Returns will be a sore spot for North American retailers this year according to a new report from Dynamic Action, with the value of returns up 6% year-over-year vs. 2016 and up 26% over the holiday season.
Carriers are bracing for the impact, as UPS announced its projected holiday returns volumes. The company said it expects to handle more than 1.3 million returned packages on Jan. 5, its largest returns day in 2017, and more than 5.8 million packages during the first week of January. Both figures are significantly higher than last year, the company said.
UPS, FedEx, and the U.S. Postal Service are all experiencing double-digit holiday volume spikes. To date the two major commercial carriers have handled the load, with FedEx Ground at 99.2% on time and UPS Ground at 98.5% on time performance last week, according to data from shipment visibility firm ShipMatrix.
But FedEx is “intentionally trying to keep the seasonal shipping spike low after struggling to manage a 20% increase during 2015’s holiday season,” according to a report in the Wall Street Journal. The report states FedEx has even cut ties with a few retail customers over pricing disagreements.
The U.S. Parcel Service hired more than 35,000 seasonal workers to help with the holiday shipping rush, up from 29,000 in 2015. UPS added 95,000 seasonal workers this year, and FedEx added 50,000 additional positions.
All three major carriers have announced post-holiday rate hikes. UPS’s general rate increase (GRI) will be 4.9% on Dec. 26, while FedEx will raise its GRI by 3.9% to 4.9% on Jan. 2. The USPS will increase Priority Mail by 3.9% and Priority Mail Retail by an average of 3.3% in early January.