Online shopping surge could lead to holiday delivery delays

Online shopping surge could lead to holiday delivery delays
Delivery firms are warning customers not to leave shopping over the Christmas period too late, or risk missing out on deliveries, with many companies already working at full capacity before the annual holiday surge. (AFP)
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Updated 12 November 2020

Online shopping surge could lead to holiday delivery delays

Online shopping surge could lead to holiday delivery delays
  • Companies already at online capacity due to the coronavirus disease pandemic

NEW YORK: Retailers and carriers are preparing for an online holiday shopping surge that could tax shipping networks and lead to delivery delays.
FedEx and UPS are ramping up their holiday hiring while expanding their weekend operations and asking retailers to use their shipping network when there is more slack. And stores are pushing shoppers to buy early and are expanding services like curbside pickup to minimize the need for delivery.
For the last few years, many retailers had been using their own physical stores, in addition to their distribution centers, to fulfill online orders. But now they are designating some of those stores to handle even higher volumes. Best Buy, for example, converted space in 250 of its 1,000 stores this fall to manage online orders.
The moves come as most of the carriers have been at full shipping capacity for months as shoppers shifted their buying online during the pandemic.
“We are warmed up for what we’re calling the ship-a-thon,” said Brie Carere, chief marketing and communications officer at FedEx. “Like everything else in 2020, this is going to be an unprecedented peak season. We’ve actually seen three years of growth in e-commerce pulled forward. So we are expecting a ton of volume.”
Carole B. Tome, CEO of UPS, told analysts last month she expects “a pretty peaky peak.”
Amazon, which has been growing its own delivery network so it doesn’t have to rely as much on UPS and the US Postal Service, is nonetheless warning shoppers not to wait until the last minute to buy gifts. While the world’s largest online retailer delivers more than half of its packages itself, it still relies on other carriers to get orders to shoppers.
“It’s going to be tight for everyone and we will all be stretched,” said Brian Olsavsky, Amazon’s chief financial officer. “And it’s advantageous to the customer, and probably the companies, for people to order early this year.”
Satish Jindel, the president of ShipMatrix, which analyzes shipping package data, predicts 7 million packages a day could face delays from Thanksgiving to Christmas. That’s because he’s expecting a total shipping capacity for the industry to be 79.1 million parcels a day during the 34-day period, with 86.3 million packages looking for space. Last year, total capacity was 65.3 million packages with demand at 67.9 million packages a day.
Right now, Jindel is predicting delivery delays of one or two days for parcels.
US online holiday sales are expected to shatter previous records. Adobe Analytics, which measures sales at 80 of the top 100 US online retailers, predicts a total of $189 billion in online holiday sales, a 33% increase compared to last year. That’s equal to two years worth of holiday e-commerce sales growth shoved into one season.
But even with the online surge, overall holiday sales are expected to see only modest gains compared to recent years. Consulting firm Deloitte expects total sales, including online, to rise between 1% and 1.5% during the November through January period. That’s compared with a 4.1% increase last year for the November and December period, according to an analysis by the National Retail Federation. The trade group says it won’t be coming out with a forecast until this month given so much uncertainty.
Retailers can’t afford to upset shoppers with delayed deliveries or gifts that come after Christmas so they’re stepping up their game.
Kohl’s says it has tens of thousands of items on its website available for curbside pickup. The retailer doubled the number of drive-up parking spaces at its store locations to support increased demand. Likewise, Target has also doubled the number of parking spaces for its drive up services, to 8,000.
Meanwhile, carriers have added holiday surcharges to certain packages, a blow to retailers already struggling with higher costs during COVID. Jindel says the US Postal Service might be a good alternative for retailers now that it has gotten through the deluge of mail-in ballots during the elections. He estimates that the Postal Service’s temporary surcharges mostly range from 25 cents to 40 cents per package is considerably lower than $1 to $5 per package at major carriers.
“Our network is designed to handle temporary and seasonal increases in volume and we have the ability to deliver those additional holiday packages in a timely manner,” said Kimberly Frum, a spokeswoman at the US Postal Service.
For the holidays, FedEx is hiring 70,000 workers, while UPS is in the throes of hiring more than 100,000 temporary employees.
Lee Spratt is the Americas CEO for DHL eCommerce Solutions, a division that specializes in processing small packages for mid- to large-size shippers. He predicts online shopping to be up to 50% higher this holiday season compared to the year-ago period. The division has already been grappling with a 40% surge in online orders since the pandemic began.
It’s hiring 900 more permanent workers to its current labor force of 3,000. It also will hire 1,400 temporary workers, about the same as last year because the company is investing in more permanent workers instead.
In September and October, it also upgraded and some cases added new sorting machines in six key cities including Baltimore and Atlanta, in order to process more parcels.

