Kellie's Korner

Kellie’s Korner

By Kellie Aamodt

The days are getting shorter and soon we will start getting cooler. Thoughts can’t help but turn to falling leaves, pumpkins and preparations for the holiday season. After an extremely draining 2020, and a confusing 2021, planning for the holidays this year will be very different. COVID not only affected human lives, social patterns and education norms, but it had an enormous impact on e-commerce and the businesses that depend on and support it.

Many articles and reports have been written on the impact of Covid on supply chains. You may be asking what does that really mean? How does that relate to e-commerce and how does that affect me personally? Do I need to do something different this year in regards to holiday shopping?

Well, the short answer is yes. After 35 years in the logistics industry and over 28 at UPS as Vice President of Sales, it seemed like a great time to share with you why this holiday season will be different from any other we have experienced in our lifetimes.

Kellie Aamodt

Former Vice President of Corporate Inside Sales, UPS (Retired)

Historically, the holiday season is called “peak season” in the logistics industry, due to the dramatic increase in shipments that need to be delivered both to consumers and businesses. This typically starts in September with businesses building up their inventories. The number of ships arriving at the ports in the U.S. increase dramatically starting in August. The Ports of LA and Long Beach which are primarily fed from Asia are no exception. These two Ports account for 46 of all imported goods in the U.S. The rail system also sees a dramatic increase in container movements. This system is used heavily by package delivery companies to move these containers from the ships that are going across the U.S. Shipping companies do this versus relying solely on over-the-road trucking. The number of additional trucks and drivers needed for this three-month period could never be fulfilled. All of this is done to meet the dramatically increased needs of the retail stores. This is to satisfy the consumers who will be waiting on “Black Friday “outside of stores in the early morning for the “hot” items. These “hot” items are typically sold out during these sales within hours of the doors opening as there is not enough inventory to go around.

This year that will be applied dramatically. Consumers are very aware currently that inventories are even lower this year due to covid and supply chain issues. Remember Cabbage Patch Dolls, Talking Elmo or just about any new Nintendo game! This year inventory shortages will be the norm.

E-commerce began to increase over the past few years dramatically. Consumers stopped waiting at the stores and shifted much of their purchasing to home deliveries. This was a result of Amazon developing its own delivery network while using traditional carriers as well. This accelerated during the lockdowns as more orders were done online. It did however take labor from the already limited labor supply. In addition, Amazon added vehicles and aircraft as well. This was all due to the need to move products to homes that were previously purchased at malls and retail stores. Think of it this way, prior to covid when you purchased anything you occasionally went to get it. During covid with stores locked down you’d go online and purchase those items now to come to your home via a carrier. Getting the product to you still takes time and a vehicle to get it to your home. This increased the amount of labor, equipment and fuel being used by carriers. That has driven e-commerce up substantially.

The number of ships arriving at the LA/Long Beach ports and all ports in the U.S. continued to increase as we were in lockdown. The ships from Asia typically arrive in Southern California while European ships typically arrive on the east coast. During the covid lockdown, ships sat in the water waiting to be processed. As the port strike showed a few years ago, being idle in a port creates a bottleneck. It has the same effect as a traffic jam on the highways. There are only so many containers a day that are physically capable of being processed. Only a fixed number of trucks, containers, and trains can fill the roads and rail systems daily. Right now, projections are that the ports have a backlog of eight months.

The entire industry deserves a round of applause for the efforts they’ve made to keep the supply chain moving over the past year and a half. With the quarantines that started in April 2020, they focused on getting Americans their essential goods such as pharmaceuticals and food products.

"One ship carrying 12,000 containers takes a crew of 3,000 people working 24 hours a day for 3 days to process."

On some days we have had as many as 50-60 ships back logged in the Long Beach/ Los Angeles ports. Due to all the issues above, it could possibly take one to two years to correct. Its complexity makes it difficult to correct quickly.

This is a very simplistic overview of current supply chain issues. So, what does this mean to each one of us? Consumer demand needs to be managed. Retailers are advising consumers of the need to order early and ship early. If there is something you truly desire, order it very early. You should prepare yourself for potential shipping delays. One option is to take pictures of the items you are giving from the website and wrap them. This way you can have a wonderful holiday season in-spite of these issues.

Remember, the supply chain is a chain and right now every link is challenged. Thank the port workers, truck driver, hub worker, package delivery drivers and logistics employees every day for what they do. They are definitely essential workers!