What do you want for Christmas next year? Overburdened shippers want to know.
When every year shows record-breaking online sales for the holiday season, shipping companies plan all year long to try and get their strategy right and deliver packages on time for Christmas.
Long gone are the days when Scrooges – real or fictional – could denigrate Christmas by saying "Bah humbug" in the name of business. The holiday season has now become an epicenter of good retail sales business.
With online holiday shopping getting bigger every year, the nation's shipping services are spending sleigh-loads of money to anticipate how much to invest into holiday logistics capacity. They know online sales will set a record, but they just don't know how big they will be.
"I’ve been around here for a lot of peaks,” said Henry Maier, the chief executive of FedEx Ground, in a Dec. 16 company conference call with Bloomberg. “This is without a doubt the busiest one I’ve ever seen, and it has been consistent every single day since Nov. 30. And there’s no sign it’s going to let up.”
Online buying is big and getting bigger each year, and the nation's largest package-shippers are feeling the weight of a record Cyber Monday shopping season. FedEx is posting a record 317 million shipments for the Christmas shipping season, up more than 12 percent from last year, according to a press release.
UPS and the US Post Office are "posting" equally impressive records. The post office plans to deliver 545 million packages in December, Samantha Masunaga wrote for the Los Angeles Times. UPS forecasted 360 million this season, with an increase of 1 million deliveries from last year on Tuesday alone, according to a press release.
This is just the latest installment of a holiday shipping saga that in recent years has ended in various forms of tinsel-covered disaster. It's difficult to make plans when every single year of holiday shopping sets records, and it's a shift that costs companies billions to get right. Mary Schlangenstein and Spencer Soper wrote for Bloomberg:
Finishing the peak season without a service misstep would be especially crucial for UPS, which disappointed some customers in 2013 when foul weather and a last-minute surge in online orders led to late gift deliveries. UPS worked to refine its procedures this year after adding too many temporary employees and facilities in 2014, only to see them left idle at times.
When the only thing companies can plan for is record-breaking demand, they can struggle at times to know, for example, how many extra employees to hire for the holiday season. FedEx and UPS – which together made 92 percent of online shipping deliveries this year – both released their holiday plan-of-action back in October. FedEx invested $1.6 billion in its ground operations this year and added 55,000 new job positions to its holiday crew.
UPS made a plan to add up to 95,000 temporary holiday workers, and the company announced in February a plan to institute special surge pricing for the holidays in an effort to shift some of the pressure back to its source, Caroline Thompson wrote in a blog for The Christian Science Monitor.
"After last year's debacle, where their service was so bad, they wanted to prove they have the service right," said Kevin Sterling, a BB&T Capital Markets analyst in an article on Bloomberg.com. "This coming year, they can go back to the shippers and say, 'We got the service figured out, now you have to pay.'"