FedEx, Strained by Coronavirus, Caps How Much Retailers Can Ship From Stores

Date: Friday, May 15, 2020
Source: The Wall Street Journal

Kohl’s, Abercrombie & Fitch among two dozen companies asked to limit shipments to ease strain on delivery giant

FedEx Corp. has limited the number of items that Kohl’s Corp. and about two dozen other retailers can ship from certain locations, as the delivery company tries to prevent its network from being overwhelmed during the coronavirus pandemic.

Many retailers have seen e-commerce sales surge since they were ordered to close thousands of their stores, a shift that has unleashed a flood of packages into FedEx’s delivery network. They have converted stores into makeshift warehouses to help fulfill more of the orders, scrambling the normal flow of online shipments from distribution centers to homes.

“These customers have seen significant volume growth since the spread of Covid-19,” FedEx said last week in a notice to its Ground workers reviewed by The Wall Street Journal. “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.”

Other customers with shipping limits include department stores like Belk Inc., Neiman Marcus Group Inc. and Nordstrom Inc., retailers like Abercrombie & Fitch Co., Bed Bath & Beyond Inc., Hobby Lobby Stores Inc. and Eddie Bauer, and other sellers like Groupon Inc. and Young Living Essential Oils LLC. The limits vary at each location and will last until at least Tuesday. 

A FedEx spokeswoman said the limits are similar to what the company does during busy shipping seasons like Christmas.

“We are proactively taking steps, similar to what we do during the peak season, to help ensure we continue providing safe and reliable service during these unprecedented times,” the spokeswoman said. Those include hiring in certain markets, delivering more packages on Sundays and working with shippers to manage capacity.

During normal busy seasons, FedEx manages the volume in its network by working with customers for months on forecasts for how many packages they will send during certain periods. Most of the packages come from distribution centers, where trucks bring full trailers into FedEx facilities that sort packages for their journey through the network.

The coronavirus pandemic has created an unexpected peak season as millions of Americans have been ordered to stay home. Online sales rose 49% in April, according to Adobe Analytics. It has increased pressure on delivery companies to find and retain workers, and posed other logistical and financial challenges as the bulk of shipments are going to homes instead of businesses.

FedEx’s rival United Parcel Service Inc. said it is working closely with shippers to manage a jump in home deliveries, which in recent weeks have made up 70% of its U.S. deliveries. A UPS spokesman declined to comment on whether the company is imposing limits on shippers.

Some retailers are fulfilling more of their online orders from stores, where inventory is sitting without any shoppers to buy them. The store pickups are typically performed by FedEx Ground drivers after they finish delivering packages on their routes.

FedEx is asking some of its customers to bring their packages directly to the FedEx Ground facility closest to the customer, so that they can bypass the sortation process.

Shoe retailer DSW ramped up shipping orders out of its stores once they closed in mid-March. “We essentially turned them into ’mini-warehouses’ to fulfill our increased digital demand,” said Bill Jordan, chief growth officer of Designer Brands, which owns the chain. Now, FedEx has imposed shipping limits at some of those locations.

Caleres Inc., which operates stores like Famous Footwear and Allen Edmonds, has worked around the limits by shipping more from its distribution centers and from other stores it owns. It also started doing curbside pickup at hundreds more stores to ease the strain.

“We have a good relationship and have worked closely with them throughout the last several weeks to manage the limits,” said Mark Schmitt, Caleres’s chief logistics officer.

A Kohl’s spokeswoman said the company has “levers to work with,” like different delivery windows, to manage online shipping volume during this time. She declined to provide additional context.

A Nordstrom spokeswoman said the company has made some adjustments because of the limits, but the changes haven’t affected deliveries.

A spokeswoman for Abercrombie & Fitch said that online orders are putting strains on delivery companies. “When a carrier restricts capacity, we reallocate packages leveraging other carrier partners to deliver on customer commitments,” the spokeswoman said, adding that the company isn’t under any caps with its carriers.

Other retailers with shipping caps didn’t immediately respond to requests for comment.

Young Living has told customers to be patient as daily orders placed for oils and other products are outpacing its shipping capacity by more than 40%. It has added several temporary fulfillment centers that can help process up to 20,000 orders each day.

Some may come via another carrier other than FedEx. Their website reads: “Over the next few months, your order may arrive via a different carrier than the one requested at checkout.”

Young Living said in a statement that it is working with FedEx and other shipping partners to mitigate the challenges and that, “when needed, we have worked directly with FedEx to adjust capacity constraints.”

 

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