Wednesday, February 5, 2014

No Free Shipping

Parcel carriers deal with fallout from missed Christmas deliveries.

UPS proved this season there’s no such thing as free online shipping. The parcel giant said an unexpected surge of last-minute Internet gift orders during a compressed peak holiday season strained its delivery system, leading to fourth-quarter earnings of about $1.25 per share, or 18 cents below Wall Street estimates, reported Transport Topics.

On Dec. 23, two days before Christmas, UPS said it delivered more than 31 million packages, a 13 percent year-over-year increase and a figure that includes 5 million packages delivered to post offices for final delivery by the U.S. Postal Service. The three parcel delivery outlets — UPS, FedEx and the Postal Service, which control 95 percent of the market — make their shipping data public, so we know they handled a huge spike in volume in the week leading up to Christmas. Some 73 million parcels were delivered on Dec. 24 alone, compared to 37 million on a normal day.

UPS was widely, and some say unfairly lambasted in the media for late deliveries over the holidays. Delays occurred after retailers saw an unprecedented surge in last-minute online shopping encouraged by deep discounting and promises — made by some retailers — of on-time Christmas deliveries.

UPS had to hire 30,000 more temporary workers than expected to handle the surge in last-minute package shipping, bringing a total of 85,000 temporary employees on board this holiday season. Still, millions of packages arrived late, and consumers could use the FedEx or UPS online tracking technology to watch in real-time as their packages backed up in the system’s logjams.

The small package carriers have a remedy in mind – who would have guessed? – a rate increase. By next holiday season, there may well be a premium for peak time deliveries, similar to the
similar to the airlines’ fare structures. Merry Christmas. 

Kirk Shearer
1-800-989-0054 x103

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