Shipping during early December: ‘So far, so good’
December 15, 2016 03:38 PM
While the true last-minute rush is still ahead, the news about package arrivals for the 2016 holiday season is mostly good, despite an expected double-digit increase in overall volume this year.
Analysts at e-commerce analytics company Slice Intelligence say that, for the week of to Dec. 4-10, the average days from order to delivery for online holiday shoppers was 2.47, a big improvement from the 5.63 days during the comparable week (Dec. 6-12) in 2015. Also, the shipping time is shortening as this holiday season progresses, while last year the shipping time increased. During Nov. 27-Dec. 3 this year, the average days from order to delivery was 3.59 days. The week before that, that number was 3.98 days.
A Slice spokesman attributes the improvement to two main factors: First, Amazon's guaranteed two-day Prime shipping could be having an impact on other retailers who are trying to compete with this convenience. The second factor is Amazon’s dominance of the online holiday season. Amazon sales accounted for 43% of the online U.S. e-commerce market for the Nov. 29-Dec. 10 period, according to Slice’s data, which means that Amazon also likely accounts for a large proportion of shipments, the spokesman says.
Software developer ShipMatrix Inc. reports on-time delivery of parcels shipped via ground service during the week of Dec. 4- 10 was 96.2% for FedEx Corp.’s ground service compared with 95.3% for the same week in 2015. For United Parcel Service Inc., the on-time rate for ground service that week was 93.1%, roughly unchanged from 93.2% for the same week in 2015. For the week of Nov. 27-Dec. 3, on-time delivery of parcels shipped via ground service was at 96.9% for FedEx and 96.3% for UPS.
Satish Jindel, president of ShipMatrix, says the fact that FedEx improved ground-shipment performance and UPS held basically steady—despite an increase in overall volume this year—shows that pre-holiday preparations by shippers and long-term investments in things like UPS’ ORION routing and navigation software are helping them deal with increased volumes.
ORION stands for “On-Road Integrated Optimization and Navigation.” The technology uses an algorithm come up with the most efficient order of delivery on any given route.
But the strain on the parcel-shipping giants is showing up in other ways. FedEx and UPS are delivering hundreds and thousands of parcels on Sundays at no extra cost to their retailer clients or consumers, ShipMatrix says. ShipMatrix data also shows that UPS increased its deliveries on Sundays to 0.9% of all packages so far this season from 0.04% in 2015 for the Dec. 4-10 period last year.
ShipMatrix’s data also shows that, for FedEx Express and UPS Express Services, delivery by the time expected for express and deferred parcels from Dec. 4-10 was 93.7% for FedEx Express and 98.7% for end-of-day delivery. For the same week, UPS Express was 90.6% for on-time performance and 94.6% for end-of-day delivery. For deferred services, FedEx Express was at 99% on time, compared to 89.8% UPS Express. Deferred service is used for lower-priority packages that can ship on a space-available basis
Retailers that responded to Internet Retailer have been mostly upbeat about deliveries so far.
Jonathan Muller, CEO of online-only glasses and sunglasses retailer Gaffos.com, No. 902 in the Internet Retailer 2016 Top 1000, says his company hasn’t had any delivery problems so far. “So far, so good. Our late or non-deliveries haven’t spiked more than usual; in fact they’re down a little bit,” he says. “But the stress test usually happens around the 20th when people start sending lots of expedited packages and the system gets overwhelmed.”
Muller says Gaffos.com, like many other UPS clients, had problems in 2013. “Our site guarantees delivery by Christmas and the UPS problems wreaked havoc. There was a tremendous amount of refunds and unhappy customers. But since then UPS seems to have learned from that.”
Edwin Choi, vice president of marketing at online mobile device accessory e-retailer Mobovida LLC says: “This year has been a pretty good one for us. We’ve gotten our shipping to within 24 hours from order to ship-out. And based on customer feedback, it looks like a pretty good season. No complaints.” UPS and the U.S. Postal Service are the company’s main carriers. UPS has not warned Mobovida to expect delays, Choi says.
A spokesman for UPS said the company does not provide data on delivery volume. However, the company earlier forecast delivery volume to be more than 700 million packages between Thanksgiving and Dec. 31. That would be more than a 14% increase compared with the same period last year. UPS also expects a record 13 of the 21 delivery days before Christmas to exceed 30 million packages daily. UPS delivers approximately 18 million packages daily during typical nonpeak shipping periods. To deal with the extra shipping volume, UPS planned to hire 95,000 seasonal workers nationwide, up from 93,000 in 2015.
The UPS spokesman says the carrier’s ORION routing technology will be fully rolled out in the U.S. by the end of this year and is expected to help UPS vehicles reduce miles driven by 100 million miles per year.
A spokeswoman for FedEx says the company is expecting record peak volume this holiday season—about 10% higher than the 2015 holiday season—but it is not releasing a projected number. To deal with the surge, FedEx is increasing hours for some existing employees and has added more than 50,000 positions leading up to the holiday season. The majority of the seasonal hiring has been in the FedEx Ground network, she says.
Friday (Dec. 16) is FedEx’s deadline to ship FedEx Ground and FedEx Home Delivery for delivery in time for the holiday. UPS deadlines begin kicking in on Monday (Dec. 19), for delivery by Friday, Dec. 23. The U.S. Postal Service’s deadline for Retail Ground service is Dec. 15.
But placing an order with an online retailer Dec. 16 feels a little too close to Christmas for many shoppers. 51.4% of 480 online shoppers taking an Internet Retailer survey in late November indicate buying online after Dec. 15 feels like risky business. 25.6% of the 480 respondents selected Dec. 15 as their deadline for online holiday shopping comfort. 25.8% selected a day prior to Dec. 15. Taken together, 51.4% of online shoppers indicate they are not comfortable they will receive goods they buy online after Dec. 15 in time for the holiday.