DC Velocity - February 2016

If the 2015 peak-season parcel delivery saga is ever chronicled, the overarching narrative could be how the nation’s largest transportation company accomplished more by handling less.

After two years of trial and error, UPS Inc. appears to have gotten this past year’s holiday porridge close to just right. It tweaked its vast domestic network to effectively add an extra day of delivery cushion. Perhaps more important, given the growing amount of sway e-tailers have come to hold over their delivery providers, UPS declined to accept an undetermined— but no doubt large—number of packages during the last week of the shipping cycle, refusing to accommodate last-minute shipping demands that would stress its network.

According to Satish Jindel, head of SJ Consulting Group Inc., UPS effectively created an additional day of delivery time for packages shipped on Dec. 21 and scheduled to be delivered either by air in two days or via ground service in three. This meant packages moving in three-day service had to be tendered by Dec. 18 to arrive by Christmas Eve, Jindel explained. For two-day deliveries, the additional day meant that Dec. 21 was the cutoff for parcels arriving by Christmas Eve, Jindel said. Separately, UPS chose not to accept overnight deliveries on Christmas week from customers who, for the most part, did not use its overnight service during the same week in 2014, Jindel said. UPS’s goal was to avoid overloading its network with unplanned volume on Dec. 23 and 24, Jindel said.

Many shippers turned away by UPS headed to rival FedEx Corp., which accommodated most of the volume. In a turnabout from the 2013 peak, when UPS took enormous criticism for late deliveries of an avalanche of last-minute packages that it was unprepared for, it was FedEx that bore the brunt of the social media backlash as it struggled with the additional last-minute volumes.

Susan L. Rosenberg, a UPS spokeswom-
an, said the company “engaged
with more customers this year than
before for updated forecasts to
develop detailed operating plans,
and we were disciplined to adhere
to (those) plans.” Rosenberg said
the company “would balance
accepting volume with maintaining
UPS network integrity,” adding that
it would take business “where we
could without putting service com-
mitments at risk.”

RISING TO THE CHALLENGE

Though there were service hic-
cups in 2015—UPS’s during the
“Cyber Monday” online order-
ing hysteria and FedEx’s around
mid-December—both companies
performed adequately through the
cycle, according to industry data.
Adjusted for issues like weather that
are out of the carriers’ control, UPS
had a 96.10-percent on-time deliv-
ery rate, while FedEx clocked in at a
94.56-percent on-time delivery rate,
according to consultancy Shipware
LLC. Those were improvements
over 2013 and 2014 results, accord-
ing to the firm.

FedEx and the U.S. Postal Service (USPS), which reported the best on-time performance, according to SJ data, issued statements praising their organizations’ performance but offering little else in the way of analysis.