Business & Investment

How Logistics Companies Deal With the Pandemic E-Commerce Boom

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The COVID-19 pandemic has pushed the long-standing growth of online sales and e-commerce fulfillment into a single 12-month period.

Faced with business closures, large rally restrictions, physical distance guidelines, and fear of catching the new coronavirus, consumers turned computers and phones into shopping malls with US merchants in 2020. Spent $ 86.1 billion online, up 44% year-on-year. , According to a Digital Commerce 360 ​​quote.

In fact, e-commerce accounted for more than 21% of total retail revenue last year, up from less than 16% in 2019, research firms reported. That increase of over 5 percentage points far outweighed the previous yearly increase in online shopping.

“People are bored sitting at home and have extra money that would have been spent on vacation,” said Kathy Morrow Robertson, an industry consultant who leads Logistics Trends & Insights.

According to Roberson, they spend the money at home, buying exercise equipment, office furniture, and equipment for working from home. Most of that spending goes online.

Kraig Foreman, President of E-Commerce, DHL Supply Chain Americas, said:

DHL Supply Chain Based in Westerville, Ohio Rank 7 It is on the Top 50 Transport Topics list of the largest third-party logistics companies in North America. The Contract Logistics Provider is a business unit of the Deutsche Post DHL Group based in Germany.

Sean Henry, CEO and co-founder of Atlanta-based supply chain visibility and e-commerce fulfillment company Stord, needs retailers and logistics providers to adapt quickly to dramatic changes in the market. So it wasn’t an easy transition.

First, companies needed to restructure their businesses to implement social distance and other health and safety protocols.

“Our business was not built for social distance,” Foreman said. “Before the pandemic, space optimization was so efficient that we tried to do a lot with as little space as possible.”

And while the virus was rampant, they had to deal with massive supply chain disruptions as the entire economy fell into a slump in the first months of the pandemic. For some businesses, fulfillment centers needed to help clients meet high demands as shoppers flocked to stores or started ordering online.

Other logistics companies had clients that had to be closed due to the blockade being initiated and wanted to develop e-commerce capabilities quickly.

At the same time, some companies have found that large inventories on the US coast have hindered their ability to replenish due to long delays at the country’s largest port.

In the process, they also had to adapt to the general increase in e-commerce demand.


“The increase in volume we see means we need to work differently than before. We can’t keep up with this activity manually,” said the new global contract logistics company. Malcolm Wilson, who will be the CEO of GXO Logistics, said. Following a planned spin-off from XPO Logistics Later this year. He is currently leading XPO’s European operations.

The split of XPO into two separate companies is expected to be completed in the second half of 2021. XPO will maintain a less than trucked cargo brokerage business while the logistics segment becomes GXO.

XPO based in Greenwich, Connecticut Rank 2 Before the planned spin-off, it was on the TT Top 50 list of logistics companies.

Another complex factor, according to Wilson, is that the surge in merchandise volume is reflected in the increase in shipments of individual merchandise, such as furniture and appliances.

“We need to work harder to make our warehouses more efficient,” he said. “Consumers don’t want to wait weeks or even days for a product to arrive. Organizations like XPO must be able to reduce lead times for large orders.”

Logistics and e-commerce fulfillment executives said pandemics show that companies need to quickly build capabilities to keep up with the changing business environment.

Agility is at the top of the list.

Craig Foreman, DHL.


“People who take certain actions this afternoon will soon hit the fulfillment supply chain,” said Foreman of DHL.

But agility isn’t just about making adjustments by wearing a hat, says Henry of Stord. It’s also important to make intelligent changes based on your data to understand where your products need to be for your customers.

Through all of this, companies are also expanding their reverse logistics business.

Greg West, Vice President of CH Robinson Worldwide Less than Truck Capacity and Head of Integration Center, said:

CH Robinson based in Eden Prairie, Minnesota. Rank 1 It is on the list of TT Top 50 Logistics Companies.

Amazon isn't on the Top 50 Logistics List, but it's a big player in the e-commerce space.

Amazon isn’t on the Top 50 Logistics List, but it’s a big player in the e-commerce space. (Chris Ratcliffe / Bloomberg News)

In the case of returns, the company must consider the value of the product and the cost of regaining it. Many will be liquidated, West said. For some items, many retailers simply instruct consumers to hold it and credit the cost.

As they adapted to changing demand and supply chain configurations, many companies realized that they were constrained by the capabilities and technical limits of their logistics partners, such as order management systems.

“If you’re a shipper and suddenly you can’t get your goods to market, that’s a big awakening call,” West said.

As a result, companies such as CH Robinson and Stord are investing in both capacity and technology to help clients deal with sudden bottlenecks.

CH Robinson is Roadrunner Transportation Systems Inc, just as the pandemic expanded to the United States last year. Acquired Prime Distribution Services for $ 225 million in cash. Prime provided a range of distribution, fulfillment and inventory management services to fill the gap in CH Robinson’s operations.

“We need to combine transportation and warehousing. If we can’t marry the business, it’s difficult to meet the requirements of large retailers,” West said.

An employee unloads a box at a UPS facility. UPS supply chain solutions are ranked 3rd in the Top 50.

An employee unloads a box at a UPS facility. UPS supply chain solutions are ranked 3rd in the Top 50. (UPS)

A five-year-old start-up, Stord is a fast-changing consumer shopping retailer by offering flexible logistics and fulfillment services, primarily by leasing warehouse space dispersed across the country. We would like to help you navigate the patterns. According to Henry, such an approach draws the brand out of the need to build warehouses across the country to meet consumer expectations for fast delivery.

“Our overall mission is to bring together the shipper’s cloud supply chain platform, both the physical logistics network and the software, into one platform,” says Henry.

He said retailers are striving to get the right amount of inventory as close to consumers as possible, and much of the industry is pulling in that direction. The Stord system allows shippers to use the data to rebalance goods nationwide and speed up shipments.

CH Robinson and other companies also offer demand planning and forecasting tools.

According to XPO’s Wilson, shippers are tackling a pandemic-led boom in e-commerce with multiple strategies.

“There are customers who just want to solve the problem with XPO. They provide us with data and we design the supply chain for them and run the warehouse,” he said.

The package travels along a conveyor belt within the Wal-Mart Fulfillment Center in Pennsylvania.

The package travels along a conveyor belt within the Wal-Mart Fulfillment Center in Pennsylvania. (Michael Nagle / Bloomberg News)

But some people want to outsource their warehouses because they don’t want to distract from their core business, Wilson said.

Regardless of the approach, the use of both hardware and software technologies has helped the industry cope with the surge in e-commerce.

Roberson of Logistics Trends & Insights said: “Many retailers are adopting cloud technology to know where their inventory is in real time.

This allows for better inventory placement and links between middle and last miles for delivery services.

According to Roberson, past holiday seasons show why that feature is essential. It speeds delivery to shoppers and provides accurate tracking information, alleviating consumer concerns.

The adoption of automated hardware is also accelerating.

XPO, one is Developing automation and robotics In the warehouse to increase productivity.

But that creates a challenge for XPO — designing a warehouse that blends both human labor and automation. According to Wilson, the robot is not yet able to gift wrap packages or take over all product picking operations to fulfill orders.

All efforts currently being made by the logistics industry to deal with the surge in e-commerce will be rewarded over the years to come, executives said.

“Many people won’t go back to their previous shopping,” Wilson said. “They are so happy to shop online that they never leave home.”

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How Logistics Companies Deal With the Pandemic E-Commerce Boom How Logistics Companies Deal With the Pandemic E-Commerce Boom

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