Retailers already fear U.S. holiday ‘shipageddon’; now here come vaccines

imageStock Markets3 minutes ago (Nov 24, 2020 05:55PM ET)

(C) Reuters. FILE PHOTO: The word “COVID-19” is reflected in a drop on a syringe needle in this illustration

By Lisa Baertlein

LOS ANGELES (Reuters) – Deliveries of holiday gifts purchased online at major retailers could get delayed by something far more critical – COVID-19 vaccines.

Pharmaceutical companies including Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) as early as mid-December could begin sending inoculations to U.S. healthcare workers and nursing home residents.

FedEx (NYSE:FDX) and United Parcel Service (NYSE:UPS) could make space for those shipments on cargo planes by bumping off packages from Amazon.com (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT) and other retailers.

“FedEx is prioritizing vaccines,” company spokeswoman Bonny Harrison told Reuters.

While vaccines could displace some FedEx Express air shipments, they will not affect the separate FedEx Ground network that depends on trucks and delivers the majority the company’s holiday volume, Harrison said.

UPS, without elaborating, said it is prepared for holiday and vaccine shipments. UPS and FedEx are transportation providers to the federal government’s Operation Warp Speed vaccine project.

The additional cargo could cause problems for retailers who were already worried about a year-end “shipageddon” in the United States, where peak holiday demand and a pandemic-fueled surge in online orders of everything from food to furniture risk overwhelming delivery networks.

During the peak holiday season, many more products use air versus ground transportation, said Alan Amling, distinguished fellow at the University of Tennessee’s Global Supply Chain Institute.

The vaccine is “going to strain the industry, but when it comes to the trade-offs, I’ll take the vaccine,” said Amling, a former UPS executive.

“It could not start at any worse time,” said Satish Jindel, president of ShipMatrix, a delivery tracking and management firm. He does not expect impatient shoppers to give the carriers a blanket pass for putting the nation’s health before their last-minute holiday gifts.

“Seeing how American consumers are handling the recommendations for safety during the pandemic, they will be more upset about their Christmas online orders being delayed,” Jindel said.

Retailers like Target and Best Buy launched Christmas promotions before Halloween, the earliest ever, to spread deliveries of online orders across a longer time frame. Those and other projects are designed to prevent networks from buckling when demand spikes.

“This would include vaccines that may be approved for distribution during the holiday peak season,” said Mike Parra, chief executive for DHL Express Americas, a UPS and FedEx rival. Melissa Dorko, 41, and her husband are ordering holiday gifts weeks earlier than usual this year.

“We are never this buttoned up,” said Dorko, a mother of three who used to be a last-minute Christmas shopper on Amazon.

Retailers already fear U.S. holiday ‘shipageddon’; now here come vaccines

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