UPS Challenged Handling Holiday Online Orders

Holiday parcel shipping volume is surging and that could spell trouble.

United Parcel Service Inc. (UPS) is straining to handle a surge in online sales that have resulted in more packages than the company had expected.

The delivery giant, which handles more residential volume than FedEx Corp., has sent managers from corporate headquarters and elsewhere to work at delivery centers to handle the additional packages.

The surge looks to be the result of a big upward spike in online retail sales over the Thanksgiving weekend.

Cyber Monday purchases rose 16% to more than $3 billion, well ahead of expectations.

We already know UPS is renting additional vehicles to help with the onslaught of holiday deliveries, but it seems that’s not enough to help the company stay ahead of the avalanche of online orders this time of year.

UPS is facing more holiday volume than it was expecting because everyone likes shopping online for the holidays, reports The Wall Street Journal, which could have a big impact on the season: according to an analysis of millions of packages by software developer ShipMatrix Inc, on-time delivery rates for UPS ground packages based on their usual shipping transit times last week fell to 91%, compared to an on-time rate of 97% during the same week last year.

“Volumes are coming in much higher than planned”John Haber, CEO of Spend Management Experts

UPS isn’t alone in slowing down, however, as FedEx’s early numbers were lower than usual at around 95% on-time rate.

Some sources in the know tell the WSJ that UPS is being dragged under the waves by unexpectedly high volumes, high pickups and just not enough people and equipment to get the job done in some locations.

“Volumes are coming in much higher than planned,” John Haber, CEO of Spend Management Experts, which advises retailers on shipping matters told the WSJ. “You can only process so much volume so quickly.”

To try to combat the slowdown, UPS dispatched managers from its corporate headquarters in Atlanta and other locations to work at delivery centers in areas that need help handling the additional packages.

A UPS spokesman acknowledged that the company “did experience some high impact areas” driven by volume in some places that came in at “levels greater than the original peak plan for those locations.” That’s typical, he says, as retailers often might have more volume than expected and UPS usually sends management teams every year to sites that are affected.

The reason UPS often gets singled out in these shipping situations is simply because it does more residential deliveries than FedEx. But combined, UPS, FedEx and the U.S. Postal Service are expecting to ship more than 1.5 billion packages over the holidays, which is a boost of 10% over last year.

Everyone is just trying to keep the past from repeating itself, namely, the 2013 holiday season when UPS and FedEx were so overwhelmed at the last minute that many customers saw their packages arriving after the holidays. No one wants an empty scene under that tree.