Private companies have tackled the burgeoning supply chain crisis by investing in assets, expanding their workforce and looking into digital infrastructure ahead of peak season, while the Biden administration gives credit for solving the crisis and saving Christmas.
The crisis began to peak at the end of August 2021, as a number of COVID-19 issues, in addition to the consolidation over the past five years, created a series of cascading issues that created a global backlog. for shipping companies. and terminals.
About 90% of the world’s traded goods travel by sea freight due to significantly lower costs, but China has closed ports after discovering even one case of COVID-19 among the workforce. work. Initial forecasts pointed to a rough outlook for the holiday season, with some officials urging shoppers to get their gifts early or face a disappointing Christmas with empty shelves.
|FDX||FEDEX CORP.||253.82||+3.86||+ 1.54%|
|UPS||UNITED COLIS SERVICE INC.||212.19||+3.75||+1.80%|
|DPSGY||DEUTSCHE POST AG||62.35||+0.48||+ 0.78%|
But just days before the holidays, the Biden administration said it had “saved Christmas.”
“Good news,” White House press secretary Jen Psaki said, touting a New York Times report. “We saved Christmas, and that’s because President Biden recognized this challenge early on.”
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FedEx, DHL statements, and UPS at FOX Business painted a different picture: Companies invested in e-commerce, modernizing airline fleets, and using alternative methods for advance delivery.
Even the United States Postal Service (USPS) did not cite the Biden administration’s help, but instead said it launched a plan to update and expand capacity from March 2021 called “Delivering for America 10 Year Plan”. USPS told FOX Business that it plans to deliver some 12 billion letters, cards, and packages.
DHL told FOX Business it has a “constructive relationship” with the administration and “would welcome the additional attention the government is giving to improving the US supply chain.”
The pandemic itself presented significant logistical challenges, forcing delivery companies to adapt. Every business started making early plans because of the “peak season,” which in the delivery industry is the term for the holiday season between Thanksgiving and New Years.
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DHL CEO Mike Parra told FOX Business the company sees the 2021 holiday season as “the Super Bowl of high seasons” and has decided to hire 2,291 from July to avoid any delays.
“On the contrary, we have seen an increase in transit times, which has happened throughout the year,” Parra explained. “Specifically, from Asia and China to the United States. Other than that, no, we’ve seen some delays that we are aware of, that we have heard of, that we have received complaints about.”
These transit time delays largely resulted in only a few days of delay, largely due to the exclusive use of airline fleets to complete delivery.
As shipping lanes faced increasing delays, companies began chartering cargo planes for at least $ 2 million to transport products in September and October.
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“When you take a look at the pre-COVID 2019 period and the number of planes that flew both intercontinental and transcontinental compared to where it is today, there are obviously fewer airlines. commercial, number of flights, ”Parra said. “So we added the capacity ourselves to complement that.”
DHL increased its aircraft capacity by 12% from what it had in 2020. The company started experiencing issues in August as customers began stocking while concerns over the delta variant – and future variants possible – tormented plans for the vacation.
DHL primarily focuses on international shipments, leaving the bulk of domestic shipments to companies like UPS, FedEx, and USPS.
Workforce growth was a priority, with FedEx making a big hiring surge in September with its National Hiring Day on September 23. The company also added new sorting centers and facilities, as well as improved parcel handling and delivery capabilities to meet demand.
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FedEx has estimated it will end up delivering 100 million more shipments in 2021 than in 2019.
The Biden administration’s infrastructure bill, which was passed by the Senate on November 15, will help those same delivery companies continue to expand their capacity and infrastructure.
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The Department of Transportation, which has played a leading role in handling the shipping crisis, did not respond to a request for comment from FOX Business.