UPS, FedEx Already Struggling During Deluge Of Holiday Deliveries

One might think that after years of online shopping growing in popularity that major shipping carriers would finally be prepared for the Big Show, also known as the holiday season. And yet here we are again, heading into crunch time, and UPS and FedEx are having trouble keeping up with all those packages.

Though the shipping companies expected a lot of online orders as usual, they weren’t expecting quite this many, reports The Wall Street Journal. UPS had been expecting to handle a record of more than 700 million packages, a 14% increase from last year, while FedEx predicted a 10% bump.

To cope with the onslaught, UPS has relocated hundreds of employees from its headquarters and other corporate offices to pitch in at hubs that are overwhelmed with record demand, a person familiar with the matter told the WSJ.

Before the holiday season even started, both UPS and FedEx beefed up their seasonal staff and tried to prepare by extending some delivery windows, temporarily dropping delivery guarantees and refunds for some weeks, and stopped promising to deliver express packages by a certain time.

That didn’t help much, as analysts say on-time delivery rates for both carriers were down a bit in the weeks after Thanksgiving, compared to their average rates for the rest of the year: on-time delivery rates for UPS Ground fell to 96.3% last week, while FedEx Ground sank to 96.9%.

The good news? That’s up from last year’s average rates of 95% for FedEx and UPS during the same period in 2015, but down from the 98%-99% rate during the rest of the year, according to ShipMatrix Inc.

Air shipments weren’t as consistent either, with UPS Express delivering on time 90.6% of the time and FedEx Express delivering on-time 93.7%.

FedEx told the WSJ that the company is continuing to work closely with its largest peak customers and is increasing hours for some employees to meet demand, while UPS says it’s faced some issues this year that have held up some deliveries.

“A small percentage of packages have experienced some delay related to weather, wildfires or some operational challenges,” a UPS spokeswoman told the WSJ.

The source of all this trouble is, once again, e-commerce, which this year made up 25% of consumer spending on Black Friday and the two days leading up to it, a surge from last year’s 18% figure, and almost double the number for the same period in 2012.

Will all this trouble mean FedEx and UPS will be better prepared next year? Maybe, but as long as online shopping continues to grow in popularity, it will remain difficult to predict volume, one logistics consultancy expert tells the WSJ.

“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,” he said.

FedEx Expects To Handle A Record 317 Million Packages Between Black Friday And Christmas

As consumers continue to rely on online retailers to fill their holiday shopping needs, FedEx says this year will be busier than ever before: between Black Friday and Christmas, the company says it expects to handle 317 million packages. Which is a pretty impressive number — but what’s FedEx going to do to make sure those packages actually reach their destinations in time?

In projections released Monday, FedEx says its holiday shipments will be at a record-breaking volume, up 12.4% over last year.

Cyber Monday and its avalanche of online deals will be especially crowded, as will the first two Mondays in December: on those days, FedEx will deal with more than double the number of packages it handles on an average day, the company predicts.

Again, these are all big, fat numbers, but they’re numbers that could turn into a headache for FedEx (and other shippers) if it can’t handle all that volume — one only has to think back to 2013 and recall the millions of packages that didn’t arrive on time for Christmas.

To prepare for the onslaught, FedEx says it’s made $1.6 billion investing in its ground shipping service this year to increase capacity and add automation to its network. It’s also planning to hire 55,000 seasonal workers, 10% more than last year, to handle all those packages.

FedEx says it expects its projections to be on target, and that it’s ready to handle what comes.

“We’re very confident,” Patrick Fitzgerald, senior vice president of marketing and communications at FedEx told the Wall Street Journal. “There’s a relatively small number of e-tail and retail customers that drive the peaks during the holiday. Because we work so closely with them, not just this year, but every year, we can really understand some of the patterns.”