ALEXANDRIA, Va.—During the holiday season, millions of packages must all find their way home with fewer days to move them around the country, and online shoppers may worry this holiday season as delivery companies confront a problem they haven’t faced in years: how to deliver millions more orders in six fewer days.
Thanksgiving, the fourth Thursday of November, fell the latest it possibly could this year, on Nov. 28, leaving just 23 days until Hanukkah and 26 days until Christmas. According to the Wall Street Journal, the last time the industry dealt with such a narrow window was in 2013, when U.S. e-commerce spending was roughly half as big as it is today, according to Commerce Department data.
The shift in the calendar is a big challenge for Amazon, which delivers more of its orders through its own logistics network. In 2013, Amazon had $26 billion in fourth-quarter revenue. This year, it projects at least $80 billion for the fourth quarter with a promised one-day shipping schedule for many items promoted on its U.S. website. The math leaves little room for error, said Citi transportation analyst Christian Wetherbee. “We think that the set up for the parcel carriers is as tricky as we’ve ever encountered,” he said. “The risk someone gets coal in their stocking seems elevated.
But the carriers say they can manage the tighter window. Since 2013, they have built scores of additional sorting facilities that use automation to process packages faster. For example, UPS has poured billions into expanding and modernizing its network, including six massive new sortation hubs located near dense-population centers. These give UPS the ability to sort more than 800,000 pieces hourly. It has also added 23 aircraft since 2013 and now delivers packages on Saturday and Sundays.
History isn’t quite on UPS’s side when it comes to managing the shorter season though. In 2013, UPS suffered severe delivery problems after retailers dumped an unexpected glut of holiday shipments into the network in the final days. The result was that many holiday shipments arrived after Christmas, a situation hampered by seasonal storms.
However, the lessons learned from prior years “gives us even more confidence in our success,” said UPS spokesman Steve Gaut.
FedEx was expecting a record volume of 33 million packages on Cyber Monday, when carriers process the spike in orders during the preceding Thanksgiving weekend. The daily package volume on the following two Mondays is expected to double what FedEx handles on an average weekday.
SJ Consulting Group Inc., a parcel-industry research firm, expects Amazon drivers to deliver 275 million packages during the peak shipping season, double last season’s volume. An Amazon spokeswoman said the company is adding capacity and moving inventory closer to where customers live.
The Postal Service, which delivers more packages to homes than the private delivery companies, projects a decline in shipments this season, to 800 million packages from 900 million last year, mainly due to the shorter time frame. USPS is expanding Sunday delivery to more locations with high shipping volumes. It says it has enhanced capacity and technology to meet the seasonal demand, including preventive maintenance on equipment to avoid breakdowns.