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More than one million packages will not reach their destination this Christmas

Holiday gifts delayed ahead of Christmas
Despite delays, holiday shippers press on to deliver Christmas gifts 05:30

A flood of mail, a historic boom in online purchases and one of the biggest snowstorms in the Northeast in years have overwhelmed the U.S. shipping system this holiday season.

The result: Over one million holiday orders are not likely to make it to their destination on Christmas Day, according to the latest estimate from ShipMatrix, a software company that helps retailers and others track shipments and collects data on millions of packages sent from more than 100,000 locations in the U.S.

"Our entire industry is underwater because of the demand [for deliveries]," said Satish Jindel, president of ShipMatrix. 

Packages needed to be shipped nearly a week ago to make it by Christmas by regular mail. But CBS News' Erol Barnett reported that a number of retailers, including Amazon, were still offering overnight deliveries for Christmas Day on thousands of items on Thursday.

The shortfall of millions of packages comes after weeks of pile ups in warehouses for shippers to catch up. At the peek of the holiday shipping season this year, an estimated 6 million packages a day were being left behind by FedEx, UPS, Amazon, the U.S. Postal Service and other shippers, according to ShipMatrix. Another 3.5 million packages a day that were picked up were not reaching their destinations on time.

The good news is that it appears things are improving. On-time delivery rates for the post office, which has had to deal with millions of behind packages, rose to nearly 98% in the last full week before Christmas, up from 86% the week before. ShipMatrix's Jindel attributes the improvement to the fact that easing of demand for shipments as it got closer to the holiday.

"Most recent data shows retailers and consumers have heeded advice about delays from huge spike in holiday shipping which is starting to reduce parcel volume and helping recovery of on-time delivery performance," said Jindel.

E-commerce surge strains retailers and delivery networks 08:56

The holiday shipping gridlock described by shipping industry veterans — worse this season than in past years, they said — curtailed the holiday shopping season, frustrated both consumers and retailers as well as potentially hurt the economy as the recovery from the coronavirus pandemic appears to be sputtering. 

Both FedEx and UPS declined to disclose how many packages were delayed in transit, and might not make it by Christmas Day. A spokesperson for UPS said that 96% of its shipments have arrived on time this holiday season. But that figure only includes the packages that UPS picked up — not the ones it missed. 

"This is one of the most successful peak holiday shipping seasons ever as we focus on maintaining a reliable delivery network that all of our customers can depend on," a UPS spokesman said in an emailed statement.

"Data provided by third-party consultants can vary widely based on the specific markets, customers and shipping lanes they choose for their analyses," the FedEx spokesperson said. She also said the company's role in helping to distribute the Pfizer-BioNTech vaccine is not affecting regular shipments, noting that the company is using a separate fleet of trucks and airplanes for that effort.

"As stated previously, we continue to work closely with our customers to manage their volume and help ensure we provide the best possible service," the FedEx spokesperson added.

"Waiting for the refund request"

A number of retailers told CBS MoneyWatch they faced shipping delays. Earlier this month, Victoria's Secret owner L Brands warned investors in a filing with the U.S. Securities and Exchange Commission that "additional constraints" in shipping capacity during the holiday season could hurt sales. On December 15, Etsy also updated its shipping cut-off dates for its retailers and asked them to add the dates to their product-description pages. 

Arlene Marie Mathews, a Milford, Pennsylvania-based vendor who sells bath and aromatherapy lotions on Etsy and generally ships through the Postal Service, said customers have been experiencing delays since late November and that some orders are delayed by as much as two weeks. On December 16, she updated her product page on Etsy to warn that orders may arrive as many as 10 business days late. 

"I am presently inundated with messages from customers asking where their packages are. Some are understanding, some are not," Mathews told CBS MoneyWatch. "I am waiting for the refund request messages to begin flooding my inbox any moment now." 

Etsy said it will allow sellers to flag for removal any negative reviews from customers complaining solely about shipping problems. A spokesperson with the ecommerce company said it has "dynamically adjusted estimated delivery dates" on its website to provide buyers with the latest information. 

"We know the holidays are an incredibly important time for the 3.7 million creative entrepreneurs selling on Etsy," the spokesperson said in a statement. "To address carrier delays in the U.S., we're focused on supporting sellers by making available the latest information we have."

Mass coronavirus vaccine distribution plan underway 02:42

Olive & Cocoa, an online gift-basket retailer based in Salt Lake City, Utah, is warning customers about possible delays and that shipping slots are running out. December 16 was the last day the website said it could ship orders by standard shipping for delivery by Christmas. Later orders won't arrive until December 29. Two-day shipping is unavailable on the website until January, though slots remain for faster — and pricier — deliveries.

"Olive & Cocoa recognizes that the entire shipping system is overloaded," a spokesperson said. "We are working closely with our shipping partners to provide our customers with the best information we can as to shipping availability and timelines, and to ensure that holiday gifts ordered from Olive & Cocoa are being delivered in a manner consistent with our high customer service standards."

"They have no idea where it is"

The holiday shipping delays are causing headaches for consumers. Christine and Bruce Merevick of Chicago are unable to see their family in Alabama for Christmas because he is undergoing chemotherapy and is considered at high-risk for COVID-19. Heightening their frustration, the Merevicks' holiday package, which they sent priority and insured in early December, still hasn't arrived. They filed a claim, but were told to check back in two weeks. 

"It's just very frustrating," Christine Merevick told Tara Molina of CBS Chicago. "They have no idea where it is."

USPS to implement "extraordinary measures" amid delivery delays 05:35

CBS News correspondent Janet Shamlian reported this week that FedEx and UPS have told some retailers that they will not pick up additional packages beyond their previous commitments before retailers saw a spike in orders. That has resulted in more orders being pushed to the Postal Service, adding to mail delays that started this summer before the November election. Earlier this week the USPS in a public statement encouraged customers to send their holiday gifts and cards "as soon as possible."

Even before the holidays, shipping delays had been a problem during the pandemic, which spurred some consumers to increase their online orders and avoid in-person shopping. FedEx and UPS began ramping up hiring as early as November to be ready for the expected surge in deliveries, adding as many 170,000 workers combined for the season. But those issues are now intruding on many people's holidays.

"It was not possible for shippers to be ready," said ShipMatrix's Jindel. "It would have taken two or three years to be ready for this year's jump in demand."

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