Company blames an "unprecedented" surge in online orders, sees
issue solved this week
By Paul Ziobro
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 6, 2017).
United Parcel Service Inc. is struggling to handle the surge in
shipments from online shoppers, resulting in delivery delays early
in the critical holiday season and prompting the carrier to a push
drivers to work extra hours.
UPS, which handles deliveries for many of the biggest retailers
including Amazon.com Inc., Wal-Mart Stores Inc. and Macy's Inc., is
adding one or two days in transit time on an unspecified number of
deliveries following record sales around Cyber Monday, spokesman
Steve Gaut said Tuesday.
"We have shifted more employees and other resources to these
markets to address this cyber week surge and expect to have the
issue resolved by midweek, this week," Mr. Gaut said.
The delays show that delivery networks such as UPS, which are
critical components of the e-commerce boom, are still struggling to
cope with the busiest shopping periods despite heavy investment to
build out and automate their operations and capacity. For the first
time this year, UPS tried to manage the flow of packages by adding
surcharges to deliveries during peak periods.
The week after Thanksgiving is the start of the delivery crunch,
as carriers begin to process online orders placed during the
holiday weekend and millions more packages pour in, starting the
following Monday. Adobe estimated that Cyber Monday sales hit $6.6
billion this year, up more than 17% from 2016.
ShipMatrix, a software provider that analyzes shipping data,
said 89.2% of parcels shipped last week through UPS Express were
delivered on the day they were promised. The worst on-time service
hit packages that UPS picked up on Monday and Tuesday of last
week.
By comparison, 99.4% of FedEx Express packages were delivered by
the end of the day they were scheduled to arrive.
Mr. Gaut said UPS doesn't comment on the accuracy of third-party
data. UPS expects the "vast majority" of the 750 million packages
that it ships between Thanksgiving and Christmas will be delivered
on time, he added.
FedEx Corp. is "well-positioned" to meet record demand during
the peak season, when it plans to deliver up to 400 million
packages, said spokesman Glen Brandow. "We plan and collaborate
closely with our customers year round and engineer our networks to
be ready to meet the significant surge in demand for residential
deliveries," Mr. Brandow said.
The U.S. Postal Service, which delivers more online orders to
residences than anyone, is expanding delivery hours to handle the
peak season's volume, with packages delivered early in the morning,
evening and on Sundays.
"We have planned for this holiday season all year long and have
flexed out network and expanded delivery hours to accommodate
increased volume, " said spokesman David Partenheimer.
UPS, based in Atlanta, is making some adjustments to cope. It
has notified workers at more than 100 package-delivery centers
where demand is highest that it may raise the number of hours
drivers work to 70 hours over an eight-day period, up from 60 over
seven days.
Union leadership, which represents UPS drivers, has objected to
the move in some places, saying that the longer hours put
package-delivery drivers at risk and keep them away from their
families during the holidays.
In a letter sent Monday to UPS Chief Executive David Abney,
Teamsters President James P. Hoffa said: "I fail to understand how
the Company neglected to take the steps necessary to ensure that it
had a sufficient number of trained workers available to meet the
demand generated by the digital economy." The Teamsters represent
more than 250,000 UPS workers and are currently engaged in contract
talks.
UPS said the change complies with federal requirements and that
workers are paid time-and-a-half for over eight hours a day.
"UPS customers can be confident that UPS is taking the necessary
steps to ensure the network operates with its customary dependable
performance throughout the holiday season," Mr. Gaut said.
UPS has spent billions of dollars to add more warehouse space
and automate sortation centers, where packages are sorted before
being sent to shippers to reduce shipping time. It also has worked
more closely with large retailers to avoid the problems of previous
holiday seasons. In 2013, for instance, UPS was swamped by an
unexpected glut of last minute packages in the days before
Christmas and many shoppers didn't receive their orders on
time.
This year, UPS added three Boeing 747-8s, the largest
commercially available freight aircrafts to its fleet, to help
during the peak season. It also said it would hire 95,000 seasonal
workers and even let some of them drive their own cars to deliver
packages.
In October, Mr. Abney, the UPS CEO, told investors the company
was "well-positioned to have a successful peak season, both from a
customer standpoint and an investor standpoint. We've been working
a long time on this, and I think there's a lot of confidence
throughout the group."
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
December 06, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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