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The torrent of parcel movement in the US has changed direction, as consumers return millions of goods ordered online in the run-up to the holidays.
John Haber, president & CEO of parcel logistics consultancy Spend Management, described it as a ‘returns tsunami’ – a reference to the “parcel tsunami” analysts had predicted for online orders shipped during the peak.
“Last week was the busiest week in returns in history,” he said.
However, Brian Bourke, chief growth officer of Seko Logistics, said: “I wouldn’t call it a tsunami, but volumes are significant.”
After a spike of 10.7% in returns on the first working day of 2021, home delivery specialist ParcelHero predicted that more than half of all parcel shipments, 51.7%, sent last week would be returned items, while UPS estimated it would handle 8.75m return parcels last week, 23% higher than the peak returns period of 2019.
But, unlike the scramble for capacity during the peak, the volume of returned parcels has not met any serious bottlenecks.
“I don’t expect a dramatic increase in capacity pressure from returns,” said Horst Manner-Romberg, principal of mail and parcel logistics consultancy M-R-U.
Mr Haber agreed, noting that merchants had taken steps to reduce the volume of returns in the early days of the new year by offering longer return windows.
“A lot of retailers have expanded the return period to 90 days,” he said.
Amazon, Walmart and Target have also reduced returns flows by allowing consumers to keep unwanted items if they are low margin.
“They try to encourage them to give these goods to charity,” said Mr Haber, adding that this approach also applies to bulky goods, which face prohibitively high surcharges.
But while this tactic should reduce the number of items sent back, it opens the door to abuse and fraud, he pointed out.
Another factor easing the pressure is that many consumers can return unwanted goods at FedEx office and UPS store branches.
“A FedEx driver goes to a FedEx Office store anyway, so this is incremental volume,” Mr Haber said.
A few days before Christmas, Walmart announced it had struck an agreement with FedEx to handle returns. Carrier Pickup by FedEx allows consumers to schedule free collection of return items purchased online from Walmart – this programme is permanent, not only for the peak season.
Picking up parcels from consumers is costlier than moving those dropped off at FedEx office locations, and it does add to the workload of a driver making residential deliveries, but Mr Manner-Romberg is sure FedEx is not losing money to do Walmart a favour, adding: “I think they’ve made their calculations.”
Mr Haber said the integrator had partnered with Happy Returns, a specialist that aggregates returns – “an opportunity to streamline costs and processes”, he said.
He added he would not be surprised by more collaboration between the integrator and the retail behemoth.
“After it walked away from Amazon, FedEx aligned itself with Walmart. This is part of a broader strategy. We’ll see how close this will become,” he said.