Last year’s holiday shopping season could be described as “rough.” An estimated two million packages were delivered late, which really doesn’t make for a happy customer. The reasons were two-fold. First, there was a huge jump in last minute orders that shippers were simply unprepared for, and therefore were unable to get out on time. Second, horrible weather. The weather made shipping even more difficult than normal, and pushed back delivery timeframes even for those packages that were ordered on time.
Shippers, and retailers, have vowed not to let 2014 fall victim to the same problems. There has been advanced planning going into this holiday season. The major shipping carriers (UPS, FedEx, and USPS) have announced plans for how they will combat the busy holiday season. Amazon, which has traditionally partnered with UPS, has made some announcements of their own to ensure that last year’s problems do not happen again.
UPS is spending a reported $500 million on improvements for the holiday season. UPS has announced that it will hire up to 95,000 seasonal workers to match the demand of delivering an estimated 585 million packages in December alone. The company has bolstered its capacity by preparing what it calls “mobile delivery villages,” which are modular facilities that can expand existing shipping centers. Additionally, the company is adding “Black Friday” as a full operating day, allowing for more efficient handling of deliveries.
FedEx has also announced plans to invest in logistical improvement as part of the holiday rush. The company is looking to invest $1.2 billion in its ground-shipping network in its current fiscal year. The majority of this investment is geared towards increasing capacity and automation, including the use of “enhanced visibility technology” to improve tracking abilities of the packages. FedEx will also hire 50,000 seasonal workers for the upcoming holiday season. With so much of last year’s issues blamed on the weather, FedEx employs 15 full-time meteorologists in its global operations control center who help the company avoid weather-related delays.
The United States Postal Service (USPS) has introduced two components to its holiday plan. The first, is the announcement that it will deliver packages 7 days a week starting November 17, and continuing through Christmas. While Mondays have typically been the busiest day for package deliveries, adding Sunday deliveries will help to alleviate some of the congestion. While the USPS has tested Sunday delivery with Amazon, this move will also allow it to deliver packages shipped from individuals, not just from retailers. The second component to the USPS plan is to enable “click-n-ship.” This feature allows customers to ship packages when it is most convenient for them. The web link offers customers the ability to order boxes, get price quotes, print postage, and schedule pick-ups through the USPS. Combined with Sunday deliveries, this feature can be a major factor in ensuring on-time deliveries around the holidays.
Amazon has also made some plans to combat last season’s difficulties. First, the company is hiring an additional 80,000 season workers, which is a 14% increase over last year’s figures. Amazon has also opened additional sortation centers for direct shipping. These centers collect parcels from the fulfillment centers and sort them by ZIP codes for delivery to local post offices. The sortation centers help to eliminate the company’s dependence on UPS and can help the flow of packages. Add this to the company’s private fleet and new taxi delivery service, and Amazon has many methods for holiday deliveries.
While the shipping battle has begun, and retailers try to entice customers to their e-commerce stores, there is one potential looming problem for the holiday season: port congestion in Los Angeles and Long Beach. There still is not an agreement between the unions, and both sides are calling foul. The stalemate has reached a critical point with accusations of work slowdowns contributing to the congestion. Some container ships have been anchored since late October. While these goods should be on trucks rolling out to retailers now, they are stuck on the boat with nowhere to go. Luckily there has not been a full work stoppage, which the National Retail Federation (NRF) estimates would cost the US economy $2 billion a day. But if things are not resolved soon, many customers will not be complaining about delayed packages. They will be complaining about a lack of goods.