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Santa’s Not Coming: FedEx, UPS Struggle With Record Number of Holiday Shipments

Posted on December 17, 2015

Written by broussard_press

Christmas is coming fast, and more consumers are doing holiday shopping online than ever before. Target was just one of the stores that broke online sales records on Thanksgiving and Cyber Monday, when online sales added up to a staggering $11 billion that weekend alone.

Now, carriers like UPS and FedEx are struggling to keep up with all those deliveries. While carriers are calling the holiday crisis “an unexpected surge,” consumers waiting for Christmas gifts might wonder just how unexpected it could have been. To be fair, FedEx delivers an average of nine million packages in 220 countries everyday, and retailers have been promising fast holiday shipping, perhaps unrealistically.

Despite the Christmas 2015 crunch, the online shopping bonanza has been kind to the big carriers (low fuel prices haven’t hurt either). FedEx has seen revenues grow from about $44.2 billion in 2013 to $48 billion in 2015, while UPS saw revenues increase from $55 billion to $58 billion over the same time. Plus, Amazon is looking to make inroads with its own fledgling carrier service.

Revenues Up, Delivery Rates Down
According to a new report from Business Insider, delays were up in 2015. In the second week of December, on-time delivery rates for UPS ground were down to 91%, compared to 97% last year. FedEx also slipped from 97% to 95% over the same time.

All things considered, the carriers are coping fairly well with the record number of holiday shipments, though Santa might be a few days late for some customers. Unfortunately for shippers and e-commerce companies, that late delivery might be enough to lose a customer for good.

So how can shippers cope with the new state of shipping in 2016?

It’s Time For a Performance Review…
Whether you depend on carriers like FedEx and UPS or LTL shipping to deliver your goods, there are simple ways to avoid losing money on shipping in the new year.

First, it’s crucial to manage customer expectations. Part of the reason the 2015 holiday season has been so hard on carriers is because some e-commerce companies promised completely unrealistic delivery options. And if customers pay a premium for overnight shipping, they often blame the shipper when things go awry. During especially busy periods of the year, take special care not to over promise.

Second, the new year is the perfect time for a review of your freight auditing. If you don’t regularly audit your freight bills, then you could be bleeding money without realizing it. That’s why so many high-volume shippers rely on a freight auditing company. If you’re having trouble seeing the big picture, a third-party freight auditor can help.

Not only can outsourcing freight bill audit and payment help cut costs in your shipping department, but a professional freight auditor can help identify carrier mistakes, errors, and other costly mistakes. Ultimately, using a freight auditor allows you to save money on multiple fronts, while also freeing up time and labor for other tasks.

It’s too late to optimize your shipping department for 2015, but make sure you start 2016 right and audit your freight bills.