UPS, FedEx on-time delivery falls due to holiday package surge

Dive Brief:

Shippers United Parcel Service and FedEx are struggling to keep up with the record numbers of e-commerce orders this holiday season and are stretching delivery times on some routes, suspending on-time delivery guarantees and refunds in some cases, and no longer promising delivery times in other instances, The Wall Street Journal reports.
UPS in particular has brought hundreds of workers from its headquarters and other corporate offices to assist with operations at hubs facing the greatest difficulty, people familiar with the matter told the Journal.
Even so, on-time delivery rates have been slightly down since Thanksgiving compared to other times of the year for both shippers, according an analysis of millions of packages by software developer ShipMatrix cited by the Journal

Dive Insight:

Adjusted for weather and other unavoidable delays, on-time deliveries at UPS fell to 96.3% last week, while FedEx dropped to 96.9% — better than last year’s 95% for both companies, but still below their 98% and 99% averages during the rest of the year, according to ShipMatrix. These busy shippers’ slower delivery rates still seem high, but even incremental slippages mean that as many as hundreds of thousands packages aren’t being delivered as promised.

The challenge comes from the surge in holiday e-commerce. Cyber Monday sales reached a record $3.45 billion, well past a forecast for $3.36 billion and a 12.1% increase over the year-ago period, according to an Adobe Digital Insights report. Online shopping accounted for $36.5 billion in online revenue by the end of November, with 26 out of 27 days in November generating $1 billion each day, Adobe adds.

UPS and FedEx are haunted by the specter of the 2013 holiday season, when a confluence of bad weather and late orders (often spurred by delivery promises made by retailers) corresponded to a rash of late deliveries. Last year, UPS managed to eke out a successful holiday season despite a heavy surge in e-commerce, even though many orders were placed well after Black Friday, while FedEx had more trouble keeping up with orders, and scrambled after Christmas Day to deliver late packages.

Both FedEx and UPS earlier this year said that they planned to hire roughly the same number of seasonal employees during the holiday season as they did for the holidays last year; FedEx also went out of its way to say that it expected a record number of shipments during the holidays this year. A FedEx spokeswoman told the Journal that it’s working with its largest retail customers and boosting hours to meet demand.