Last week’s Amazon Prime Day kicked off what will surely be a wild 2020 holiday season. While the numbers are not official yet, most estimates have Prime Day raking in nearly $10.5 billion in worldwide sales. Not to be outdone, Walmart and Target launched their own online deals to coincide with Prime Day. Black Friday is till 5 ½ weeks away, and by all accounts, it will be the biggest Black Friday ever. In fact, more and more retailers are launching Black Friday deals that will run for a week or more to help meet the rising demand for online shopping.
One of the biggest questions is whether or not logistics companies will have the necessary capacity to deliver all of these orders. According to multiple reports, UPS and FedEx have begun telling shippers that they have essentially reached full capacity already. With the onslaught of online shopping to come, retailers and logistics companies alike are telling consumers to shop and ship early. These companies are bracing for the potential of a massive capacity shortfall which could impact up to 7 million packages per day between Thanksgiving and Christmas.
As such, logistics companies and retailers are planning earlier than ever to get ahead of the capacity crunch. As we’ve done in years past, let’s check in to see how some of the largest logistics providers and retailers are handling the holiday logistics rush.
Amazon is in full-on holiday season mode even though we are still 10 days away from Halloween. The company has announced that as it gears for up the busy holiday rush, and to continue to ensure capacity around the growth of online orders, it is hiring 100,000 workers. While it did not say how many of that 100,000 would be seasonal-specific, the overall strategy is to bring in warehouse and delivery workers to build out the logistics and fulfillment network. The minimum starting wage is $15 an hour, and in some markets the company said it is offering up to $1,000 in sign-on-bonuses. Amazon will also open 100 additional buildings across its fulfillment, sortation, and delivery network. The company plans to increase capacity by 50 percent by the start of the peak season to effectively manage the demand spikes it is expecting. All of these numbers are on top of the 175,000 workers Amazon hired in a matter of months as the pandemic set in, with 125,000 of those workers becoming full-time employees.
UPS is hiring more than 100,000 seasonal employees as it gears up for the holiday season. Like Amazon, UPS has already brought in a large number of workers to meet the growing e-commerce boom. In the second quarter of 2020, UPS hired 39,000 as package volume surged by 23 percent over the same period in 2019. As a unionized workforce, UPS is among the top-paying in the industry; part-time package handlers earn $14.50 an hour and seasonal drivers can make as much as $21 an hour. On average, 35 percent of seasonal jobs turn into permanent positions. Like last year, UPS is also extending its “Earn and Learn” program, which gives qualified students a bonus of up to $1300 for college expenses. The shipping deadlines for UPS are December 15 UPS Ground, December 21 UPS 3 Day Select, December 22 UPS 2nd Day Air, and December 23 UPS Next Day Air. UPS will also impose surcharges ranging from $1 to $3 per package on high-volume US residential shippers.
FedeEx is planning to hire a record 75,000 seasonal workers in 2020, a jump of 27 percent compared to 2019. Aside from bringing in more seasonal workers, FedEx is expanding its e-commerce capabilities. The company will expand its Sunday home delivery service to cover nearly 95 percent of the US population. FedEx is also increasing Ground’s network capacity and expanding coverage of the FedEx Freight Direct service. The shipping deadlines for FedEx are December 15 for FedEx Ground, December 22 for FedEx 2Day, December 23 for FedEx Standard Overnight, and December 25 for FedEx Same Day. FedEx will also be applying peak season surcharges to high-volume shippers, ranging from $1 to $5 depending volume.
The Postal Service is gearing up for a busy season as well, as it gets ready to delivery nearly 15 billion pieces of mail and 800 million packages. The USPS will likely hire somewhere in the range of 35,000 to 40,000 seasonal employees once again this year in positions such as mail handlers, holiday clerk assistants, and mail processing clerks. The agency will also push consumers to use its Click-N-Ship feature which allows users to order free Priority Mail boxes, print shipping labels, purchase postage and even request free next-day package pickup. The Postal Services asks consumers to plan accordingly, as it predicts December 14 will the busiest day online with more than 13 million consumers predicted to visit usps.com for help shipping holiday gifts. USPS shipping deadlines include December 18 for First-Class Mail and packages, December 19 for Priority Mail, and December 23 for Priority Mail Express.
Walmart made some major changes to its normal Black Friday sales event for the 2020 holiday season. Last week the company announced that will be holding “Black Friday Deals for Days” with category-specific markdowns on different days, with an initial offering online followed by in-store deals. The dates include November 4 / 7 for toys, electronics, and home products and November 11 / 14 for TVs, computers, tablets, movies, and music. Walmart will hold a sale on November 25 followed by the company’s “true” Black Friday the day after Thanksgiving. To meet the growing demand, Walmart is hiring 20,000 seasonal workers in its e-commerce fulfillment centers across the country for a variety of positions, including order fillers and power equipment operators, that begin at a starting hourly rate ranging from $15.75 up to $23.75 based on location, position and schedule. Walmart has already hired more than 500,000 workers across its stores and supply chain since the beginning of the COVID-19 pandemic. In an effort to promote customer safety, Walmart is offering pick-up and delivery on more than 160,000 items that can be picked up or delivered as soon as the same day. Free next day or two-day shipping on online orders over $35, pending eligibility and customer location, will also be offered.
Target also launched an online sales event to coincide with Amazon Prime Day as part of its efforts to kick off the holiday season. The company is hiring about 130,000 seasonal employees this year, which is in line with how many it hired last year. These hires will focus on everything from customer service to stocking shelves. The big push for 2020 is how it will approach its staffing in relation to same-day services such as curbside pick-up. Target is doubling the number of employees that will be dedicated to same-day curbside and in-store pickup of online purchases compared with the first half of the year. Distribution centers will have more workers than last holiday season to make sure they can continue to re-stock stores in a timely manner. There will also be modified training across stores and distribution centers so employees can switch from task to task as needed, such as from disinfecting shopping carts and helping with curbside pickup during peak hours. Target-owned same-day delivery start-up Shipt will likely be very busy this holiday season.
Even though it’s earlier this year, the holiday season is kicking off. And this year’s season looks to be the biggest one yet. Most estimates put holiday spending around $1.15 trillion, which will be a 1 to 1.5 percent increase over 2019. The big driver this year will be online sales as more and more people avoid brick and mortar stores. Amazon, UPS, FedEx, the Postal Service, Walmart and Target are bringing in more than 465 million seasonal workers to make sure packages are delivered on time. The question remains to be seen whether the investment in people and infrastructure will be able to handle the strain of increased orders. And in a few weeks, we can talk about the reverse logistics nightmare that is looming.