UPS and FedEx have played down reports that they are struggling to accommodate peak season holiday shipping volumes which have exceeded forecasts and led to delays in the delivery of millions of goods ordered online.
Yesterday, the Wall St Journal, quoting “people familiar with the situation”, reported that UPS has relocated hundreds of staff from its headquarters and other corporate offices to help at shipping hubs straining to handle record demand.
However, when contacted by CEP-Research, a spokesperson for UPS remarked: “We’re humming along fine with our deliveries and meeting our forecasts. It’s a busy and a banner holiday season. As we do every year, we may shift nearby personnel to an area where there was a variation to plan for the capacity. And we send teams to spot areas where there may be weather or the need for a few days of assistance, something we have done for a number of years.”
The spokesperson added: “We have people from Corporate and regional or local offices go out to assist in operations every year. It’s nothing new this year and is a great training and exposure opportunity for the finance or marketing manager or the person who writes code for systems.
“I was a delivery helper during peak season (many years ago!). We’re meeting our needs with staff, seasonal hires and the spot participation of some managers and supervisors.”
The mood was upbeat at FedEx too. In a brief statement seen by CEP-Research, the company said: “FedEx is proud to have achieved outstanding service during the first several weeks of the peak holiday shipping season. We prepare year round to be able to meet the surge in demand, and will continue to work closely with our large retail and e-tail customers during these final weeks leading up to Christmas to ensure our networks are prepared to continue to deliver the holidays.”
Meanwhile, the US Postal Service (USPS) told CEP-Research that it was “processing and delivering record volumes of packages.”
A spokesperson commented: “We plan all year for the holiday season. We’ve increased our network capacity by expanding transportation, hired more than 35,000 employees and are delivering packages in the morning and late afternoon, as well as on Sundays. We are keeping our network fluid.”
The report in the WSJ noted that already in advance of the busy holiday season, both UPS and FedEx had extended delivery windows on some routes, suspended delivery guarantees and refunds for certain weeks and stopped promising to deliver express packages by a certain time in some cases.
“Despite these measures, analysts say on-time delivery rates for UPS and FedEx were down slightly during the weeks following Thanksgiving, compared with their average rates during the rest of the year,” it underlined.
The report went on to highlight an analysis of millions of packages by software developer ShipMatrix Inc., which showed that on-time delivery rates for UPS ground packages, adjusted for weather and other unavoidable delays, fell to 96.3% last week while FedEx Ground’s hit 96.9%.
That was an improvement from about 95% at both companies on the same week in 2015, though on-time delivery rates usually average between 98% and 99% during the rest of the year, said Satish Jindel, ShipMatrix’s president who was quoted in the report.
Air shipments, which typically arrive by a certain time of day, were also more erratic, with UPS Express delivering 90.6% of express packages as expected and FedEx Express hitting their window 93.7% of the time.
Returning to the claims that UPS has relocated hundreds of staff to shipping hubs struggling to cope with this year's holiday volumes, the WSJ report quizzed Brandon Staton of logistics consultancy Transportation Impact LLC, who said the high number of employees sent into the field this year, still almost two weeks out from Christmas Eve, signalled that the delivery giant was bracing for a bumpy holiday season.
“If their supply chain is already starting to get clogged, the issue could compound on itself and we could experience a situation where people aren’t getting their packages for Christmas.”
Because e-commerce was growing so explosively, it is hard to know how much volume to anticipate, Staton added. “Until this trend shows any sort of stabilization, the carriers – I don’t care how good they are- are going to have a tough time trying to figure out where to allocate their resources in order to keep up with demand.”
In October, UPS announced that it expected its 2016 global peak season volumes to rise by more than 14% to over 700 million packages for delivery in 25 days between Thanksgiving and New Year’s Eve. This would be 100 million packages more than last year, when there were two delivery days fewer. The increase is 5% on a same day basis.
A record 13 of the 21 delivery days before Christmas, including December 19 – 23, could exceed 30 million packages daily, compared to the 18 million packages that UPS delivers daily during typical non-peak shipping periods.
To cope with this record volume, UPS has deepened planning and collaboration with major customers to ensure accurate forecasts, is ramping up sorting capacity, particularly in the USA but also in Paris and London, and aims to avoid last-minute delivery challenges by advancing pickups and processing ahead of peak delivery days.
“We are committed to helping make this year’s peak season a success for our shippers in all industries,” said Kate Gutmann, Senior Vice President UPS Sales and Solutions. “In addition to investing in temporary seasonal processing facilities, UPS is implementing new technology and automation systems to increase capacity, efficiency and flexibility within the operations. We have completed the full U.S. deployment for our sophisticated route navigation system, ORION, to reduce miles travelled even with more delivery stops and volume carried,” she added.
As for FedEx, last month it announced that it was anticipating “another record peak holiday shipping season, with each of the four Mondays during the season expected to be among the busiest in our company’s history.”
It forecast that volumes would be approximately 10% higher than last year for the total peak period.
“The rapid growth of e-commerce has driven significant shifts in demand over the last several years, and we are confident we are prepared to deliver another successful holiday for our customers due to our significant investment in our people, facilities, aircraft and technology,” it said.
