We have reached that time again as global transportation networks deal with the peak volumes of the current holiday fulfillment period.
Today’s Wall Street Journal Logistics Report headline indicates that both FedEx and UPS are struggling to keep-up with the surge in holiday orders. Reading the report, one would get the impression that parcel transportation networks are struggling. Supply Chain Matters is of the view that this is just business as usual and should be expected. The true benchmark of performance is yet to come.
The WSJ report indicates that UPS has relocated hundreds of staff from headquarters and other corporate offices to help efforts at the carrier’s main shipping hubs. That is not unusual since this has been a practice of UPS in prior holiday focused quarters including last year. Further noted is that FedEx and UPS have both extended delivery windows beyond prior quoted times. That also occurred last year.
Further cited are on-time delivery stats from ShipMatrix Inc. indicating that on-time delivery rates for UPS Ground and FedEx Ground, adjusted for weather and delays fell to 96.3 percent and 96.9 percent respectively last week. Again, we believe that this should not be a big deal given current surge volumes and the occurrence of severe winter weather conditions across the U.S. these past two weeks.
What is probably more pertinent was that current online shopping data indicates that shoppers started earlier this season, with Thanksgiving and Black Friday holidays showing online volume higher peaks than previous years.
Let’s face it- we have reached an era of expected instant gratification brought about by online buying habits. Consumer patience for delay is short.
We agree with some industry experts that the deployment of corporate staff teams to operational hubs at this point may be a signal of concern for added chokepoints just prior to the Christmas holiday when last minute holiday shoppers exercise online purchases and expect delivery by Christmas Eve.
Of course, what is missing in the overall headline is the current delivery performance of Amazon which this year, has taken on more control for last-mile fulfillment requirements for Amazon Prime program members. Any firms tracking that specific statistic are going to have a high interest level among transportation industry insiders. Direct feedback from Amazon Prime members will be helpful as well. Our own experiences thus far indicated the program is meeting its delivery commitments.
The real headline last year, and again this year, is whether the traditional hub and spoke networks of both FedEx and UPS can adequately keep-up with current levels of holiday package surge and whether modified networks are in the cards for future periods. That will require more expensive investments in the light of Amazon’s deployment of its own logistics fulfillment network.
Bottom-line, the real performance statistics matter over the next two weeks and especially the period from December 22-24.