More Evidence of E-Commerce Impact on Supply Chain

UPS and FedEx are predicting a hectic holiday season paced by heavy volumes.

UPS said earlier this week that it expects to deliver 527 million packages between Thanksgiving and Christmas this year, which would top last year’s record 480 million. And it said that its busiest day of the year is expected to be Thursday, December 20, a day that UPS said it will deliver an estimated 28 million packages globally.

To put that number into better perspective, UPS said it is the equivalent of more than 300 packages being delivered per every second of that day, whereas on an average day, it delivers 15.8 million packages.

In terms of air packages on December 20, UPS said that it is expecting to deliver more than 6.5 million air packages, more than double the normal daily air volume of 3 million packages. And it said it will fly more than 400 additional flight segments per day to facilitate on-time delivery of holiday gifts globally.

“Once again, trends show the popularity of e-commerce and mobile accessibility are likely to delay online shopping and compress deliveries into the final two weeks before Christmas,” UPS officials said in a statement. “UPS expects online tracking requests to reach more than 69 million on its peak tracking day, Tuesday, Dec. 18, as holiday shipments surge.”

And Alan Gershenhorn, senior vice president of Worldwide Sales, Marketing and Strategy for UPS said on the company’s recent third quarter earnings call that the dramatic rise of e-commerce continues to alter consumer behavior and shipping patterns.

“Historically, peak season volume ramped up from Thanksgiving to Christmas,” he said. “This year, we are planning for 2 peak periods: one that revolves around Black Friday and Cyber Monday, the other compressed into the 2 weeks before Christmas.”

The impact of e-commerce on holiday shopping trends and volumes continues to escalate. This was exemplified earlier this year by IHS Global Insight’s report stating that it projects e-commerce retail sales to increase about 17 percent during 2012 to reach somewhere in the $230 billion range, for another record breaking year.

As for FedEx, the company said that it expects Monday, December 10 to be the busiest day in the company’s history, expecting to move a projected 19 million shipments through its global ground, express, and freight networks, which would represent a ten percent annual increase.

Like its chief competitor, FedEx is pointing to e-commerce as the engine that will drive the FedEx Ground and FedEx SmartPost networks on “Green Monday,” the second Monday of December and one of the most lucrative days of the year for retailers.

For the entire holiday season from Thanksgiving to Christmas, FedEx said it is forecasting more than 280 million shipments to move through its global shipping networks, which would represent an annual increase of more than13 percent compared to 2011’s 247 million processed shipments.

“The continued trend toward record Peak volumes is a testament to the strength, speed and reliability of the FedEx Ground and FedEx SmartPost networks,” said Frederick W. Smith, chairman, president and CEO of FedEx Corp, in a statement. “FedEx team members from around the globe, 300,000 strong, are prepared to help drive commerce during the busy holiday season and beyond.”

Both FedEx and UPS are ramping up staff numbers for the holiday season. UPS said it will hire 55,000 seasonal U.S. employees to serve as driver helpers, package sorters, loaders, or unloaders. FedEx plans to add about 20,000 seasonal staffers at its FedEx Ground, FedEx Home Delivery, and FedEx SmartPost networks.

According to the National Retail Federation (NRF), 2012 holiday sales are expected to increase 4.1 percent to $586.1 billion, with online holiday sales, not including travel, expected to rise 16.8 percent annually to up to $54.5 billion, according to eMarketer.

While UPS and FedEx are both calling for gains in shipment volumes from e-commerce, a recent Wall Street Journal report tempered the projected gains in e-commerce, saying that e-commerce “has been something of a mixed bag” for them as they are “buoying volumes but at low prices.”