Despite dire predictions of long package delivery delays and commercial carrier distribution system breakdowns, it was a relatively happy and problem-free holiday season for most package delivery services.
That comes in stark contrast to the previous holiday season, when missed deliveries and package delays caused many gifts to be delivered long after Christmas. Problems with 2013 holiday deliveries had carriers like UPS and FedEx on the defensive and promising to do better this time around.
Weather, Longer Shopping Season Helped
This holiday season, package deliveries went much smoother, partly because of milder weather and longer holiday shopping season between Thanksgiving and Christmas. Last year, many parts of the country were pounded by crippling snowstorms in the weeks leading up to Christmas.
But some of this season’s success also had to do with preparations made by commercial package carriers, as well as the US Postal Service, to ensure that last’s year’s holiday season nightmare wasn’t repeated.
Improvements in Anticipation of Higher Demand
This season, postal workers made deliveries seven days per week in the hopes that Sunday deliveries would ease the burden on the strained package delivery system, which jumped to an anticipated 450 million to 470 million packages, a 12% increase over 2013.
UPS invested an additional $175 million prior to the holiday season to upgrade its operations and another $500 billion on new capital expenditures.
FedEx also beefed up its infrastructure and staffing in anticipation of delivering more than 290 million packages between Black Friday and Christmas Eve, an 8.8% increase over the previous year. The carrier brought in 15 full-time meteorologists to work at its global operations control center to anticipate weather-related delays. It also hired 50,000 seasonal workers.
Amazon, the world’s largest online retailer, also expanded its network of shipping and fulfillment centers in preparation for the holidays. Plus, it hired another 80,000 temporary workers.
And UPS officials have said the package delivery service expects an 11% annual increase in volume over last year. Last holiday season, UPS was widely criticized for its inability to keep up with holiday demand. But the company recently invested an additional $175 million to upgrade its operations and another $500 billion on new capital expenditures.
Retailers Backing Off on Delivery Promises
Another difference-maker this year was fewer retailers promising overnight delivery close to Christmas, according to Maria Haggerty, president of Dotcom Distribution, a fulfillment service for e-retailers based in Edison, New Jersey.
“Every year we learn from the past year’s mistakes,” Haggerty said. “We conduct a postmortem of what went right and wrong over the holiday season. Last year’s indicated we needed really good communication with the carriers, although we go lucky in the sense that we did not have any issues but we were still very aware of the situation.”
Lessons to Be Carried Forward
Expect package delivery companies to use the lessons learned during this successful holiday season to make future seasons smoother, said Rob Martinez, president of Shipware Systems, a San Diego company.
“I think it’s safe to predict that we’ll see the carriers implement ‘peak capacity’ surcharges in 2015 in an effort to recover higher costs incurred during the holidays,” Martinez said. “Also interesting are the reports that FedEx and UPS held firm on volume caps, occasionally limiting package counts from certain customers with higher than expected volumes.”