UPS and FedEx brace for Free Shipping Day

Are UPS (UPS) and FedEx (FDX) having trouble meeting record demand this holiday season? According to a story in The Wall Street Journal, package volumes “have blown past expectations.”

While both package delivery giants deny that’s the case, they’re bracing for a spike in traffic following Friday’s Free Shipping Day, when more than 1,000 online merchants allow customers to get free shipping and delivery by Christmas Eve.

Millions of orders made since Thanksgiving have already arrived even as the world’s two largest packages deliverers suspended the delivery guarantee, according to the Journal, which cited statistics from software developer ShipMatrix. 

In an email to CBS MoneyWatch, UPS spokeswoman Susan Rosenberg said the ShipMatrix data was based on a small sample that lead to erroneous conclusions about its performance.

“There have been a few locations where volume surged beyond expectations for that site, or weather caused some delay,” she wrote. “But UPS has expertly flexed resources and personnel to manage those issues, the same as we do every year to shift personnel from other UPS sites or the Corporate HQ to address spot needs.”

FedEx also denied any holiday service problems.

“FedEx is proud to have achieved outstanding service during the first several weeks of the peak holiday shipping season,” wrote spokeswoman Katie Wassmer in an email. “We prepare year round to be able to meet the surge in demand, and will continue to work closely with our large retail and e-tail customers during these final weeks leading up to Christmas to ensure our networks are prepared to continue to deliver the holiday.”

UPS expects to deliver more than 700 million packages this holiday season, a 14 percent increase over last year. FedEx is forecasting a 10 percent increase over last year, though it hasn’t released a more specific forecast.

ShipMatrix President Satish Jindel told CBS MoneyWatch that he stood by his data, adding: “We’ve got so many different sources to know what’s happening.”

UPS Ground service saw its one-time rating slip to 93.1 percent in the week of Dec. 4 and Dec. 10, compared with 93.2 percent a year earlier, according to ShipMatrix. The company estimates FedEx Ground delivered 96.2 percent of its parcels on schedule between Dec. 4 and Dec. 10, an improvement from 95.3 percent during the same time in 2015. 

In the prior week, UPS and FedEx both had ratings topping 96 percent. Even small changes in the shippers’ ratings can indicate that thousands of packages are arriving late.

“With the daily volumes being 50 percent higher than normal times of the year, ShipMatrix data shows that both FedEx and UPS are even delivering hundreds and thousands of parcels on Sundays at no extra cost,” according to ShipMatrix.

Neither UPS nor FedEx would address the accuracy of ShipMatrix’s data. Both companies said demand is expected to reach record levels as consumers continue to shift their holiday spending online. 

eMarketer expects web-based retail sales to surge more than 17 percent this year, well above the 3.3 percent gain seen in overall spending. E-commerce also is expected to surpass 10 percent of total sales for the first time this holiday season. 

Not surprisingly, experts are encouraging consumers not to wait until the last minute to do their holiday shopping, especially given the coming onslaught from Free Shipping Day.

“While hundreds of millions of gifts will in fact arrive in time for Christmas,” said Tom Caporaso, CEO of e-commerce service provider Clarus Commerce, “consumers should try to get their online shopping done as quickly as possible, rather than risk the chance that inclement weather and a record number of online purchases result in a few of their gifts showing up late this year.”

  • Jonathan Berr On Twitter»

    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.