This year, while extraordinary for many reasons, has seen a phenomenal growth in online retail sales as a result of the ongoing Covid-19 pandemic. Due to social distancing measures and national lockdowns, an estimated £5.3 billion has been added to the UK ecommerce industry in 2020 alone.
With Christmas fast approaching and the pandemic preventing many from making a dash to the high street to buy presents, Santa aside, how will these parcels reach our doorstep in time?
The answer, in most cases, is third party logistics providers (3PLs). A 3PL provides outsourced logistics services ranging from storing to shipping all sorts of items. If you’ve ordered a new dress for your virtual Christmas party from your favourite clothing retailer, the chances are it’s made its way to you via a 3PL.
Thanks to the pandemic, the logistics sector has seen take-up of warehouse space hit record levels. In 2020 to date 3PLs have accounted for over 20 per cent of this, second only to online retail at almost 37 per cent.
While the supply chain is usually well equipped to deal with the Christmas rush, it was, perhaps, less prepared to handle the unexpected peak in March when the first lockdown hit. Panic buying saw the need for faster movement of stock through the supply chain, with product leaving the warehouse almost as soon as it arrived.
In the case of Christmas, most operations start to build stock reserves throughout September, which is then sent out to distribution centres from October onwards in order to reach the consumer in time for the big day. 3PLs know this, as it happens year after year, and they plan accordingly taking on additional staff to cope with the increased volumes both in warehouses and on the road.
This is why we saw a lack of loo roll on the shelves at the beginning of the pandemic, as the volumes moving through the shops in March were akin to levels seen at Christmas and some supply chains were just not equipped to deal with it. Social distancing measures also hampered efforts, as normally more hands can ease the burden and increase capacity.
This off-peak surge had a destabilising effect on many 3PLs’ finances. Those that were part of the food or essential goods supply chain saw bumper revenues, while those that were not saw operations grind to a halt. Although the second lockdowns have not seen quite the same level of panic buying, activity will have increased once again as restrictions prevent people shopping on the high street.
Despite everything, the real test is yet to begin with many retailers now spending millions to expand their ability to sell online. With many warehouse operations still feeling the effects of a long year, Christmas will see further pressure on supply chains to deliver both literally and figuratively.
If 2020 has taught us anything it is to expect the unexpected and this motto is likely to serve the sector well, especially with the potential for further lockdowns ahead of a vaccine. With Rudolph most likely under quarantine, the best present the industry can hope for is a very normal Christmas.
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