A surge in US online shopping and more ‘free returns’ offers look set to overcome moderateoverall consumer spending and generate double-digit volume growth for UPS and FedEx this holiday
season.UPS is expecting to deliver 135 million packages around the world this week, peaking at 28million deliveries on Thursday (Dec 20), while a record 2 million return packages are expected togo back to retailers during the first week in January.
Overall, UPS is expecting parcel volumes across its global network to be around 10% higher thanlast year in the final four-week peak period before Christmas, with the company expecting todeliver 527 million packages during the period – 47 million or 9.8% more than last year’s record of480 million.
A UPS spokeswoman told CEP-Research that for the peak volumes it was not possible to make “apples-to-apples comparisons to last year, when Christmas Day fell on a Sunday”. She said averagedaily deliveries last year exceeded 25 million packages on five different days, two of which hadglobal volume topping 27 million packages.
UPS said the estimated 28 million packages expected to be delivered on Thursday compares withan average of 15.8 million packages per day delivered through the UPS system throughout the year. “The near 12 million package increase is larger than UPS’s nearest competitor’s average dailydelivery volume,” the company pointed out.
To meet the demand, UPS Airlines is adding more than 400 additional flights per day this week,and around 3 million express shipments will be processed within 24 hours through the UPS Worldportinternational air hub in Louisville, Kentucky.
The company stressed the growing importance of simple and efficient returns processes in theonline retail process, with “more retailers this year focusing on reverse logistics and offeringfree returns”. David Sisco, UPS retail marketing director, commented: “We’ve seen a 15% increase inretail returns over last year. UPS research shows that 63% of online shoppers review a retailer’sreturns policy before making a purchase.”
The busiest day for returns at UPS is expected to be 3 January 2013, when the companyanticipates that more than 520,000 packages will be shipped back to retailers in a single day.Returns are expected to top the 500,000 mark for several days in that first week.
The spokeswoman said: “We know that is being influenced by the growth of online commerce andsuccess that retailers are having with clear, transparent returns policies and the ease forconsumers to use preprinted returns labels included in their orders or to have links to returnslabels easily accessible to print.”
Rival FedEx is expected to give updates on its trading and volumes tomorrow (Dec 19), alongsidethe publication of its second-quarter financial results. But earlier this month, FedEx said itexpected 10 December to be its busiest day, when 19 million packages were expected to move throughthe FedEx network. It is expecting a record-breaking 280 million packages through its globalnetworks between Thanksgiving and Christmas, up 13% from 2011.
FedEx said the majority of its volume surge was from online shipping. “Increased e-commercespending is directly contributing to record holiday FedEx volumes and a 10% year-over-year increasein volume from 2011,” the company said. “In fact, online holiday sales are forecast to climb 17%compared to last year, according to eMarketer,” FedEx added.
The figures compare with a more moderate 4.1% overall holiday sales growth forecast by the USNational Retail Federation, and more than 13% online retail growth predicted by US digital-retailspecialist comScore. For the first 44 days of the November-December 2012 holiday season, comScoresaid $33.8 billion had been spent online in the US, marking a 13% increase compared with thecorresponding days last year. With two extra shopping days between Thanksgiving and Christmas thisyear, comScore said it expected the full season “to realise a growth rate well north of 13%”.
The Wall Street Journal (WSJ) last week reported on a “holiday season shipping war” between UPSand FedEx, with the two companies fighting ever harder for their share of the growing e-commercemarket, while B2B delivery volumes continue to struggle. It quoted Satish Jindel, president of SJConsulting Group, who observed that from 2000 to 2011, deliveries to consumers at UPS grew at acompound average growth rate of 7%, compared to B2B volumes that declined at an average rate of1.8%.
The WSJ observed that FedEx was telling consumers on its website and in its stores that “We (notUPS) deliver on Saturday”, and that it now offered deliveries in the evening or “by appointment”,arranged with a call ahead to the recipient. UPS, meanwhile, has been pushing its UPS MyChoiceproduct, which it claims now has 2.1 million subscribers. Registered users are sent digital alertsand updates about when to expect pending deliveries.
Meanwhile, the US Postal Service said that yesterday was expected to be its busiest mailing dayfor holiday cards and packages, when more than 658 million pieces of mail were expected to beprocessed. That compares to 528 million on an average day, representing an increase of more than25% in the average daily volume entering the system. USPS said its busiest days for delivery areexpected to be Wednesday for mail and Thursday for packages.
