This Holiday Crunch begins with more packages to make their debut



A holiday item that has already been sold: shipping capacity.

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  & United Parcel Services Inc<span class="company-name-type">.</span>


    UPS <span>0.23%</span>


  According to shipping consultants and retailers, have told their largest shippers that most of their capacity is already spoken for, and will have to wait to pick up any additional trailers with holiday orders.</p><div> <p>"There will be days in the holiday season where the industry is over capacity," FedEx Chief Marketing Officer Bree Carre said in an interview.









  Outlook has sent hunters on a hunt for options with little luck.  Smaller carriers in the US like Ledgership Inc. and DHL eCommerce Solutions said they booked their capacity for the holiday months earlier than normal and are not taking on new customers until next year.









  The final safety valve is the US Postal Service, whose finances and networks have been pulled during the coronovirus epidemic and may come under greater pressure if shippers dump their overflow orders into the agency's network.




  "Everyone is in the market looking for more potential," said Tim Jiken, a leading consulting firm at Platinum Circle Circle Partners LLC.  "With minimal exceptions, no one is getting it."




  The capacity shortage between Thanksgiving and Christmas could equal seven million packages a day, estimates Shipmatrix Inc., a software provider that crunches parcel shipping data.  The firm's chairman, Satish Jindal, estimates that the total shipping capacity for the industry over that period would be 79.1 million parcels a day, with 86.3 million packages to seek.  Last year, the total capacity was 65.3 million packages with 67.9 million seeking space.









  Mr. Jindal said, "Consumers should be prepared for delivery for additional days, regardless of which carrier is delivering their parcels."  Amazon.com said the shortfall could be reduced<span class="company-name-type"> Of inc</span>


  The distribution network adds more drivers or if the postal service delivers more packages on Sundays.




  The shipping crunch comes against an uneven retail backdrop.  Economic activity has increased since the outbreak of the epidemic.  But the rebound is being largely fueled by select retailers, including retailers and home-improvement chains, while department stores and others that had to close temporarily continue to struggle.  Overall spending remains below pre-epidemic levels and there are signs that the economic recovery is losing steam.




  Carriers and their shippers plan months for the holiday season and set their forecasts for the number of packages they expect to ship.  Both sides decide on weekly shipping forecasts and how many trailers, such as carriers, that may need to be lifted from their loading dock each day.  Any deviation from the estimate may result in a higher rate of penalty per package or more and punish the carrier for compensating for the need for more resources.




  FedEx has tightened the line in recent years, deciding to accept any additional volume to ensure that its network is not overwhelmed.  UPS<span class="company-name-type">,</span>


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  Meanwhile, due to the recent buildup of the major sorting hub, there is more frill room to accept the additional volume.




  In previous years, shippers could usually find a place to operate a ship if online sales were to be expected, although it came at a premium rates that were negotiated.




  "It seemed that there is always a way where you can buy more capacity," said Hannah Testani, the chief operating officer of Intelligent Audit's freight audit and analytics company.  "Now, it does not exist."




  The main reason for this year's capacity decrease is that carriers have already been operating near maximum capacity for months as consumers stay away from home, stores and online shopping.  Distribution growth has made networks stressful and led to longer processing and delivery times.  Carriers cannot quickly boost capacity with new features as this often requires a multiple planning process.




  Cargoers have imposed shipping limits on customers and increased fees to cover increased costs to staff, safe safety equipment and other expenses during the epidemic.  The power of pricing has quickly shifted to carriers, who are raising and raising rates about which ships they want to trade with.




  To build some additional capacity, carriers are asking their customers to try making changes several times to move some shipping volume when their network may be overcrowded.




  For FedEx customers, this means doing more on weekends.  The company, which recently made a major push into e-commerce, has started picking up seven days a week, a process that accelerated it during the epidemic.  It is telling customers that the network is more sluggish on Fridays, Saturdays and Sundays.




  "We don't want to say no to anyone," said Ms. Carrere of FedEx.  But, she said, "there will be limits of a few days."  A company spokesperson said that the company's marketing for the holiday season would also focus on quickly purchasing and shipping orders.




  Delivery giants are asking shippers for more detailed data on inbound volumes and redirecting them to facilities that have the capacity to handle it.




  A UPS spokesperson said, "We are working closely with our large and medium customers to increase volume and make the UPS network reliable for all customers."




  A spokeswoman for the Postal Service said it focused on handling the upcoming election mailings before taking note of the holidays.  The agency said its network could handle the expected increase in packages, but it is particularly important for customers to prepare packages earlier this year.




  "Our network is designed to handle temporary and seasonal growth, and we have the ability to deliver those additional holiday packages on time," the spokesperson said.





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share your thoughts

What lasting impact can the epidemic have on holiday shopping? Join the conversation below.

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  <p>One solution is to spread sales more widely during the holiday season, a marketing strategy that carriers are pushing to drive their customers forward.  Amazon.com Inc.  Competitive sales from K Prime Day and other retailers halted the shopping season in mid-October, which could pull some amounts of shipping ahead of busy windows.




  Meanwhile, retailers are trying to convince shoppers that they won't have to wait weeks of thanks to get the best deals.  Many are also rolling out services that allow customers to buy items online and pick them up in stores, an option that has grown in popularity during the epidemic.









  In most years, shippers will be able to rely on other carriers.  But most are turning away business earlier than usual.  A spokesperson said DHL stopped taking new customers in early August, as its normal schedule was awaited until October.




  Josh Dinnenen, the chief commercial officer of the laser, said the carrier, which serves the eastern US, had to return slippers in search of help during the holidays by July, as opposed to September in earlier years.




  A shipper said that after being told that the laser would not carry its packages for November and December, he replied, "Is there an amount that will replace it?"




  "It's a great conversation to have," Mr. Dineen said.  "But I can't solve your problem this year because you came too late."




  <strong>Write </strong>Paul Ziobro Paul .Ziobro @ wsj.com




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