As the 2014 retail shopping/shipping season roars to a close, the major carriers are seeing their numerous technology upgrades, investments and temp hiring expansions put to the test, while retailers have pushed cutoffs as far as humanly possible toward Christmas day.
Today, UPS is expected to handle 34 million packages in the U.S. on its peak shipping day, the highest volume in its history. FedEx said it handled 22.6 million packages on its peak day one week ago, when the U.S. Postal Service handled an estimated 640 million cards, letters and packages.
Both have spent hundreds of millions this year on new technology such as scanners and automated sortation systems, as well as adding scores of new shipping bays and – in the case of UPS – using temporary mobile distribution facilities and speeding up deployment of its high-tech Orion driver routing system. All of this is an effort to avoid a repeat of the 2013 debacle when an estimated 2 million parcels didn’t reach their destinations by Christmas.
“I can tell you we’re on plan for today to be the peak for deliveries,” said Susan Rosenberg, public relations director for UPS. “Our coordination has gone well with the large retail shippers for processing this past weekend, and our capacity around the country has flexed to meet the needs of this busy month.”
“We have experienced a dynamic of peak demand shifting more broadly across the entire peak period, with less specific demand on any given day, like Black Friday or Cyber Monday, and we continue to expect growth for the overall peak season,” said Michael Bielskis, a spokesman for FedEx. “That shift is positive for FedEx as it allows us to more efficiently plan our service and adjust capacity.”
Bielskis added the shift is being “driven by retailer and e-tailer activity promotional activity, as well as evolving customer buying patterns.”
“We have already experienced several days with surges in demand that resulted in volumes among the busiest in company history,” Bielskis said. He added the company’s investments have thus far paid off in terms of peak volume performance despite shifts in demand and transportation mode, port labor issues and weather issues.
A November survey by the National Retail Federation found nearly eight in 10 major retailers planned to set shipping deadlines a before Christmas, up from 74% in 2013.
And in a roundup of retail holiday order cutoffs from DealNews, a number of retailers set their standard shipping deadlines for today, including Bloomingdale’s, Eddie Bauer, Kmart, L.L. Bean, Lowe’s, Macy’s and Sears. A handful of others, including Athleta, Banana Republic, Brooks Brothers, Old Navy and Piperlime, set the cutoff at Dec. 20.
The increased deployment of omnichannel fulfillment operations at many retailers is also being put to the test as never before this holiday season. In particular, the growing popularity of in-store pickup should relieve a bit of the pressure on networks from peak shipping volumes, even as it taxes store operations.
“We’re definitely seeing evidence that (ship from store) is a big part of the omnichannel strategy this holiday season,” said Kevon Hills, vice president of research at retail data analysis firm StellaService.
Hills cited Toys ‘R Us as an example. Its cutoff for standard shipping for delivery by Christmas has passed and a promotion for in-store picking is featured prominently on its home page. “If a retailer can snag that sale online and use their local store as the fulfillment center, they have a big advantage over retailers without that infrastructure,” he said.