UPS Sees Six Shipping Days Exceeding Last Year’s Holiday Season Record

As reported by Bloomberg’s Michael Sasso, United Parcel Service Inc. (UPS) said it expects six days during this holiday season to surpass its single-busiest shipping day last year, a workload sure to put its yearlong preparation to the test as online retail sales rise.

The world’s largest package delivery company today forecast it will deliver more than 585 million packages in December.

That’s up 11 percent from a year ago, when harsh weather and a surge of last-minute online retail orders overwhelmed UPS’s capacity and forced it to miss some Christmas deliveries.

UPS and FedEx Corp. are bracing for a crush of e-commerce orders this year. The National Retail Federation said 44 percent of the average consumer’s holiday shopping will be done on the Web, the highest since at least 2006. Memphis-based FedEx last week forecast its total shipments during the season would rise 8.8 percent from last year.

“The holiday season is a major retail sales opportunity for our customers, and we have worked closely with many of our shippers to plan delivery volumes,” UPS Chief Commercial Officer Alan Gershenhorn said in a statement. “Our objective is to ensure that all of our year-round business and retail shippers can take maximum advantage of expanded UPS capacity during this important period.”

Photographer: David Paul Morris/Bloomberg
A United Parcel Service Inc. (UPS) driver, loads his truck with packages at a UPS sorting facility in San Francisco, California. UPS expects shipments to peak on Monday, Dec. 22, when it predicts dropping off more than 34 million packages.

Preparedness Plan
Investors and retail customers are watching to see if Atlanta-based UPS’s $175 million peak-season preparedness plan, which includes hiring as many as 95,000 temporary workers and setting up 15 “mobile delivery villages,” is up to the challenge.

Satish Jindel, president of SJ Consulting Group

“When I see UPS adding 95,000 employees instead of 55,000, it makes me fear that people have a rosier projection than it will be”Satish Jindel, President of SJ Consulting Group

Preparations for this year’s holiday season started immediately after the end of last year’s, UPS executives have said. In an earnings call with analysts last week, Myron Gray, president of U.S. operations, said UPS will watch the volumes generated by its biggest customers closer than ever. If they exceed their original projections by too much, UPS may impose surcharges or defer their shipments for a day, Gray said.

Retailers may have an incentive to inflate the shipping estimates they give to UPS, according to Satish Jindel, president of SJ Consulting Group Inc. in Sewickley, Pennsylvania.

They’ll probably see less risk in sending too few packages than too many, given the possibility UPS may take punitive actions for exceeding estimates, he said.

“When I see UPS adding 95,000 employees instead of 55,000, it makes me fear that people have a rosier projection than it will be,” Jindel said.

UPS’s temporary mobile villages, similar in appearance to strings of school portable buildings, each can dispatch 60 to 90 additional vehicles.

The company said it should benefit from one extra operating day before Christmas and from turning the Friday after Thanksgiving into a full operating day.

Source: Bloomberg