The holiday season is here and it won’t, scratch that – can’t -- be ignored. While festive colored lights blink, people are bustling in shops. Your customers don’t care that it’s almost mid- to late-December – that dreaded time of year when everyone wants their packages, like, yesterday. You and your company are holding steady and keeping the proverbial package-hungry wolves at bay, but how are others doing? What did they do to ensure smooth holiday operations?
Before we examine the “good” companies are doing now, we’ve got to rehash the bad.
The Great Fiasco, also known as the 2013 Holiday Delivery Season
FedEx and United Parcel Service Inc. didn’t have a jolly 2013 holiday season. And neither did the “big two’s” customers.
Last holiday season, UPS was overwhelmed by package volume and rendered unable to deliver many customers’ packages in time for Christmas. UPS ran into problems when the company miscalculated how many seasonal workers it needed. Major delivery issues also arose when UPS received an unexpected volume of items from various e-commerce shippers. Other factors that negatively impacted UPS’ ability to deliver were weather, and retailers’ “aggressive” shipping offers. Also of note: The time between Thanksgiving and Christmas was only 26 days. (This year’s time period is almost equally as short: The 2014 shopping season is only 27 days.)
In UPS’ defense, last year’s online holiday sales were huge. According to the article, “What's on Your Holiday Checklist?” by Maria Haggerty, last November and December’s “online sales increased at a rate more than double that of brick-and-mortar stores, according to ShopperTrak data.”
To help remedy the company’s less-than-stellar 2013 performance, UPS announced it would add 90,000 to 95,000 seasonal workers. The increase in worker volume, which included the addition of package sorters, loaders, delivery helpers, and drivers, began in October and will continue through January, reports USA Today. In addition to increasing staff, UPS also planed on spending $1 billion in capital improvements and operating expenses, such as technology improvements, capacity expansion, and new and leased equipment. The company also improved overall planning. FedEx also planned to add 50,000 seasonal jobs, reports ABC News.
In addition to increasing staff, UPS also expanded some of its company’s delivery capacities (including two in Houston, located at Mykawa and Conroe). Part of the company’s expansion should allow workers to load and unload packages to dispatch on 30 percent more delivery vehicles from centers.
The Wall Street Journal also reports that in addition to upgrading its network and modernizing some sorting operations, the company will add 50 shifts to hubs across the nation. UPS also planed on running full operations on Black Friday, which was a first. In addition to all the aforementioned changes, UPS also added 14 temporary shipping facilities, which the company called “mobile distribution center villages.” Michael Sasso from Bloomberg Businessweek explains:
“The groups of modular structures -- similar to portable school buildings, pieced together in parking lots with dozens of bays that UPS trucks back up to -- are part of $500 million in capital spending being expedited for the seasonal holiday peak. The temporary villages will let UPS operate for longer hours and give drivers convenient access to sorting and pickup facilities, Mark Wallace, vice president of engineering, said yesterday.” – “UPS plans mobile villages to add peak shipping capacity”
The Atlanta Business Chronicle also recently reported that in early fall, UPS tried to urge retailers to not offer free overnight shipping on December 23: “Atlanta-based UPS is asking e-commerce companies to hold big sales in mid-December rather than in the last days before Christmas, and is also asking retailers to stagger offers geographically, reports The Wall Street Journal. For example, the paper says, a GoPro camera would go on sale one day in Texas and on a different day in Florida.” And according to JOC.com, FedEx has made a similar request.
Along with UPS, FedEx also is communicating with its customers to better understand each of their needs and concerns. Susan Rosenberg, UPS director of public relations, was interviewed by Logistics Management and explained how the company plans on talking with customers:
“We are having really meaningful discussions with particularly larger, high-end shippers,” she said. “In some cases are making changes; they may be putting new distribution centers in certain locations. There is also the whole growth of omnichannel, with the combined brick and mortar and shopping component in which retailers are using their stores as fulfillment centers. This means our patterns for pick up and delivery are changing. We are having that dialogue and have been building capacity that might be permanent with brand new buildings that are going up very quickly.” – “Extra hires and early planning are part of the holiday delivery playbook for UPS and FedEx,” by Jeff Berman
Amazon, another big name in the holiday delivery game, also vowed to not allow the same troubles that plagued it last year resurface this season. To help fulfill deliveries on time, the company built 38 new fulfillment centers in America over the past year and a half. Amazon also added 15 sortation centers, “a new category of smaller warehouses where packages from the fulfillment centers are sorted by zip code,” reports Bloomberg Businessweek. The centers allow the company to directly deliver to customers and forgo busy carrier hubs. Amazon also plans on sending delivery trucks to Seattle, Los Angeles, and San Francisco.
