirus pandemic:
- Our Parcel Network Pulse Dashboard pulls together our data of over 3 billion shipping events to help retailers identify where eCommerce fulfillment disruptions are happening.
- As COVID-19 impacts ripple across the supply chain, what should retailers do to keep customers happy? Stay up to date with trends and best practices in our blog, Managing Coronavirus: How Can Retailers Mitigate Supply Chain Shock?
- With so much uncertainty in the next few months, what should retailers focus on in 2020? Forecasting Supply Chain Resilience in 2020 goes over trends and insights we’re hearing from experts and top retailers.