David G. Ross, Global Transportation and Logistics Research, Stifel

https://stifel.com/
Jan 8, 2021, 9:20 AM EST
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David G. Ross, Global Transportation and Logistics Research, Stifel

While -e-commerce traffic certainly took a big step forward in 2020, most of that shift is likely to remain, even as businesses reopen and people go back to shopping in stores again. In talking to UPS, FedEx, and others, we’re hearing that e-commerce growth was essentially fast-forwarded about three years due to the odd chain of events we saw in 2020. And when you’re talking about e-commerce, you’re talking about high expectations from customers for delivery speed. This means more air freight, especially if goods are produced far away. It also means more LTL shipments for replenishment of inventories at the warehouse, as sellers need to make sure inventory is always in stock and can’t wait anymore for, say, one truckload per week to restock everything. While many companies were dealing with inventories that were too low the last few months, going forward, we believe the trend should be to have a little more cushion. This will be facilitated by the trend of companies locating product in smaller warehouses closer to consumers, which will require inventory to be spread out more than in the old model of fewer, bigger warehouses.