Unprecedented Holiday E-Commerce Volumes will Accelerate Innovation
With the fourth quarter just a week away, preparations for unprecedented e-commerce volumes are already in motion. Even before COVID-19, there was never any question that this would be the biggest e-commerce holiday season of all time. Now, as the pandemic has accelerated online sales into the future, we are projected to see a 35% year over year increase in 20201, more than double the 14.7% growth achieved in 2019.
That puts tremendous pressure on logistics providers to meet demand. This has been a struggle since the start of the pandemic, with major e-commerce copmanies routinely missing promised delivery times for the first time in recent memory. But with a holiday surge in volumes, delivering packages to customers on time will get even tougher.
To brace for the rush, companies have no choice but to try to hire more workers. FedEx is calling for 70k temporary workers2. UPS is calling for 100k temporary workers3. Amazon is calling for 100k temporary workers4. But they won’t have an easy time filling these positions.
Warehouse workers are already under immense pressure to work overtime while putting themselves at risk of catching COVID on the job. Over 50 Amazon fulfillment centers have tested positive for the virus5, with per-warehouse infection rates as high as 1 in 7 employees6. Given the potential shortages, parcel carriers such as UPS, FedEx, USPS, and Pitney Bowes are adding surcharges for high-volume shipping7 to manage operational expenses and capacity. On-time delivery rates may drop8 from 98% to the 80% range. It might not be a bad idea to order your Christmas presents in October this year.
At the same time, new challenges bring opportunities for new innovations. The difficulty of meeting skyrocketing demands will catalyze changes that improve the scalability of e-commerce logistics. Operations must find ways to augment worker productivity with new processes and robotics technology that improve reliability, accuracy, and efficiency.
A huge opportunity lies in warehouse automation, which has accelerated in adoption since the start of the COVID crisis. AS/RS systems9 are being deployed in grocery micro-fulfillment centers. Mobile robots10 are being deployed to reduce walking times and increase efficiency. Picking robots11 are being deployed to automate tedious, high-turnover tasks such as parcel induction. And if the 2020 Annual Warehouse Automation Survey12 is any indication, the number of customers using these technologies will more than double in the next 24 months.
Even if you can’t use automation today, keep an eye out for opportunities as you work through the largest peak season of all time. With technological progress accelerating, it will be possible to automate a greater number of tasks in the coming years. A more scalable future is just around the corner.