Saudi Arabia anticipates 1 trillion riyal injection from 4IR technology

Saudi Arabia anticipates 1 trillion riyal injection from 4IR technology
Updated 24 min 34 sec ago

Saudi Arabia anticipates 1 trillion riyal injection from 4IR technology

Saudi Arabia anticipates 1 trillion riyal injection from 4IR technology
  • Artificial intelligence and smart cities will see Saudi Arabia rebrand as a global technology hub

RIYADH: Advanced technology from the Fourth Industrial Revolution (4IR) is expected to generate around 1 trillion riyals for the Saudi economy in new revenue streams, a senior minister said today.

The Kingdom will enjoy economic boosts from robotics, artificial intelligence, and wireless production models as it pushes for more smarter cities and infrastructure.

In his opening remarks of the Saudi 4IR conference, Minister of Communications and Information Technology Abdullah Alsawaha said that Saudi cities must keep pace with technological developments.

He told an audience at the two-day conference, being held at King Abdullah City for Science and Technology, that the Kingdom is building the most technologically advanced infrastructure in the new NEOM giga-project, which will be a global technology center.

The impact of the 4IR is expected to be massive, with non-oil gross domestic product anticipated to increase by more than 4 percent from 2017 to 2030, generating 1 trillion riyals in new revenues, Abdullah Alghamdi, the president of Saudi Data and Artificial Intelligence Authority (SDAIA) said in his opening remarks.

He added that SDAIA is working on developing customized platforms for each  city to accommodate their specific needs.

Saudi Arabia has invested heavily in digitizing its cities, with 60 percent of the Kingdom’s urban centers covered by 5G networks, said Haytham Alohali, vice minister of communications and information technology.

Gulf Islamic insurers face tough competition, pressure on profits – S&P

Gulf Islamic insurers face tough competition, pressure on profits – S&P
Updated 28 July 2021

Gulf Islamic insurers face tough competition, pressure on profits – S&P

Gulf Islamic insurers face tough competition, pressure on profits – S&P
  • S&P expects more capital raises mergers to improve profitability

RIYADH: Islamic insurers in the GCC may see profitability wane in the second half of 2021 as they face a tough competitive environment amid weak performance in some sectors hurt by the coronavirus pandemic, according to S&P Global Ratings.

Some smaller Takaful companies will need to raise capital or merge, particularly in Saudi Arabia and Kuwait, where losses have persisted, S&P credit analyst Emir Mujkic wrote in a report.

“Our outlook on the sector for the next 12 months remains stable,” he said. “However, given that risks related to the pandemic persist, we could take rating actions in the event of a sharp decline in asset prices, unexpected and severe technical losses, or governance and internal control failures.”

Takaful insurers recorded modest growth of about 1.5 percent in 2020 and about 1.0 percent in first-quarter 2021 according to S&P Global Ratings calculations.

The Saudi Central Bank (SAMA) in January reiterated the need for insurance companies to look at M&A deals since the sector was a key driver of the Kingdom’s economy and a pillar of the Financial Sector Development Program, one of 12 executive programs launched by the Council of Economic and Development Affairs to achieve the objectives of Saudi Vision 2030.

