Why Christmas presents arrive on time this year
The warnings started going out in early fall: buy early or you might not receive your gifts on time.
Global supply chain issues that have resulted in long delays in manufacturing and shipping could spill outward, slowing package deliveries to millions of Americans in the weeks and days leading up to Christmas, experts have warned. The prospect has even become a topic of discussion in Tory attacks on President Biden’s policies.
Despite initial fears, however, holiday shoppers received their gifts for the most part on time. Many consumers have helped themselves by shopping early and in person. Retailers ordered goods in advance and acted to avoid further bottlenecks. And delivery companies have planned well, hired enough people, and built enough warehouses to avoid being overwhelmed by a deluge of packages at the last minute, as the Post was last year.
The vast majority of packages delivered by UPS, FedEx and the Postal Service this holiday season are gifts destined for residential addresses, according to ShipMatrix, a software company that serves the logistics industry. And almost all of them arrived on time or with minimal delays, defined as a few hours late for express packages and no more than a day late for ground shipments. The UPS and the Postal Service delivered about 99% of their packages on time by this measure between Nov. 14 and Dec. 11, and FedEx was just behind at 97%, according to ShipMatrix.
“The carriers have done their part. Consumers have done their part, ”said Satish Jindel, President of ShipMatrix. “When they work together, you get good results. “
That’s not to say the supply chain turmoil is over. About 100 container ships are waiting off the west coast to unload their cargo. Bigger items, such as new cars, are still hard to find due to a shortage of some critical parts like computer chips. And the prices are going up for all kinds of products.
But at least when it comes to inventory items, delivery companies have given consumers little reason to complain. In some ways, in fact, they’ve done a better job this holiday season than even before the pandemic. In the full two weeks after Thanksgiving, it took about four days from the time a package was ordered online for it to be delivered by FedEx, according to data from NielsenIQ, which tracks online transactions. millions of online shoppers in the United States. This compares to about 4.6 days for UPS and over five days for postal service.
For UPS and FedEx, those numbers represent an improvement of about 40% from a similar period after Thanksgiving in 2019, according to NielsenIQ. For the postal service, this was a 26 percent improvement.
“There are all these different moving parts that worked together to help us get through what could have been a perfect storm to cause problems,” said Bill Seward, president of global sales and solutions for UPS, in an interview. “We feel really good about our current situation. “
The achievement is all the more notable as Americans are set to spend more this holiday season than the last – up 11.5% from 2020, according to the National Retail Federation, a trade group.
But this year has been different in a critical way: many people have started shopping earlier.
Consumer surveys, including those commissioned by UPS and NPD Group, a market research company, have found Americans have ramped up their holiday shopping this year, driven by shortages, delivery delays or sales previous retailers.
Jennifer Grisham, who lives in Southern California with her husband and three young children, was one of them. Concerned about the news of supply chain disruptions, Ms Grisham asked her children to make their Christmas wish lists before Halloween, weeks earlier than usual. She was done shopping the day after Thanksgiving, which is usually when she starts shopping for gifts.
“I have three children who still believe in Santa Claus,” she said. “I wasn’t going to save these two really dramatic years for us without suddenly getting what they wanted.”
Ms Grisham said she has little trouble finding the expensive items she’s looking for: a Barbie Dreamhouse for a girl, Lego sets for her son, and a cat apartment for her other daughter, who plans to use it. as a home for his stuffed animals. .
“I’m glad I managed to do it early, because I didn’t have to worry about the risk,” she said.
Retailers have encouraged consumers to shop early. Amazon and Target, for example, launched vacation deals in October. According to UPS’s Seward, 26 of the company’s 30 largest retail customers started running substantial deals ahead of Black Friday.
Many Americans have also eased the pressure on UPS and other delivery companies by shopping more in stores. After consumers turned en masse to online shopping when the pandemic took hold last year, in-store purchases have rebounded sharply this year, according to retail and logistics experts. In September, in-store sales made up about 64% of retail revenue, up 12 points from their low during the pandemic, but still slightly below 2019 levels, according to NPD Group.
“We miss people,” said Katie Thomas, consumer analyst at Kearney, a consultancy firm, of the pressure to visit stores rather than shopping online. “There is pent-up demand. We see people wanting to dress up again.
Retailers and delivery companies have also been working behind the scenes to make sure supply chain disruptions don’t wreak havoc on vacation packages. Retailers worked harder to forecast sales and moved inventory to areas where UPS, FedEx and others had more capacity to pick up packages. Companies that previously relied primarily or exclusively on a single delivery service began to do business with multiple companies.
Delivery companies have also spent the past two years building capacity in response to growing demand. UPS, which in the past did not make Saturday deliveries to much of the country, has been extending its weekend service for years. It now offers Saturday deliveries to about 90 percent of the US population. FedEx has added nearly 15 million square feet of sorting capacity to its network since June. And, starting in the spring, the Postal Service, which handles more mail and parcels than other delivery companies, began renting additional space and installing faster parcel sorting machines across the country. .
Businesses have also responded by increasing rates, imposing surcharges for larger packages that could slow down their networks, limiting the number of packages they will accept during peak hours, and penalizing retailers who ship a lot more or a lot. fewer packages than they expected.
“We thought every package was the same,” Carol Tomé, general manager of UPS, told financial analysts in October, explaining her strategy of putting quality over quantity. “We don’t think so anymore. So, for some shippers, we no longer deliver their packages, and that’s fine with us.
The Postal Service doesn’t have the luxury of easily turning down business, but even it has handled the expectations of vacation package delivery better. Despite the introduction of its very first holiday supplement last year, its delivery performance suffered. This year, however, is faring much better, thanks to 13 million square feet of new processing space, 112 new high-speed processing machines, and the decision to hire workers earlier in peak season.
“USPS is perhaps the most exciting story of all,” said Josh Taylor, senior director of professional services at Shipware, a consulting firm. “The fact that they are not overwhelmed, that their network can continue to deliver on time, is a great development for consumers.”
But the holiday crisis doesn’t end with Christmas. Online returns will keep delivery companies busy for weeks.
And the pandemic is not yet over. Fears of the spread of the Omicron variant of the coronavirus could bring consumers back to online shopping in the months to come, putting further pressure on delivery companies and retailers.