FedEx Corp. and United Parcel Service Inc. are girding for their biggest test yet in the e-commerce era, with “Christmas Creep” pushing the holiday shopping season ever earlier and stretching the limits of shipping networks already strained by the COVID-19 pandemic.
Promotions by Amazon.com Inc. and rivals that began last week were forecast to spur $10 billion in sales, accelerating holiday purchases and outstripping last year’s post- Thanksgiving Cyber Monday spree. With legions of consumers staying away from stores this year, the parcel carriers are already handling record deliveries and bumping against capacity constraints.
FedEx and UPS perform a peak season balancing act every year that involves computer models and customer discussions. Adding too few resources can create havoc for retailers and customers, while beefing up payroll and capacity too much can dent couriers’ profits.
New consumption patterns this year fueled by the pandemic, plus signs that consumers plan to shop earlier than usual, have introduced a measure of guesswork into the planning.
The big couriers have already been hiring seasonal workers to handle higher-than-usual volume, ramping up earlier than they typically do. FedEx increased capacity by rolling out seven-day service to 95% of the U.S. population and introduced new routing software that lets it handle unusually large residential packages.
“Because we’ve had the resources on already and, over the top of that, we’re now adding on peak resources, I think we’re well positioned to handle the volume,” said Henry Maier, the chief of FedEx’s Ground unit. “We’d move aggressively to accommodate anybody who thinks they’re going to be shipping significantly higher than normal.”
Large retailers — who typically get volume discounts — must be more flexible on schedules. FedEx and UPS, for example, have increased weekend capacity for pickups and delivery. Shippers will also be pressed to prepare trailer loads of packages for delivery.