It seems they never guess right. United Parcel Service Inc. (NYSE:UPSB) and FedEx Corp. (NYSE:FDXC) are, once again, struggling to keep up with holiday shipping volume. Some of the millions of orders placed since Thanksgiving area already being delayed.
Shifting personnel and other strategies are helping but the struggle continues, negating delivery promises made by retailers that count on these two shippers to get packages delivered in a timely manner.
Solutions Being Tried
UPS has relocated staff from its headquarters and other corporate offices to help at shipping hubs. Delivery windows for both UPS and FedEx have already been extended, delivery guarantees are being suspended including no longer promising to deliver express packagages by a certain time in some cases.
As is always the case both companies have hired extra workers and tried to plan ahead for the busy holiday season. Planning is not an exact science and sales projections can - and often do - exceed predictions.
On-Time Rates Are Down
Despite all that’s being done, some analysts report that on-time rates are down compared to average rates during the rest of the year.
Software developer ShipMatrix Inc. analyzed millions of packages, adjusted for weather and other delays and said delivery rates fell to 96.3% last week for UPS. FedEx Ground rates were at 96.9%.
Normal On-Time Rates Are Higher
On-time delivery rates for both companies average between 98% and 99% during the rest of the year. One bright spot – both UPS and FedEx were at 95% last year, so this year’s numbers are actually an improvement.
None of this will be much consolation to consumers who end up not getting packages on time as both shippers continue seeking the sweet spot balance between projections and reality.
One Retailer’s Solution
Most online customers, however, want to stay home and get their packages delivered, free if possible. For that reason more than 800 retailers are offering free shipping with no minimum purchase on Dec. 16. If you order by then, these retailers promise delivery by Christmas Eve.
Amazon Putting On Pressure
Meanwhile, Amazon.com Inc. (NASDAQ:AMZNC) in launching its new Seller Fulfilled Prime program is not making things easier for UPS and Fed Ex. This new program lets third-party merchants make their inventory eligible for Prime two-day shipping without using Fullfillment by Amazon.
These sellers typically ship their items via UPS or FedEx. The program greatly increases the number of Prime-eligible items for sale, therby encouring Amazon customers to join the Prime program.