It’s great that these companies are ramping up workforces. It’s projected that retail sales in the United States are expected to top last year’s growth, reports Grace M. Lavigne of JOC.com. In the article “U.S. retail holiday sales expected to top last year’s growth,” Lavigne reports that Deloitte, a financial advisory firm, expects U.S. retail holiday sales to “climb 4.0 percent to 4.5 percent year-over-year to between $981 billion and $986 billion, above last year’s holiday season growth of 2.8 percent.”
What One DHL Manager Says DHL is Doing to Keep the Holidays “Merry and Bright”
So, how does a company make certain that its holiday operations stay steadfast year after year? Courier Magazine recently interviewed Robert Mintz, Sr. manager of communications from DHL Express – BFI, in Seattle, Wash. to find out.
Courier Magazine: When do you typically start planning for the holiday season?
Robert Mintz: We start planning in the summer for the Q4 holiday season.
CM: How do you plan on speeding up holiday deliveries this year? More people? More vehicles? Better planning?
RM: DHL has been in the express delivery business for 45 years, so planning and handling of known peaks in volume during the year are part of our “normal” operations. We schedule extra aircraft and trucking rotations, equipment, as well as additional pick-up and delivery routes to handle these volume peaks. This is the normal cycle of business for us, and we are well trained to handle these situations. We have reliable partners that we call upon regularly to ensure that our service quality is maintained. Additionally, actions, such as in-depth resource planning, help expand our operational capacity.
CM: Where do you think companies fall behind when it comes to delivery "on time?" Is it poor planning, or just circumstance?
RM: DHL works to make the pick-up and delivery process as seamless and simple for the customer as possible, however there are many variables along the way that can delay on-time deliveries, including regulatory and customs issues, and especially inclement weather during the holiday season. At DHL Express, planning and execution are at the forefront of what we do and contingency planning is always a part of the process.
CM: Are there any new technologies this year helping holiday deliveries?
RM: A few months ago, DHL introduced a new, informative, online portal at dhl-usa.com/goglobal that helps our customers get the information they need to expand into international markets. This informative online portal includes a comprehensive suite of timesaving tools, expert advice on going global, and the latest international news. It helps take the difficulty out of international shipping.
Additionally, we provide “DHL On Demand,” which is an online and mobile solution that provides customers a choice of delivery options and ensures that they receive their shipments at the location and time that best meet their needs.
CM: What do you think the biggest trends in holiday deliveries will be this year?
RM: Significant growth for DHL Express is coming from B2C shipments and is accelerating, so the growth of e-commerce will continue to play a huge rule in volume increases this holiday season. The growth in shipment volume is driven by inventory we transport to online sellers, as well as the delivery of purchases directly to buyers and consumers.
CM: What are your thoughts on same-day holiday deliveries? Is this even possible with the amount of things that are being delivered on a daily basis?
RM: We do have a DHL Same Day service available. DHL Same Day never closes as they have a 24 x 7 x 365 operation that books next-flight-out shipments for customers year round.
How Software can make Holiday Operations Run Smoothly
As companies ramp up for peak season they tend to bolster their bullpen of drivers to ensure they can be ready with the right amount of drivers for the workload that's coming in. With mobile applications now offering smartphone apps to communicate with drivers (as they onboard more drivers) within seconds, they can deploy mobile technology and have the driver ready to receive orders.
As a software provider, we tend to see a heavier volume of EDI/API integrations come through, starting in September, to get prepared for the peak season. These integrations enable the courier company to automate the flow of orders and updates to and from the shipper. This automation helps the courier handle more volume without the need to add more internal staff leading to higher margins for the courier.
Patrick Scardilli, business development at Key Software Systems