2013 Holiday Deliveries: A Perfect Storm for the Logistics Industry

Some Christmas presents were not under the tree this year due to a perfect storm within the logistics industry.  Delays at major delivery companies, UPS and Fed-Ex, were blamed on a mix of bad weather, overloaded systems, and a shortened shopping season.

Neither company would state how many packages were affected, but it was a small share of the overall holiday shipments.  UPS confirmed these shipping delays on its website with the following statement:

“UPS is experiencing heavy holiday volume and making every effort to get packages to their destination; however, the volume of air packages in our system exceeded the capacity of our network immediately preceding Christmas so some shipments were delayed.”

UPS Spokeswoman, Natalie Godwin, attributed some of the delays to snow and ice storms in both Dallas and the mid-west, but weather was not the only source of this logistics storm.  A shortened holiday shopping season placed additional pressures on the carriers.  UPS projected 123 million deliveries for the last week of the shopping season alone.  However, this number was exceeded as many shoppers continued to place orders within days of Christmas.

The additional surge in holiday deliveries can also be attributed to the extreme spike in on-line ordering.  Amazon.com announced today that the 2013 holiday season was the best ever for the on-line giant.  One of the major factors in this record breaking year for the company is the Amazon Prime membership program. For an annual fee of $79 consumers can be a part of the Amazon Prime program where two-day delivery is guaranteed on pre-determined merchandise.  Programs, like Amazon Prime, continue to feed the growing appetite of on-line shoppers across the world.  Unfortunately, these programs are also supporting the flourishing trend of buyer procrastination, where on-line shoppers are waiting to the very last minute to place an order for Christmas delivery.   

UPS and Fed-Ex did not release any information on how many of the delayed shipments were Amazon Prime customers. Amazon did release an apology letter to their customers affected by the breakdown.  Amazon is also taking a proactive approach with affected customers offering shipping refunds and $20 gift cards to compensate for the inconvenience. 

Customers did voice their disappointment with the carriers via social media by tweeting their frustration for the world to see. While some customers complained that their gifts would not make it under the tree for Christmas, others came to the defense of the carriers by showing their appreciation for all the employees who sacrifice their family time to work during the holiday season.

While this perfect storm may be isolated to the holiday season of 2013, it could be a foreshadowing of sorts.  The increase in promised delivery by companies like Amazon is not showing any indication that it will slow down soon. These promises will simply further inflate the expectations and demands of the consumer.  The hope is many logistics companies will learn from this holiday season and will be able to adjust both internal and external processes, so future system overloads and breakdowns do not occur. 

Retail Logistics