Parcel-delivery company FedEx and others are facing a problem they never would have anticipated at this time last year: a shortage of delivery vans needed to deliver packages.
This is another of the effects of the coronavirus pandemic, and though it counts as one of the more benign effects, to be sure, it shows how much life has changed since the beginning of 2020, as different containment measures have led to explosive growth in online shopping. In fact, UPS, FedEx and others have seen demand for their services grow exponentially.
According to the Bloomberg Group, the closure of vehicle assembly plants earlier this year due to the pandemic has also helped create the current shortage of vehicles, all while more and more people are buying goods online and having them delivered to their door.
This has increased costs for companies like FedEx and UPS, which according to Bloomberg are urging the vehicle-leasing companies that supply them to buy as many vans as they can get their hands on.
Said Brendan Keegan, CEO of vehicle supplier Merchants Fleet, to Bloomberg, “If there’s a cargo van out there, we’re trying to buy it”. His company expects to have 15,000 vans leased and in service by the end of the year, more than double the 6,000 it had leased at this time last year.
FedEx is sending out assurances that the shortage will not reduce their ability to deliver packages, but Bloomberg reports that the situation is affecting their profit margins. FedEx company executive Steve Myers told Bloomberg the company has proposed to help its delivery contractors cover the cost of renting the surplus vehicles they would normally have to purchase during the holiday season.
This forecasted shortage couldn't come at a worse time as the Christmas shopping frenzy gets underway. Delivery companies will be dealing with a lot of pressure, as experts estimate that around 86 million packages will need to be shipped to customers between American Thanksgiving and Christmas. The problem is that it’s also estimated carriers will only have the capacity to deliver about 79 million packages, this according to the Wall Street Journal.
We contacted FedEx to find out if the situation was the same in Canada as in the United States. The company had nothing specific to mention regarding Canada or other specific market, but company spokesperson Chris Allen told us, “FedEx has experienced a surge in package volumes due to the pandemic and now the holiday season. We have the ability to flex our network during periods of peak activity and have taken steps to secure our ability to deliver the best possible service this season.”