The sector has witnessed a number of agreements and mergers this year, including between Walaa Cooperative Insurance Co. and Metlife AIG ANB Cooperative Insurance Co., and between Al-Ahlia Insurance and Gulf Union National.

Profit in the Kingdom’s insurance sector, including conventional insurers, rose 96.1 percent in the first nine months of 2020 to SR1.32 billion, according to KPMG.

“Despite a recent material improvement in profitability in Saudi Arabia’s insurance sector, more than one third of insurers continue to report losses,” said Mujkic. “Pressure on solvency and certain regulatory incentives have led to a number of mergers in Saudi Arabia over the past year and we expect this trend to continue throughout 2021.”

A new insurance law in Kuwait that requires higher reserve requirements is due to come into force over the next year, putting pressure on small and unprofitable Takaful players in Kuwait, S&P said.

The pandemic did not only affect Islamic Insurance companies in the Kingdom, but also non-Islamic companies, and they are doing great efforts by attracting new subscriptions or new customers, to get a customer with a low risk level that will have a good profit return by the end of the year,” Faiz Alhomrani, a financial market analyst told Arab News.” Many companies and sectors have been greatly affected by the pandemic, thus it became very tough to collect mandatory premiums for these companies, which pressured insurance companies to put financial provisions for non-performing debts.”

Growth in the sector will be unevenly spread, with larger conventional insurers taking more of the gains, said Mujkic.

Saudi Arabia edges out Russia in Chinese oil market as high prices dim Urals demand

Saudi Arabia edges out Russia in Chinese oil market as high prices dim Urals demand
Updated 28 July 2021

Saudi Arabia edges out Russia in Chinese oil market as high prices dim Urals demand

Saudi Arabia edges out Russia in Chinese oil market as high prices dim Urals demand
  • Spread between Urals and Middle East benchmark is widest on record
  • India has also cut purchases of Russian oil

MOSCOW: Russia’s flagship Urals crude oil has mostly been used in Europe so far this year due to relatively low output and high prices, while Asian markets have shunned the blend, data showed on Wednesday.
As a result, Russia has lagged behind Saudi Arabia in China’s energy market, one of the world’s largest.
According to Refinitiv Eikon data, the port of Rotterdam, Europe’s biggest oil hub, received 9.7 million tons of Urals in the first half of this year, up from 7.3 million tons in the same period last year.
At the same time, supplies of seaborne Urals cargoes to China plunged to 1.8 million tons from 7.86 million in the first half of 2020.
This year, the spread between Brent — to which Urals is linked — and the Middle Eastern Dubai blend has reached an all-time high of more than $4 per barrel, making Russian oil uncompetitive in Asia.
India has also cut purchases of Urals, while South Korea and Thailand have completely stopped intake of the blend.
Some European countries, notably Finland, have also reduced purchases of seaborne Urals amid the move to greener economies.
Turkey, Bulgaria and Romania have kept inflows of Urals steady this year, while Poland and Germany have increased imports of the seaborne blend.
According to Refinitiv Eikon, the port of Gdansk in Poland imported 2.7 million tons of Urals in January-June, up from 1.7 million in the first half of 2020.
Seaborne supplies have also risen amid reduced flows via the Soviet-built Druzhba pipeline as some companies have failed to agree supply deals. For example, Poland’s Grupa Lotos has not extended a contract with Russia’s Rosneft.
The United States also increased imports of Urals to 500,000 tons in the first half of the year from 100,000 tons in the same period of 2020.
Some traders believe Russia will increase supplies of Urals as the OPEC+ group of oil producers, of which it is a member, eases production curbs.

