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High parcel volumes vs. lack of storage: These are the challenges logistics is facing

The changes in online commerce in the current crisis are becoming increasingly clear. Many industries are experiencing declines, while retailers for food and consumer goods are experiencing a peak phase. Stationary retailers are developing omnichannel concepts in no time at all to secure their existence. Logistics and shipping services are playing a major role in the situation and are encountering a number of challenges.

In March, the fashion online trade achieved 35 percent less turnover than in the previous year, according to figures from the Bundesverband E-Commerce und Versandhandel Deutschland e.V. (bevh). Similarly heavy losses are evident in accessories and shoes, office supplies and leisurewear. By contrast, food orders grew by around 56 percent, medicines by as much as 88 percent, and wine, drugstore goods and handicrafts by a significant margin – in times of crisis, consumers clearly focus on everyday necessities. For logistics and parcel service companies like odc, this means strong growth in parcel volumes despite the general crisis in online trade. “We are seeing a significantly higher order volume from our customers who sell food, home sports articles and cosmetic products than just a few weeks ago,” says Christian Athen, CEO and co-founder of the fulfillment service provider odc.

Storage space is in high demand
Changing consumer behaviour has a strong impact on logistics: In particular, the occupancy of available storage space is becoming a challenge. Due to the turnaround in retail, some goods are hardly moved at all and containers with new goods are already waiting in the ports. This applies in particular to fashion, but also to goods destined for restocking in stationary retail, which is now being delayed. Storage space is currently more sought-after than ever. “In this situation, the advantages of scalable storage space become clear. Since April, we have been able to offer existing customers and new partners logistics capacities in our newly connected location,” says Christian Athens.

Amazon turned down some of the FBA customers in mid-March, as the shipping giant primarily stored goods that were in demand. Since the beginning of April, these measures have been relaxed again somewhat, but many sellers are dependent on how Amazon prioritises goods. As a consequence, odc also felt a rapid increase in demand from these retailers and brands. However, Christian Athen also emphasizes: “We make sure that we win customers who have good growth potential and are interested in long-term success for odc and not just act as stirrup holders in times of crisis”. At the same time, stationary retailers were forced to consider alternative sales channels and sometimes expanded their business model to include an online channel within a few days. It is therefore evident that the omnichannel concept, which has always been praised, proves its worth in crisis mode.

The employees’ health comes first
Due to the high volume of orders and bottlenecks at the borders, many shipping service providers are currently experiencing delivery delays. These companies are therefore required to be innovative in order to reschedule supply chains, manage delivery volumes and at the same time protect employees and customers. Hermes, for example, developed a contactless handover option within a few days and implemented it throughout its operations.

In the warehouses of logistics service providers, too, the current change means increased precautions for employees. Stricter hygiene measures such as regular disinfection of hands, working in smaller shifts and strict separation between them are essential. The previous flexibility in staff planning depending on order behaviour is thus considerably restricted. “Even if it takes out a little productivity here and there: The health of the employees and the maintenance of ongoing operations is our top priority,” says Christian Athen.

 

Published in Internet World Business.

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