November and December are pegged to be the hardest and the busiest months for logistics companies like UPS ( UPS ) and FedEx ( FDX ). This period represents a make or break situation for such shipping giants considering what's at stake. Failing to make deliveries on time tend to tarnish their reputations significantly, while hurting investor sentiment even more. However, by the looks of it, both companies have managed to efficiently handle the holiday surge with minimal delays, while posting another record season.
In general, the heavy rise in shipments, in and around the holiday season, are primarily attributable to the rise in e-commerce globally. According to the National Retail Federation, e-commerce was expected to grow by around 8-12% this year, which is more than double the overall increase for all retail. This is a staggering growth rate that is expected to grow at a similar rate over the next few years, at least.
To cater for the heavy rise in shipments, like always, FedEx employed over 50,000 seasonal workers across the country, while UPS hired 95,000 temporary workers to drive delivery trucks and sort, load, and deliver packages. Additionally, both companies relied on new technology to help boost driver efficiency, while using automation at their hubs to increase processing speed.
While there were a few customers who took to social media to vent out their anger on missed packages, most of the customers were extremely happy with the services. This season, UPS's on time arrival rate for items delivered via ground was 99.1% in the week ended December 23, according to parcel tracking firm ShipMatrix Inc. FedEx managed to deliver at a rate of 98.7%. Air shipments were delivered at a rate in the high 90s for both companies.
Most logistics companies will now shift their focus away from holiday deliveries to returning packages. That said, FedEx expects holiday shopping to continue well into January, driven by increased use of gift cards. According to a survey commissioned by FedEx Express Canada, three quarters of Canadians who planned to shop after the holidays were doing so to take advantage of the abundant deals and bargains that surrounded the season. A third of the people that were surveyed said they planned on using the gift cards within a month of receiving them.
All said and done, both shipping companies should pat themselves on the back for a job well done this time around. We can expect to learn more about the statistics revolving around the holiday season in the coming weeks.
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