Egyptians the biggest winners among Dubai property buyers

Egyptians the biggest winners among Dubai property buyers
Updated 28 July 2021

Egyptians the biggest winners among Dubai property buyers

Egyptians the biggest winners among Dubai property buyers
  • Dubai house prices were up 1 percent in the second quarter of 2021
  • 128 sales of homes worth over $5.45 million in the first half of 2021

DUBAI: Egyptians have been the biggest winners when it comes to buying property in Dubai over the last few years when currency fluctuations are taken into account, according to research by real estate consultancy Knight Frank.

While the overall Dubai market is 26.3 percent down from its peak, house prices were up 1 percent in the emirate during the second quarter of 2021, the report said. That’s the biggest quarterly gain since the summer of 2014, according to Reuters.

However, the value of properties over the last six years differs depending on the nationality of buyers, or the currency they paid in, with Egyptians and Pakistanis the big winners and Europeans and Jordanians the biggest losers.

“Egyptian pound purchasers for instance have seen their investments appreciate by an impressive 51.4 percent, while Pakistani rupee buyers are currently enjoying gains of over 12 percent,” Faisal Durrani, partner and head of Middle East research at Knight Frank, said in a press statement of the valuations for different currency buyers compared to 2015.

“And if we rewind further back in time to the heady days of 2007, Egyptian and Pakistani buyers would have seen their investments increase in value by a staggering 200 percent plus,” he said. “European buyers meanwhile would be looking at gains of 20.5 percent since 2007, while for British buyers, it would be nearer 68 percent. The flipside to the story is of course some of those who held off, or were unable to step onto the property ladder, relative prices are much more attractive today than they were in 2015.”

Knight Frank’s research found that for euro buyers a home in Dubai is now 32.3 percent cheaper than in 2015, followed by British sterling (19 percent cheaper) and Indian rupee buyers (14 percent cheaper).

Earlier this week, the UAE press was awash with reports of a $30 million sale of a villa on Palm Jumeirah, the most expensive ever sold on the manmade island. Moreover, research by Knight Frank showed there has been an increase in sales of high-end luxury homes in Dubai.

The data showed there were 128 sales of homes worth over 20 million dirhams ($5.45 million) in the first half of 2021, the highest level since 2015 when 137 deals were recorded and compared with just 75 last year and 71 in 2019.

“Rather than subdue super prime sales activity, the pandemic has accelerated it,” Durrani said. “Families are looking for larger homes, with more outdoor space and even room for a home office as many are hedging their bets on greater remote working going forward, echoing what we have been seeing elsewhere in the world. And what’s more, they are willing to spend more for the privilege.”

Gazprom to pay $412m in advance to use Saudi-built Bulgarian pipeline

Gazprom to pay $412m in advance to use Saudi-built Bulgarian pipeline
Updated 28 July 2021

Gazprom to pay $412m in advance to use Saudi-built Bulgarian pipeline

Gazprom to pay $412m in advance to use Saudi-built Bulgarian pipeline
  • Bulgartransgaz to use $278 million of proceeds to make advance payments to Saudi-led group Arkad

SOFIA: Russia’s state gas company Gazprom has agreed to pay 349 million euros ($412 million) in advance for capacity on the Bulgarian extension of the TurkStream gas pipeline, Bulgarian state network operator Bulgartransgaz said on Tuesday.
Bulgartransgaz said it would use 461 million levs ($278 million) of the proceeds to make advance payments to Saudi-led group Arkad, which built the pipeline for 1.1 billion euros.
Gazprom’s export unit Gazprom Export has agreed to pay upfront for booked capacity from July 1, 2021 until June 30, 2023, Bulgartransgaz said in a statement.
Bulgaria’s 474 km gas pipeline, which transports Russian gas from its southern border with Turkey to its western border with Serbia — providing a link to the Russia-backed TurkStream twin pipeline to Serbia and Hungary, became operational in January.
The Bulgarian gas network operator will also use the money to cover 65 million euros in loans to commercial banks.
Bulgaria meets most of its gas needs with supplies from Gazprom.