retail news in context, analysis with attitude

The Wall Street Journal reports that "United Parcel Service Inc. is straining to handle a surge in online sales that has resulted in more holiday volume than it had expected, causing a wave of disruptions that could spell trouble for the holiday season.

On-time delivery rates for UPS ground packages based on their normal shipping transit times last week fell to 91%, according to an analysis of millions of packages by software developer ShipMatrix Inc. During the same week last year, the on-time rate was 97%, which is UPS’s usual average during nonpeak months.  FedEx Corp. ’s early numbers were also lower than usual at an estimated 95%."

The story notes that "UPS has been slammed with unexpectedly high volumes, extra pickups and not enough staff and equipment to handle all of the packages in some locations, according to people familiar with the matter."

The Journal goes on to note that "most of the problems surfacing so far involve UPS, which does more residential deliveries than FedEx and has been trying to contain costs. It is unclear how much difficulty FedEx and the U.S. Postal Service are having handling the loads. All combined, the three carriers have been expecting to ship more than 1.5 billion packages over the holidays, an increase of more than 10%."
KC's View:
Two things to think about here.

One is that the delivery companies want to avoid the problems of past years ... though it always seems like we read stories in early fall about how they are gearing up to deal with higher expected volume, but it always ends up being higher than expected, which in itself ought to be a lesson about how customers and expectations have changed.

The second is that this is why Amazon is trying to figure out how to take increasing control of its distribution systems ... whether it is a trucking fleet or drones. The sense there clearly is that the infrastructure is not equal to the challenges of the near future, so they're trying to get ahead of the wave.