Ready or not, this week marks the traditional beginning of the holiday season, which will be a huge test for the last mile with a shorter holiday season – 26 days compared to 32 days last year – and forecasted record volumes.
FedEx expects to move a record 33 million packages this Cyber Monday and more than double its daily average package volumes for the following two Mondays, Dec. 9 and Dec. 16, as consumers’ weekend shopping habits lead to higher parcel volume early in the week, driving up residential delivery volumes.
UPS anticipates higher volumes on Mondays throughout the season. From Nov. 29 through Dec. 30, UPS expects to deliver an average of 32 million packages and documents per day – a 60% increase over the 20 million delivered on an average, non-peak day. The company also expects a shift toward next-day delivery will drive increased demand for its Next Day Air service that experienced strong growth of 21% year-to-date through third quarter, which will likely continue increasing throughout the most wonderful time of the year.
But what if that gift we pick out for a special someone does not make it under the Christmas tree? For many people, this was the situation back in 2013 when volumes overwhelmed delivery companies and in particular, UPS. For retailers, including Amazon, apologies were extended to customers in the form of gift cards. In its apology, Amazon called out UPS by expressing their disappointment as a “failure in the UPS transportation network.”
Since then, a mad dash has been underway with UPS and FedEx heavily investing in their networks to speed up the last mile and ensure such disappointments do not occur again.
UPS reports it has invested in automated facilities, which allow it to handle another 400,000 pieces per hour. FedEx also credits its investment in automation as an important factor in speeding up the last mile. But unlike UPS, FedEx has also built out large package handling capabilities to accommodate items like TVs and furniture. This includes facilities dedicated to sorting large packages, plus new handling equipment in more than 30 FedEx Ground stations. FedEx also expanded its FedEx Freight Direct, which offers delivery of large and bulky items that take extra time to process, such as furniture, TVs and exercise equipment, to more than 80% of the U.S. population’s residences and businesses.
Additionally, FedEx and UPS have expanded their relationships with various retailers to serve as drop off/pick up locations. By doing this, FedEx and UPS hope to reduce the number of residential deliveries, which are costly and time-intensive last-mile operations. FedEx’s network includes Dollar General stores and Walgreens whereas UPS has relationships with Michael’s and CVS, among others.
To further help with extra projected volumes this year, both companies have upped their hiring of seasonal workers and service offerings. FedEx plans to hire around 50,000 seasonal workers. Plus, through its Ground division, Fedex has begun offering seven-day residential service to the majority of the U.S. population.
Meanwhile, UPS plans to hire about 100,000 temporary workers. In an unconventional move, UPS has also asked its temporary workers to use their own cars to deliver packages. This move has upset the overwhelmingly unionized Ground employees and as such, the Teamsters have filed a grievance. Stay tuned for the verdict.
But, what about Amazon’s elephant in the room? Having dropped the elephant as an Express and Ground customer earlier this year, FedEx is no longer concerned about ensuring capacity for Amazon. However, UPS, which seems to have picked up extra Amazon volumes thanks to Fedex, will need to not only ensure capacity for Amazon but also provide it at the risk of other customers. Amazon, which also began building out its own last-mile delivery logistics network over the past several years, will also need to make sure operations hum without any hiccups this season.
Customers of all three companies have more logistics and delivery options than ever before and they will use this power to switch to another provider if there are any costly mistakes during the holiday season.