UPS Says Holiday Peak Volume Will Grow 10%

UPS, peak holiday season 2015, FedEx, omnichannelUPS is looking to save on costs through its expanded pickup program, with 8,000 U.S. locations, as well as by doing flex hiring of just-in-time labor to avoid the over-capacity and under-capacity issues that dogged it the past two holiday seasons, the company said in reporting its Q3 results.

In another cost-cutting move, 70% of UPS’s U.S. drivers will be using its Orion route optimization software, up from 45% last year.

In terms of holiday volume, UPS is projecting it will deliver more than 630 million packages between Black Friday and New Year’s Eve, up 10% from about 572 million a year ago. This compares to a 12.4% jump to 317 million parcels projected by rival FedEx. On its peak day, Dec. 22, UPS said it expects to deliver about 36 million packages worldwide more, than twice a typical day’s volume.

Because of a 6% increase in capacity this year from the addition of new hubs and technology, UPS is cutting down on the number of holiday sortation shifts to 40 from 49, while starting some later.

Overall, UPS reported $14.24 billion in revenue for the quarter, down .4% from $14.29 billion a year earlier. International was down .9%, hit by currency issues and a slowing global economy, while domestic package revenue was up 1.9% to $8.86 billion. But with the cost-cutting moves, the company reported net income of $1.26 billion or $1.40 per basic share, up 5.3% from $1.33 per share a year earlier.

Alan Gershenhorn, Executive Vice President and Chief Commercial Officer for UPS, said in addition to the 8,000 U.S. pickup locations, there are another 14,000 worldwide. He also said 20 million UPS My Choice members worldwide can connect to the pickup locations via an app or other device to provide them with delivery alternatives, Gershenhorn said.

“Customers have more options this year, including increased adoption of omnichannel distribution and the use of our expanded access point solution,” he said. “In fact, about 60% of retailers will have an omnichannel strategy deployed this peak.”