FedEx Express driving making deliveries in Manhattan during holiday season

How UPS and FedEx are hiding Christmas shipping delays

The US Postal Service has been receiving the brunt of complaints from sellers and shoppers about late shipments during this holiday season. The combination of COVID related health and safety protocols along with more consumers doing their holiday gift shopping online for the same reason has burdened all logistics operators. Yet, USPS is receiving more negative press than UPS or FedEx, and is this a fair comparison?

To illustrate how much USPS is being put through the wringer, here are a few examples of media covering the shipping turmoil at the post office. The first one from Baltimore which resembles similar stories in Detroit, Cleveland other cities shows a long line of trucks waiting to be unloaded at the mail sorting center.

In another representative example, KMOV in St. Louis focuses on customers (recipients) who are complaining about long transit times, with tracking data showing little to no movement of their packages for days.

These problems with USPS are real and are playing out all over the nation leading to a lot of frustrations by shoppers. But it is also small and micro business owners who sell on marketplaces like eBay and Etsy that rely on the US Postal Service for delivering orders that are lashing out on social media.

With so much mass media attention and coverage on the holiday season delays and problems at the US Postal Service, this begs the question, are UPS and FedEx handling the surge that much better? The answer may be a bit surprising.

UPS and FedEx – The hidden delays

Before any holiday season, UPS and FedEx work with their larger customers to plan out the volume requirements needed for the anticipated seasonal shipping rush. To support the surge in shipments, both carriers hire temporary workers to sort and deliver packages and secure additional resources such as rental vans to beef up delivery capacity.

But what is now coming to light is that the anticipated volume requirements by some of the largest shippers of UPS and FedEx may have been greatly underestimated. This is causing UPS and FedEx to throttle pickups to avoid overloading their logistics networks with more packages than they can handle.

The first signs of this appeared after the Black Friday weekend when UPS told a number of major customers it wouldn’t be picking up packages for a few days until it had reestablished sufficient capacity to handle them.

At the time, this appeared to be a one-off situation. But a new report by the Wall Street Journal suggests this is an on-going issue and also includes FedEx. WSJ cited Richard Galanti, Costco’s CFO, who told The Journal that on some days UPS and FedEx aren’t picking up all the packages the company has ready to pick up, which is causing delays.

In another example, the WSJ mentioned goTRG, a company that processes returns for major retailers and sells products through channels such as eBay, Amazon, and Walmart. Earlier this month, for several days the company processed over 2,500 orders per day before being told by FedEx that it would limit pickups to 200 packages a day.

“We were never told in advance” of the shipping limits, said David Malka to the WSJ, goTRG’s chief sales officer. “We were told after the fact.” The company is now trying to spread out shipping to other carriers, but at this late stage, that is very difficult.

The WSJ report also mentioned several other examples of companies, large and small, that had been impacted by this throttling of pickups by the two carriers.

A spokesperson for FedEx told the WSJ that the company worked with customers on its anticipated volume requirements, but some are significantly higher than expected. From the UPS side, a spokesperson told the WSJ, the carrier “is picking up and delivering planned volume.”

Apparent on-time delivery through “planned volume”

Unfortunately, this seems to the key issue, the unplanned surge in parcel volume in 2020. Despite expectations that this year’s holiday gift-buying would shift significantly toward online shopping, the two large parcel carriers in the US are unable to handle shipments beyond the “planned volume.” Online merchants are left to manage how to handle the unexpected higher volume without being able to turn to a reasonable fix to satisfy customers.

Some retailers are accepting longer handling times, which makes them look bad as it appears to the customer it is the merchant that can’t handle the volume. Others are adding to the woes of the US Postal Service by adding more parcels to its overloaded postal system. Neither is a customer-friendly solution.

UPS and FedEx are receiving a bit of a break here from consumers as both companies have pawned off the problems of how to handle the surge in volume on merchants and the USPS. In reality, they are one of the hidden causes of delays, but not visible on tracking.

After this holiday season is over, the fallout of the 2020 “shipageddon” will give company executives and business owners sleepless nights wondering how to avoid a repeat in 2021. With many experts believing consumers will stay online after the COVID crisis is over, it means the three major parcel carriers in the US are not capable of handling the collective volume. That has to change for 2021.

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