Here’s a rare piece of holiday cheer in a year of screwed up supply chains: Shipments and deliveries are actually moving fairly well.
Deliveries of packages by UPS, FedEx and the US Postal Service are all moving at close to 100% on-time performance, according to data from ShipMatrix, a software provider that works with parcel shippers. It’s a pleasant surprise, even for those who anticipated that those three services would be well prepared for the holiday season.
“If you operate at the peak, that’s tremendous,” said Satish Jindel, president of ShipMatrix. “I was expecting [the performance rate] to be in the mid-90s.”
Jindel attributes the better-than-expected results to three factors.
“One is [that] carriers added capacity,” he said. “Second, many more consumers are buying in stores this year compared to last year. Having the shipments going to stores rather than homes helps. And third, people got a lot of exposure about the supply chain challenges, with ships sitting outside ports. So many didn’t want to risk a delay so they ordered or shopped early.”
A survey conducted for UPS earlier this year found that 91% of consumers said they planned to complete all of their holiday shopping one week before Christmas compared to 81% last year. And about 60% of consumers aimed to finish shopping two weeks before the holiday, up from 52% in 2020, while 25% said they were planning to finish their lists before Black Friday.
Jindel said all three major delivery services made major investments in increased capacity over the past 12 months.
A year ago, all three were hit with a huge increase in shipment volumes — FedEx, for example, said its 2020 deliveries were 24% above 2019 levels. That put shipment volumes above the services’ capacities and stretched their systems to the breaking point.
UPS said it has added 2 million square feet of automated facilities, as well as equipment to process 130,000 more parcels per hour than it was able to handle last year. The Postal Service said it has added 13 million square feet of additional space across more than 100 locations, including at more than 50 annexes, and installed 112 new package sorting machines.
And all three delivery services have brought on tens of thousands of seasonal workers, in addition to hiring more permanent, full-time staff, despite the labor shortage.
This year Jindel said overall shipment volumes will be only narrowly higher than in 2021 — perhaps a low single digit increase industry-wide. But the increased capacity will make handling that volume much smoother.
Even so, that doesn’t mean holiday shoppers will be able to get everything they want delivered by December 25.
Some items are still out of stock and won’t be able to start their trip to purchasers’ homes or nearby stores in time for the holidays.