UPS has put in place tools and processes to handle an expected peak season volume of 800,000 packages between Thanksgiving and Christmas, up from 750,000 last year, announcing price increases in the form of over-max and special handling charges to offset the investments.
The company also plans to bring on 100,000 seasonal employees to handle the holiday crush, including a “brown Friday” hiring event that was held on Oct. 19.
“We are committed to ensuring the integrity of the network, delivering UPS’s high level of service and being compensated for the value we provide,” said UPS COO James Jay Barber during the company’s third-quarter earnings call.
Breaking down the projected 800 million packages in UPS’s network this year – roughly double that of rival FedEx – Barber said it will handle in excess of 30 million packages on 19 of 21 operating days, topping out at 37 million packages on its peak operating day in late December.
Barber outlined a complete redesign of UPS’s network capacity, including a peak volume alignment tool that synchronizes volume demand for both origin and destination capacity, aimed at ensuring network reliability. “We’re using this and other network planning and forecasting tools to ensure we maintain our high service standards and efficiently manage resources,” he said.
UPS has also made facility and technology investments to address capacity and network demands, Barber said, including 22 new or retrofitted automated facilities globally that increase operating efficiency from 25% to 35% above existing ones. These initiatives have increased sortation capacity by 400,000 pieces per hour. UPS has also added nine jetliners to its air fleet since 2017, increasing international capacity and making smaller aircraft available to beef up key U.S. routes.
Barber said UPS is in communication with its largest retail customers to align its network capacity and order fulfillment with their promotion schedules. “That means working closely with the highest volume peak customers to maximize daily utilization of the UPS network, while also providing the capacity they need to accomplish their sales objectives,” he said.
In the past couple of years UPS has been “constructively dissatisfied” with peak performance, Barber said, and the investments and upgrades in the “most comprehensive peak plan ever” are meant to address those shortcomings.
“Our goal and commitment is to have this peak be the peak we all wanted to be first through the eyes of our customers,” he said. “And it’s about giving them the service that we commit to every week of the year and we plan to do that.”