UPS Improves Holiday Performance By Adding a Day to Delivery Time
December 29 2015 - 3:20PM
Dow Jones News
To help make its holiday package deliveries run more smoothly
this year, United Parcel Service Inc. made a simple tweak: It added
a day.
For its three-day and two-day shipping options during Christmas
week, UPS required an extra day for delivery, a move that prompted
retailers to send more packages over the weekend. That pushed UPS's
busiest delivery day—when it forecast its drivers would deliver 36
million packages—to Monday instead of Tuesday, as it had
planned.
"That was a real key to our success the week of Christmas," UPS
Chief Executive David Abney said in an interview.
UPS's experience this year contrasts with rival FedEx Corp.
which needed to send out drivers on Christmas day after severe
weather and a flood of last-minute e-commerce orders caused delays.
It also follows two years of holiday troubles when UPS struggled
first with a last-minute surge of orders in 2013, and then
overcompensated last year leaving the network underused, costing it
an extra $200 million each year as it overran on spending.
On Christmas Eve, tracking software developer ShipMatrix Inc.
showed FedEx had on-time deliveries of about 96%, compared with
about 98% of deliveries at UPS, after a weather-related dip at both
companies earlier in the week. On that day, those companies, along
with the U.S. Postal Service, delivered an estimated 60 million
packages, ShipMatrix said.
Ahead of the holidays UPS forecast an increase of more than 10%
to 630 million packages between Black Friday and New Year's Eve.
UPS declined to provide updated numbers. But early indications
suggest that online sales grew substantially this year. According
to data from MasterCard SpendingPulse, online sales grew 20% over
the holidays, compared with an overall increase in retail spending
of nearly 8%.
Greater online shopping came as retailers were cutting shipping
times even closer to the edge. Retail consultancy Kurt Salmon said
that retailers pushed their last ship date average to Dec. 21, one
day later than last year. Overall, about 94% of packages arrived on
time as compared with last year's 87%, according to Kurt
Salmon.
UPS had a rockier start to the holiday season, after online
orders over Thanksgiving weekend and into Cyber Monday caused
delays at locations in the Northeast, Texas and California.
"We certainly had an increase in volume, but it was much more in
three or four geographic areas that really got hit much harder than
we thought," Mr. Abney said. The company sent reinforcements to
those locations to solve the delays.
Following those hiccups, Mr. Abney said that UPS's on-time rate
stayed at between about 97% and 98% through last week.
This year, UPS stayed in closer contact with retailers than in
years previous, sending some employees to be eyes on the ground,
Mr. Abney said. To dodge the weather, the company was able to shift
some packages from the air to railcars or other modes of
transportation to avoid major delays.
In addition, UPS declined some last-minute packages from
retailers that were trying to shift volume away from other delivery
companies because UPS knew the increase could cause delays. "You
really don't make anyone really happy if you take a lot of last
minute packages and then you don't get them delivered," Mr. Abney
said.
Write to Laura Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
December 29, 2015 15:05 ET (20:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
FedEx (NYSE:FDX)
Historical Stock Chart
From Aug 2024 to Sep 2024
FedEx (NYSE:FDX)
Historical Stock Chart
From Sep 2023 to Sep 2024