Mild Weather Eases Strain for UPS, FedEx in Record Holiday Rush
UPS Inc. and FedEx Corp. may get some help from the weather and better coordination with online retailers as they move into the final days of a record Christmas shipping season.
The busiest day for UPS is Dec. 22, when the world’s largest package-delivery company projects volume of 36 million pieces, or double its normal daily average. By Christmas Eve, UPS and FedEx project they will have handled almost 1 billion shipments for the holiday crush that began on Black Friday.
Finishing the peak season without a service misstep would be especially crucial for UPS, which disappointed some customers in 2013 when foul weather and a last-minute surge in online orders led to late gift deliveries. UPS worked to refine its procedures this year after adding too many temporary employees and facilities in 2014, only to see them left idle at times.
UPS is “in very good shape,” said David Huckeba of shipping consultant Intelligent Audit. “There are only four days left, and people are going to ship a lot by air and the air system is going to be tight. But that’s nothing out of the ordinary.”
UPS is the biggest carrier for the top 40 online retailers, making 63% of deliveries this year, followed by FedEx with 29%, according to StellaService Inc., which tracks e-commerce data. Average delivery times among those retailers has dropped to 3.9 days this year from 4.6 in 2013, StellaService said.
Mild temperatures were recorded across the United States on Dec. 22, including many record highs. There won’t be “much in the way of winter weather,” said Jim Hayes, a meteorologist with the U.S. Weather Prediction Center in College Park, Maryland. For the full week ending Christmas Day, the U.S. mountain states will be the only region dealing with the season’s typical snow and cold, Hayes said.
UPS and FedEx have had to impose shipping limits on some commercial customers, spokesmen said. This year, UPS has worked with retailers to submit orders on Saturdays instead of Mondays, letting the company process packages during the weekend and start moving them earlier, spokesman Steve Gaut said.
“The peak planning has worked well,” Gaut said. “For the most part, we’ve had successful operations and have been running at our plan.”
About 93.2% of UPS ground shipments were on time the week of Dec. 6-12, the most recent figures available, according to Satish Jindel, president of logistics firm ShipMatrix. That compared with 96.5% for the same week a year earlier, he said. The on-time rate for UPS express shipments for the week of Dec. 13-19 was 96.4%, down from 97.9%.
FedEx Ground was on time 95.3%, up from 94.8% a year earlier. The rate for the company’s air shipments was 98.7%, compared with 97.6%, Jindel said. The differences with 2014 aren’t material, he said.
“If my ground package had a scheduled delivery of Dec. 14 and it delivered Dec. 16, did it matter?” Jindel said. “Let’s be realistic. What did it matter? Consumers should stop whining and do their part of ordering early.”
A “procrastinator pop,” or sudden surge in last-minute orders, still could strain the system this week because Christmas falls on a Friday and online shoppers are getting accustomed to two-day delivery, said Scot Wingo, chairman of ChannelAdvisor, which helps 2,900 merchants sell goods through online marketplaces such as Amazon.com Inc. and EBay Inc.
The mild winter also could make shoppers complacent because the snow and ice storms that snarled deliveries two years ago aren’t top of mind, Wingo said.
“I’m worried we’re going to have a surge, and if we do, can we get the packages there in time for Christmas,” Wingo said.
Amazon isn’t having delivery problems, spokesman Scott Stanzel said. The retailer is offering two-day shipping through Dec. 22 and same-day delivery through Christmas Eve, he said.
UPS’ predicted holiday-season volume is 630 million parcels, and FedEx’s is 317 million. Each figure would be a record. FedEx, which operates the world’s largest cargo airline, counts packages moving through its system on any given day instead of the number of deliveries. The company handled a record 26 million packages Dec. 14 for the busiest day in its history.
“I’ve been around here for a lot of peaks,” FedEx Ground CEO, Henry Maier said on a Dec. 16 company conference call. “This is without a doubt the busiest one I’ve ever seen, and it has been consistent every single day since Nov. 30. And there’s no sign it’s going to let up.”
