Today, The Wall Street Journal disclosed what some online consumers may already be aware of- namely that UPS is currently struggling to keep pace with current holiday parcel volumes.
The report cites recent Ship-Matrix Inc. data analyzing millions of packages as indicating that on-time delivery rates for UPS Ground packages pegged to normal transit times fell to 91 percent last week compared to a 97 percent reading during this same period last year. FedEx’s numbers were further reported as lower than usual at an estimated 95 percent. However the WSJ observes that most of the current problems so far involve UPS because of its concentration on residential deliveries. A spokesperson for UPS confirmed to the publication that the carrier did experience some specific high impact areas driven by volumes that came in greater than the original peak plan for these locations. Added was that it is typical for retailers to ship more volume than expected, and that UPS dispatches management teams to specific centers impacted to help alleviate bottlenecks.
However, the themes of this report pointed to the 14 percent increase in shipments over the Thanksgiving and Cyber Monday holiday as a contributing factor. But that was over two weeks ago.
This author’s own personal experience had my head scratching. I had ordered online a new home thermostat from Home Depot. My order was processed overnight and the UPS tracking number indicated shipment origin as Laredo Texas. However, the transit time to a New England address was 10 days. Checking that status today, I observed that the last scan was 4 days ago, and that was a departure from Mesquite Texas. However, some of our other online orders via Amazon Prime have been delivered exactly to the one or two day expectation.
Obviously, parcel carriers are trying to avoid a repeat for being “thrown under the bus” in holiday deliver commitments. Yet, from our lens, another subtle undertone is one of tightly managing profitability needs for this crucial period. Here in the New England area, UPS sponsored television ads seeking to recruit temporary workers are still running, nearly two weeks prior to the Christmas holiday. That may be an indicator that the carrier may not have hired enough temporary workers to adequately respond to regional surge volumes. UPS has certain contracts with different online retailers regarding service levels and rates, and that may be in-play as well, given the reports of certain ship center choke points.
Further reported in the WSJ report was an industry observer indicating that UPS quietly changed the length of time it takes to deliver some packages during this holiday period. The carrier had placed a notice in its customer magazine indicating that it would extend delivery times on a ’’limited” number of ground packages with transit times of three days or more, by one additional day from November 23 through December 30.
The next two weeks are a critical period for parcel carriers and online providers, given this latest report of delayed deliveries. It remains to be seen if a surge of last-minute online orders places parcel carriers in a more difficult position. Both FedEx and UPS indicated prior to the holiday period that they would enforce shutting off last-minute volumes that were not already pre=planned with online providers.
This could get interesting.