Tis Not the Season To Put Off Shopping

Despite the inexorable - and obvious - growth in ecommerce, fueled in part by the 'crack cocaine' of free shipping, UPS and FedEx are having a hard time meeting demand. They have invested in new systems and hubs but volume keeps outpacing their planning models - and there are only so many people available and willing to take on seasonal work.

The result is that holiday shoppers who wait  on the assumption their last minute purchases will arrive in time may be disappointed. JL

Erica Phillips and Jennifer Smith report in the Wall Street Journal:

UPS expects to handle a record of more than 700 million packages between Thanksgiving and the end of December this year, up 14% from last year’s all-time high. FedEx expects a 10% bump. Both say demand during the holiday season can double their volume. Because e-commerce is growing so explosively, it is hard to know how much volume to anticipate. Until this trend shows any stabilization, the carriers are going to have a tough time trying to keep up.
United Parcel Service Inc. and FedEx Corp. are straining to keep up with holiday shipping volumes that have blown past expectations, delaying the delivery of some of the millions of online orders shoppers have placed since Thanksgiving.
UPS has relocated hundreds of staff from its headquarters and other corporate offices to help at shipping hubs struggling to handle record demand, according to people familiar with the situation. 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.

According to an analysis of millions of packages by software developer ShipMatrix Inc., on-time delivery rates for UPS ground, 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. 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.
A FedEx spokeswoman said in an email Monday that the company is continuing to work closely with its largest peak customers and is increasing hours for some employees to meet demand.
Both companies handle millions of packages on their busiest days, so even a small drop can mean tens or hundreds of thousands of customers receive their shipments late.
Parcel carriers’ logistics operations are being tested by the surge in web orders at the holidays, which has grown rapidly over the past several years. This year, e-commerce accounted for 25% of consumer spending on Black Friday and the two days prior, up from 18% last year and nearly double the figure for the same period four years ago, according to First Data Corp.
UPS in November said it expected to handle a record of more than 700 million packages between Thanksgiving and the end of December this year, up 14% from last year’s all-time high. FedEx Corp. expects a 10% bump. Both companies say daily demand during the peak holiday season can reach double their average daily shipment volume.
As the volume of packages surges beyond forecasts at some of the carriers’ shipping hubs, it is testing new systems meant to smoothly handle the holiday rush. Both UPS and FedEx added dozens of satellite sorting facilities and invested in automation to process more packages faster. Both carriers want to avoid problems of the magnitude they faced in 2013, when bad weather and a rush of last-minute shoppers ordering online resulted in millions of packages arriving too late.
Neither company has seen anything like the 2013 traffic jam this year, though many customers have experienced delays of a day or two.
Last week Michael Howard, owner of a small Jefferson, Ga., company that prints commemorative sports balls, sent two footballs via UPS Ground to Texas for a high-school team banquet. The package should have arrived Thursday, Dec. 8, Mr. Howard said. But on Friday he discovered the estimated arrival date had been changed to Monday—too late to make the banquet that Sunday.
“It’s frustrating when I bend over backwards to meet a customer’s deadline,” Mr. Howard said. “Just because there’s Cyber Monday, I have to take a back seat?”
A spokeswoman for UPS said the carrier has faced various challenges this year, which have held up some deliveries. “A small percentage of packages have experienced some delay related to weather, wildfires or some operational challenges,” UPS spokeswoman Susan Rosenberg wrote in an email Monday.
As in past years, UPS is moving personnel—often managers from headquarters—to busier locations, Ms. Rosenberg wrote.
Those staff may handle tasks such as sorting, loading and unloading trucks, shuttling additional packages to drivers on delivery routes and occasionally delivering packages to doorsteps, people familiar with the matter said.
However, the high number of employees sent into the field this year, still almost two weeks out from Christmas Eve, signals that the delivery giant is bracing for a bumpy holiday season, said Brandon Staton of logistics consultancy Transportation Impact LLC.
“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,” Mr. Staton said.
Because e-commerce is growing so explosively, it is hard to know how much volume to anticipate, Mr. Staton said.
“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.”