Federal stimulus checks of $1,400 could be landing in Americans’ bank accounts by next week. It won’t be long before some of those dollars are recycled into online orders and e-commerce fulfillment companies see a spurt in volume, logistics experts say.
The U.S. House of Representatives on Wednesday passed the $1.9 trillion COVID-19 relief package and President Joe Biden says he will quickly sign it into law.
Individuals earning up to $75,000 and couples earning up to $150,000 are eligible for full direct payments. Individuals get an additional $1,400 check for each dependent claimed on their tax returns.
If history is any indicator, many people are likely to start spending some of those one-time cash payments at online retailers.
The CARES Act was enacted on March 27, 2020, and $1,200 direct deposits for eligible persons started to arrive on April 13.
In the final week of March 2020, parcel volumes increased about 10% from the same period in 2019, coinciding with increased lockdowns in the U.S. The pace picked up to 16% during the week of April 5, increasing to 30% during the week of April 12 and spiking 55% during the week of April 19, according to data compiled for FreightWaves by Pittsburgh-based ShipMatrix Inc., which helps companies manage their parcel transport spending.
Parcel volumes, which are closely tied to e-commerce sales, stayed at 40% during the weeks of April 26 and May 3 before tailing off to 20% by the end of the month, the research showed.
“The huge spike was a combination of stay-at-home orders and stimulus payments,” ShipMatrix President Satish Jindel said.
E-commerce sales also increased shortly after the Treasury Department began issuing payments of up to $600 for qualified individuals on Dec. 29 as part of the second COVID aid package.
SEKO Logistics, Itasca, Illinois, has been developing a plan to deal with the expected flood of new packages from the latest round of stimulus checks.
“The last time stimulus came out, the e-commerce orders doubled in days. People may use this money to buy something for themselves,” Rick Lee, SEKO’s chief operating officer for North America, said during a briefing with reporters last month about ongoing supply chain challenges. “And then it was a smaller stimulus. Now, with a large potential stimulus coming, our orders will surge within days.”
Jindel said parcel and less-than-truckload carriers should also experience a bounce in shipments. FreightWaves’ SONAR data also shows jumps in truckload volume soon after the government disbursed two previous stimulus payments. And many products ordered online are made overseas in China and other countries, so logistics service providers can expect another wave of cross-border shipments entering a transportation system that is already straining with long ocean and air backlogs.
COVID has added many workplace challenges for e-commerce warehouse operators like SEKO. An extremely high number of orders is matched by the need to limit the number of people in the building picking orders to keep everyone safe from infection. And parcel carriers are making less frequent pickups at distribution centers.
Lee said warehouse space is extremely difficult to secure in markets such as Southern California. SEKO has significantly increased its facility footprint in the past year and is closing on leases in weeks rather than months to keep up with retail demand.
Logistics real estate developers report tight warehouse capacity and rising inventory levels. The vacancy rate in the U.S. is extremely low, at 4.8%, putting upward pressure on rents. There is competition for limited space and a rise in build-to-suit projects for specific customers.