Warehousing & Fulfillment

Optimize Warehousing to Overcome Carrier Pickup Limits

Warehousing & Fulfillment
October 5, 2021
8 min read

Carriers will undoubtedly enforce pickup limits on ecommerce shippers this holiday season. Learn how distributed warehousing can help SMB’s increase their carrier pickups to meet holiday delivery expectations.

The ecommerce surge in 2020 had a ripple effect across every aspect of the retail industry. Merchants of all sizes had to act fast to launch or optimize direct to consumer (D2C) sales channels as brick-and-mortar store traffic plummeted. Our 2020 merchant survey data revealed that 75% of merchants had to pivot their sales strategy and that 35% actually opened on online storefront for the first time in response to 2020 shutdowns. 

On the fulfillment side, warehouses had to restructure their operations to accommodate the record volumes of small parcel orders, and last mile carriers were inundated by record levels of demand. Even Amazon, who prides itself on setting the bar for customer service, had weeks-long shipping delays and limited FBA (Fulfillment by Amazon) inbound shipments to products deemed “essential”. 

This record growth, paired with a holiday shopping season that had for years been trending towards online shopping, precipitated what journalists started calling “Shippageddon”. Carriers were projected to be over capacity by 7.2 million packages per day last year, and ecommerce sellers reported record levels of holiday demand.

What Is a Carrier Pickup?

A carrier pickup is the process of a last mile carrier picking up packages from a centralized hub such as a fulfillment center. With a limited number of available delivery vehicles and drivers, all major carriers were forced to give high-volume shippers like ecommerce merchants a maximum number of packages that could be picked up for delivery each day. 

This meant that many merchants could not get their shipments out of the door in time to meet holiday shipping expectations, no matter how quickly they fulfilled their orders. Business Insider reported that In the case of one small business, their carrier would only pick up 4% of their packages ready to be shipped on a single Saturday.

Our merchant survey data showed that this was not an uncommon experience for merchants last year.

  • 23% of merchants said they are concerned they won’t be able to meet consumer expectations for 1-2 day delivery this holiday season.
  • 20% said they fell short of meeting 1-2 day delivery expectations in 2020.
  • 17%  reported missing 2020 holiday delivery guarantees due to carrier pickup limits.

Merchants should expect carrier pickup limits again this year from all major carriers. Carriers are certainly more prepared for the 2021 holiday season, with UPS hiring 100,000 seasonal workers and adding 2 million square feet of additional sorting space to ramp up for holiday ecommerce volume. However, between near year-round levels of peak season demand and ongoing labor shortages, carriers are still expecting to be over capacity by 5 million packages per day this year.

Why Are Carrier Pickup Limits Necessary? 

All told, the four major carriers (UPS, FedEx, Amazon, and USPS) delivered more than 3 billion packages over the course of the 2020 holiday season, a 24% increase over the previous year. The largest carrier, UPS, has a history of reliable on-time delivery. End customers have a high level of expectation from UPS deliveries. In order to meet those expectations during the busy holiday season, UPS must limit the number of packages it allows into its network.

The advantage to merchants is that if they are able to optimize their fulfillment model to increase their daily carrier pickup limit from a trusted carrier like UPS, they can have confidence that their packages will meet holiday delivery promises. Even with record holiday volume in 2020, UPS remained the number one carrier for on-time deliveries.

How Can SMB’s Increase Their Carrier Pickups?

Carrier pickup limits are usually set according to average shipping volume. Carriers will often give shippers a percent increase on their average monthly shipments for the holiday months. The limits are set per pickup location, so merchants fulfilling from multiple distribution centers will have individual limits set on each pickup location. Merchants fulfilling from a single location will be limited to the carrier pickups they are allotted at that single location.

Some SMB’s may feel that they don’t have enough inventory to adopt a multiple DC model. By diluting their inventory they may lose negotiating power and have a hard time attracting the attention of top-tier service providers. However, Ware2Go’s model of on-demand warehousing, aggregates the inventory of multiple merchants in order to achieve better rates and SLA’s with large 3PL’s and fulfillment centers. 

The on-demand approach to distributed warehousing allows merchants of any size to dilute their inventory, which not only increases their daily pickup limit but also enables affordable 1- to 2-day ground shipment to meet consumer expectations for delivery speed.

Looking for a distributed warehousing solution? Reach out to one of our fulfillment experts.

How Ware2Go Delivered 12,000 Backlogged Orders in Time for the Holidays

During the 2020 holiday season, an ecommerce brand aggregator with significant seasonal holiday demand found themselves severely limited by their daily pickup limit of one truckload per day from their single distribution center. Their daily order volume was quickly out-pacing their shipping limit. In fact, just weeks before the holidays, they found themselves with a backlog of 12,000 orders unable to be picked up and at high risk for missing holiday delivery promises.

They learned that Ware2Go’s network of over 30 warehouses had capacity to process their backlogged orders. By distributing their inventory to 3 additional facilities, they gained an additional 5 truckloads of pickups per day. In a matter of two weeks, all of their backlogged orders were processed and delivered, and all of their customers received their packages in time for the holidays.

How to Ensure On-Time Delivery with Holiday Shipping Limits

In addition to distributing inventory to allow for more carrier pickups, merchants can take the following steps to ensure that customers have the best possible delivery experience in spite of capacity constraints.

  • Encourage shoppers to purchase earlier. Have an aggressive marketing campaign early in the holiday season and remind customers to make their holiday purchases early. This will help spread out demand to more manageable levels throughout peak season.
  • Prioritize forecasting. Accurate demand forecasting feeds efficiency all the way down the supply chain. Merchants who know ahead of time that their daily order volume will outpace their daily shipping limits can plan ahead to distribute their inventory accordingly.
  • Advertise order cutoff dates. When carriers announce their holiday shipping cutoffs, communicate them clearly with your customers to create a sense of urgency and give shoppers every possible chance to get their orders in on-time.
  • Position inventory in high-volume regions. Carriers rely on economy of movement to ensure on-time delivery. Merchants should position their fast-moving inventory in strategic regions where carriers are likely making more pickups. With Ware2Go’s flexible model, merchants can even move their off-season inventory to lower-volume regions to make room for their seasonal products in more favorable locations.

A Flexible Solution

With Ware2Go’s flexible contracts, merchants pay only for the storage space and labor they need when they need it. Merchants who partner with Ware2Go to accommodate holiday order volume aren’t charged premium holiday rates or locked into long-term contracts at peak season volume. If you’re looking for a flexible solution to meet ecommerce delivery expectations this holiday season and beyond, talk to one of our fulfillment experts today.

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