Commentary: The E-Commerce Road has its Ups and Downs

Commentary by Editor in Chief Deborah Lockridge.

January 2018, - Editorial

by Deborah Lockridge, Editor-in-Chief - Also by this author

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Deborah Lockridge
Deborah Lockridge

My personal experience with e-commerce this year was frustrating — and it started even before Black Friday.

In mid-November, an order from a clothing store never arrived at our house; apparently it was delivered to the wrong address, somehow “refused” and sent back to the shipper.

In December, I got a postcard from UPS notifying me that they were holding an item someone had sent to my P.O. box. Luckily, I called rather than traipsing over to the UPS facility — they had returned it to the sender only two days after the date on the postcard because they didn’t have enough room.

Numerous gifts we ordered through Amazon Prime were late. One apparently was lost in limbo between UPS and the Post Office, so we re-ordered it — only to get a notice that it, too, was delayed.

So I wasn’t surprised to read, a week before Christmas, that UPS was experiencing shipping delays due to the surge in online shopping.

UPS drivers aren’t happy about the workload, with the Teamsters complaining that this is the third year in a row UPS has underestimated demand. I’ve seen postal drivers operating unsafely, obviously in a hurry to get those deliveries done.

In short, “the peak e-commerce season is stretching the limits of the nation’s freight and package handling capabilities,” as the transportation analysts at Stifel put it.

FedEx, on the other hand, reportedly is handling the surge better. In reporting an 11% gain in net profit for the quarter ending Nov. 30, Chairman and CEO Fred Smith said the company handled this year’s peak season because of its close work with shippers to project demand.

Nevertheless, as Bloomberg notes, “deliveries to homes are more costly and complicated than taking goods to business sites.” UPS and FedEx are looking for solutions, from charging more for customers to schedule packages to offering pickup via lockers at drugstores, grocery stores and other locations.

E-tail giant Amazon is looking for solutions, as well, and some believe it is setting itself up as a competitor to UPS and FedEx.

Stifel analysts spent a couple weeks on the road in early December talking to motor carriers. Amazon, they said, wasn’t making many friends with those carriers, mostly due to an unwillingness or inability to meet the consistent volume commitments and lane assignments coveted by asset-heavy truckload carriers.

Between that problem and the volume overload and delays seen by UPS and other parcel carriers, “Amazon may be inclined to rethink its transportation network, going forward,” the analysts said in a report to investors.

One alternative would be to bring more transportation operations in-house, and some analysts do expect the e-commerce giant to eventually become a full-fledged parcel carrier. Of course, the challenges of building out the type of infrastructure that UPS and FedEx have been building for decades is no small feat.

Another approach, Stifel said, would be to implement more of a core carrier program, “fully engaging with the nation’s largest carriers, in order to ensure capacity for its base load volume.”

So far, Amazon seems to be focusing on smaller companies, recruiting owner-operators and small fleets to pull its branded trailers, as well as local delivery providers with vans and delivery trucks. The Stifel analysts were less than enthusiastic about that approach. “We are not sure that the power-only deals Amazon has been executing with small carriers is a sustainable program, over the long term, given Amazon’s growth trajectory.”

My experience tells me there’s no simple answer to the challenges posed by skyrocketing e-commerce. It also makes me wonder if more people will turn back to brick-and-mortar shopping when they don’t get their Christmas presents on time. If not, there are those Amazon patent filings for things like a drone warehouse hub in the sky…


  1. 1. Terry Rafter [ January 12, 2018 @ 04:10AM ]

    Free delivery still cost real money


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