UPS, FedEx urge retail sanity at peak season

  • October 10, 2014
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Following last holiday season’s nightmare, which ended with 2 million express parcels being delivered after their guaranteed arrival date of Dec. 24, the two largest express companies, UPS and Fedex Express, are asking the nation’s retailers to hold “last-minute” sales earlier in the month and not promise so much overnight delivery just before the Christmas holiday.

In 2013, about 73 million parcels managed to be delivered on Christmas Eve, but severe weather and an explosion in e-commerce activity caused an enormous logistics headache that resulted in many angry customers, according to estimates by logistics software firm ShipMatrix. UPS reportedly had to pay $50 million in refunds for missing deadlines, saying that more than 70 national retailers were offering guaranteed next-day delivery for purchases made up until 11 p.m. on Dec. 23.

To prevent this from happening again, the Wall Street Journal reports that UPS and FedEx have been contacting retailers this fall and urging them to stop offering free overnight shipping as late as Dec. 23, and to stagger their holiday sales on a regional basis so there is less pressure on cargo carriers simultaneously across the country.  Otherwise, the carriers said, they can no longer guarantee on-time delivery as late as Christmas Eve.

So far, the response from national retailers has been lukewarm. The Journal reports that Seattle-based Nordstrom has agreed to roll back the deadline for its next-day guarantee for shipments made on Dec. 23, in exchange for UPS adding cargo flights on the 22nd and 23rd. But the deadline was only moved back three hours, from 3 p.m. to noon.

Macy’s told the Journal that it has expanded areas in each of its 800-plus retail stores for in-store pickup of online orders; last year, the chain only had such service in 10 of its locations. However, Macy’s refused to change its noontime express delivery deadline on Dec. 23. J.C. Penney also refused to change its policy of guaranteeing standard Christmas Eve delivery as late as Dec. 20, two-day shipping by 3 p.m. on Dec. 22 and overnight delivery up until 3 p.m. Dec. 23.

FedEx said it is also trying to help by increasing its seasonal staffing levels by 25 percent, spending more than $1 billion to expanding capacity and clearly informing retailers about what delivery windows it can and can’t handle, which can help the stores plan late-season sales in a more realistic manner. UPS is spending $500 million to add 6,000 loading docks for its delivery vans and boosting its seasonal hiring by a whopping 73 percent.

To add to the pressure-cooker, Thanksgiving will fall late in the month (Nov. 27), so the unofficial shopping season will be compressed, as it was in 2013, and retailers will want to extend sales as late as possible. Plus, a study by Deloitte LLC said that retail sales in this recovering economy are expected to rise by 14 percent over last year.

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One thought on “UPS, FedEx urge retail sanity at peak season

  1. If the retailers don’t exercise better common sense by offering more relief than two or three hours of deadline time, then they will soon discover that there are more unavoidable variables that have the capacity to devestate their customer loyalty base, e.g. mechanical delays, weather, pilot scheduling, and routing of ad hoc flights. When the pressure of a compressed shopping season and elevated flight schedules are pushed to the physical limit, something in the system has to give.