UPS delays mount as online shopping hobbles courier’s network
United Parcel Service Inc. delays got worse last week as the world’s biggest package delivery company struggled to cope with a surge in online shopping that rival FedEx Corp. handled in stride.
“People are buying more than even the carriers expected,” said Satish Jindel, president of ShipMatrix, which tracks the performance of parcel couriers. The company’s survey tracks millions of packages, he said.
UPS’s performance threatens to weigh heavily on the company’s results. End-of-year revenue is generally about 15 percent higher than in other quarters, while daily volume nearly doubles. The stock’s direction typically is tied to how well packages are delivered from November to January. UPS got a black eye in 2013, when a rush of last-minute holiday packages overwhelmed operations.
UPS’s vast ground network delivered 91.5 percent of its packages on time during the week through Dec. 9, ShipMatrix reported today. The Atlanta-based courier posted a 94.4 percent on-time rate the previous week.
FedEx completed 97.1 percent of its ground deliveries on time for the latest week, improving slightly from the week before. UPS expects to deliver 750 million packages in the peak holiday season, compared with about 400 million for FedEx.
UPS is processing record volume, said spokesman Steve Gaut. The courier sent special “ready teams” to hubs in Atlanta; Denver; Oakland, California; and Kansas City, Kansas to contend with a “cybersurge” following Black Friday, he said. Those locations have since caught up to greater-than-expected volume, he said. Gaut declined to comment on the validity of ShipMatrix’s data.
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UPS last week acknowledged that a “bubble” in its network following Thanksgiving extended the time that some packages were in transit. UPS is seeing no bubble currently, Gaut said.
“We’re in a position to complete the peak season satisfying our customers,” he said.
UPS rose less than 1 percent to $119.18 at 7:52 a.m. The stock is up 3.9 percent this year, trailing a 30 percent advance for FedEx and a 15 percent gain for the Dow Jones Transportation Average.
