‘Christ­mas creep’ trips ship­pers

Early hol­i­day shop­ping amid the pan­demic will test de­liv­ery com­pa­nies

The Morning Call - - Business - By Thomas Black

FedEx Corp. and United Par­cel Ser­vice Inc. are gird­ing for their big­gest test yet in the e-com­merce era, with “Christ­mas Creep” push­ing the hol­i­day shop­ping sea­son ever ear­lier and stretch­ing the lim­its of ship­ping net­works strained by the coro­n­avirus pan­demic.

Pro­mo­tions by Ama­zon.com Inc. and ri­vals that be­gan Tues­day are fore­cast to spur $10 bil­lion in sales, ac­cel­er­at­ing hol­i­day pur­chases and out­strip­ping last year’s post-Thanks­giv­ing Cy­ber Mon­day spree. With le­gions of con­sumers stay­ing away from stores this year, the par­cel car­ri­ers are al­ready han­dling record de­liv­er­ies and bump­ing against ca­pac­ity con­straints.

“Prime Day will be a very good test,” said John Haber, founder of lo­gis­tics con­sult­ing firm Spend Man­age­ment Ex­perts. “If they can han­dle all the pack­ages com­ing out of the gate here and do that smoothly, that’s a good sign of things to come. If they have prob­lems, those prob­lems prob­a­bly won’t go away.”

FedEx and UPS per­form a peak sea­son bal­anc­ing act ev­ery year that in­volves com­puter mod­els and cus­tomer dis­cus­sions. Adding too few re­sources can cre­ate havoc for re­tail­ers and cus­tomers, while beef­ing up pay­roll and ca­pac­ity too much can dent couri­ers’ prof­its. New con­sump­tion pat­terns this year fu­eled by the pan­demic, plus signs that con­sumers plan to shop ear­lier than usual, have in­tro­duced a mea­sure of guess­work into the plan­ning.

The big couri­ers have al­ready been hir­ing sea­sonal work­ers to han­dle higher-than-usual vol­ume, ramp­ing up ear­lier than they typ­i­cally do. FedEx in­creased ca­pac­ity by rolling out seven-day ser­vice to 95% of the U.S. pop­u­la­tion and in­tro­duced new rout­ing soft­ware that lets it han­dle un­usu­ally large res­i­den­tial pack­ages.

“Be­cause we’ve had the re­sources on al­ready and, over the top of that, we’re now adding on peak re­sources, I think we’re well po­si­tioned to han­dle the vol­ume,” said Henry Maier, the chief of FedEx’s Ground unit. “We’d move ag­gres­sively to ac­com­mo­date any­body who thinks they’re go­ing to be ship­ping sig­nif­i­cantly higher than nor­mal.”

Large re­tail­ers — who typ­i­cally get vol­ume dis­counts — must be more flex­i­ble on sched­ules. FedEx and UPS, for ex­am­ple, have in­creased week­end ca­pac­ity for pick­ups and de­liv­ery. Ship­pers will also be pressed to pre­pare trailer loads of pack­ages for de­liv­ery.

“It’s mostly large cus­tomers that will make those changes,” Maier said. “We’re mak­ing sure they un­der­stand where ca­pac­ity is avail­able in the net­work and on what days and what times, so we can do our best to fill their ex­pec­ta­tions at peak.”

Small re­tail­ers, which don’t get the big dis­counts like large ship­pers, won’t be as af­fected by the tight ca­pac­ity, he said.

The UPS net­work is ready for the vol­ume gen­er­ated by Prime Day and pro­mo­tions by other re­tail­ers dur­ing peak sea­son, said spokesman Glenn Zac­cara.

“We are work­ing closely with our large and medium cus­tomers to steer vol­ume to ca­pac­ity and en­sure the UPS net­work is re­li­able for all cus­tomers,” he said by email.

Prepa­ra­tions by FedEx and UPS not­with­stand­ing, the ship­ping in­dus­try as a whole is nearly maxing out.

“Every­body — re­gion­als and na­tion­als alike — are at ca­pac­ity and then some,” said Dick Met­zler, the chief ex­ec­u­tive of­fi­cer of Lone Star Overnight.

The Austin, Texas-based courier, which serves nine states, stopped tak­ing big new e-com­merce ship­pers about a month ago. Lone Star plans to hire in­di­vid­u­als us­ing their own cars to de­liver pack­ages if the com­pany’s trucks are over­whelmed.

STEVEN SENNE/AP

Pro­mo­tions like Ama­zon’s Prime Day will test car­ri­ers like FedEx and UPS amid a con­densed hol­i­day sea­son and in a pan­demic.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.