October 25, 2021
In mid-December last year, I wrote about how we were fast approaching the last chance to buy gifts for the holidays. Covid lockdowns had accelerated the trend toward shopping online rather than in person. Shipping companies were under tremendous strain as they sought to deal with record volumes 24% greater than the levels seen in 2019. All this made sense in 2020 as we were still adjusting to living with the pandemic, but I expected that things would be better by 2021. Little did I know that some of the same supply issues which threatened my last-minute online Christmas shopping habits would reemerge nearly a month earlier than last year!
Over the past year retail has slowly moved back towards some semblance of the pre-pandemic normality. Retail stores are opening back up and shoppers are gingerly resuming in-person shopping. However, the overall trends this fall are really not that different from last year. For example, 82.5% of consumers are planning to shop online as much or more than they did last holiday season. According to Statista, holiday season ecommerce sales are expected to grow by more than 14% from last year’s record breaking $186 billion to over $207 billion.
The increased shipping volume over the last two years alone would be enough to throw a wrench into the logistics behind same week deliveries during the holidays, but unfortunately this year there are additional factors which will add stress to the system. The first is labor shortages which have left many warehouses inadequately staffed to load and deliver goods. Amazon has raised their minimum pay to $18 per hour and hired 150,000 additional seasonal employees in effort to deal with the holiday crunch. However, many of their smaller competitors have had less success finding workers. In addition to labor shortages, supply chain issues, which we discussed earlier this month, may lead to items going out of stock before there is even a chance to order them as cargo ships remain lined up at ports unable to unload their shipments.
Last week President Joe Biden met with the heads of UPS, FedEx, Walmart, and two ports. The ports involved in the meeting were Long Beach and Los Angeles which together handle a staggering 40% of shipping containers entering the US. During the meeting the President urged a move to 24-hour operations to alleviate the backup ahead of the busiest season of the year. Despite the presidential encouragement, the executive director of the Port of Long Beach, Mario Cordero, had a warning of his own: “Shop early because these delays and bottlenecks are going to continue to the end of the year”.
Even the last-minute shoppers like me really need to think about getting ahead of supply and delivery problems this year. The capacity issues faced by the shipping industry, coupled with product shortages, may mean that the “now or never” point in your Christmas gift buying will arrive sooner than you may think!