From SCDigest's On-Target E-Magazine
- Jan. 5, 2015 -
Supply Chain News: UPS, FedEx Avoid Delivery Meltdown for Christmas 2014
Investments in Technology and Capacity, Limits on Last Minute Deliveries Do the Trick
SCDigest Editorial Staff
One of the top supply chain stories of 2013 was the Christmas delivery meltdown of UPS and to a lesser extent FedEx, as millions of packages promised by etailers to be delivered by the end of Dec 24th never made it on time.
Earlier this year, UPS vowed it would do whatever it takes to avoid a repeat of the 2014 snafu, spending tens of extra millions on additional air and truck capacity, beefing its up its routing software, and hiring some 50,000 additional new seasonal employees for this year's peak period.
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| A spokeswoman said UPS largely held to its plans. For customers trying to ship more volume than expected, the answer depended on the region, the number of packages and other factors. |
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What Do You Say?
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It all seems to have worked.
UPS and FedEx delivered an estimated 98% of express packages on time on Dec. 24, according to data from tracking-software developer Shipmatrix. In 2013, FedEx's on-time rate was closer to 90% and UPS came in at just 83%.
In addition to the investments in capacity, software and people, UPS was much more disciplined about limiting etailers' abilities to promise last minute shipping. In 2013, some very late order deadlines at some web sites was exacerbated by a backlog in etailers' own pick and pack processes, which then required use of air shipping from what was expected to be ground, dumping hundreds of thousands of additional parcels into the networks.
The Wall Street Journal reported that this year (2014) both UPS and FedEx started capping air express deliveries right before Christmas, after yet another last minute increase in packages caused some retailers to exceed agreed-upon limits they had with the carriers.
The continued delays in West Coast port operations was also a factor, as many retailers did not receive some merchandise days or even weeks later than expected, pushing forward shipping volumes until closer to Christmas than they had planned.
This time, both UPS and FedEx held many retailers to their volume commitments during the final shopping days before Christmas, something many experts had suggested as a key cure to the 2013 deliver woes. (See Free Advice to UPS to Avoid a Christmas Fail in 2014).
Some retailers had also pushed back order cut offs for Christmas Eve delivery on their own. eBay Enterprises, the efulfillment arm of eBay, said that most of its retail clients had moved the cut off time back to late afternoon on Dec. 23 for delivery by Christmas Eve to minimize missed deliveries. Last year, the cutoff went as late at midnight at some retailers, which would seem to almost invite delivery disaster. Even late afternoon on the 23rd would require fulfillment heroics for both etailers and carriers.
With many retailers reaching their forecast volumes, they had to work with the carriers to see if they could exceed those numbers and still be able to commit to pre-Christmas delivery.
A spokeswoman said UPS largely held to its plans. For customers trying to ship more volume than expected, the answer depended on the region, the number of packages and other factors. "Some we said yes, some we said no," she said.
(Distribution/Materials Handling Story Continues Below
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Some etailers of course instead came in under their forecast volumes, which opened some additional capacity for others that were exceeding their estimates.
