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FedEx, UPS step up their holiday shipping performance

UPS worker Vinny Ambrosino gets in the Christmas spirit as he delivers packages in New York. (REUTERS/Carlo Allegri)

FedEx and UPS sharply improved their rates of on-time delivery during the last-minute Christmas shopping crush, avoiding last year’s shipping snafus with better planning and a little help from Mother Nature.

ShipMatrix, a logistics software firm, analyzed FedEx and UPS’s on-time performance rates for packages that had been promised for delivery by December 24th.  This year, FedEx and UPS each delivered 98 percent of express packages on time by Christmas Eve.  For both logistics companies, that is a significantly better performance than in 2013, when FedEx’s on-time performance was 90 percent and  UPS’s was 83 percent.

Last year, the shipping giants were caught flat-footed when their pipelines were inundated with more packages than expected in the days just before Christmas.  The unexpected deluge of packages, coupled with some disruptions created by eleventh-hour snowstorms, resulted in an estimated 2 million deliveries failing to make it in time for Christmas.

FedEx and UPS were determined not to repeat last year’s mistakes this time around.  Each shipper hired about 10,000 more seasonal workers this year than last year and pushed retailers to give them more accurate forecasts for how many packages they’d be shipping. Major retailers have said they worked hard to offer better estimates of their package volumes.

While the carriers took much of the heat for late deliveries last year, logistics experts say that the retailers were largely to blame for the problems.  Satish Jindel, president of ShipMatrix, said that last year many retailers would ship a package via a carrier’s ground delivery service instead of using the pricier but guaranteed express service–but then still promise their customers that the order would arrive by Christmas.

“If you ask [the shipper] for a lower quality of service, but you promise a higher quality of service to the customer, it’s a problem,” Jindel said.

Retail consultancy Kurt Salmon studied this year’s last-minute Christmas deliveries and found that retailers continued this practice.  Of packages that failed to make it in time for Christmas, analysts found that one-third of them were sent by a non-guaranteed or incorrect shipping method.

FedEx and UPS said earlier this year that they expected to handle a record volume of packages this holiday season. FedEx forecasted that it would move more than 290 million packages, nearly a 9 percent increase over 2013; UPS predicted it would handle 585 million, an 11 percent uptick. UPS also said back in October that it expected to pass last year’s single-day delivery record of 31 million packages on six different days this holiday season.  

Neither has announced whether they did indeed break those shipping records, but retailers widely reported robust online shopping during the holiday shopping season. The National Retail Federation expected online sales to grow 8 to 11 percent this holiday season, perhaps soaring as high as $105 billion in November and December.