Shipping companies brace for continued delivery boom from online shopping

As online shoppers scramble to finish their holiday gift-buying, shippers are buckling down with larger staff, extra hours and new technology – all efforts to make sure deliveries in the Charlotte area are made on time.

The United Parcel Service, FedEx and the U.S. Postal Service all anticipate record numbers of deliveries for the holiday season that began on Black Friday, thanks mostly to heavier-than-expected e-commerce, which shows no sign of slowing.

On-time delivery rates for UPS ground packages improved to 93.2 percent for the second week of December, up from 90.9 percent the prior week but still below the shipper’s 2014 rate, according to an analysis by software developer ShipMatrix. FedEx rates improved slightly to 95.3 percent, up from the week prior and near year-ago levels. USPS made on-time deliveries 98.7 percent of the time, an improvement from the prior week and year.

“We prepared for this all year,” said Lynn Taylor, USPS communications coordinator for the mid-Carolinas district.

USPS rents additional trucks from U-Haul and Enterprise, purchases new equipment like high-tech package scanners to quicken its processes and hires seasonal employees, all measures it has taken in years past.

This year, however, the shipper hired about 390 seasonal workers in the Charlotte area, up from 160 last year. USPS also has four Charlotte-area offices open on the three Sundays leading up to Christmas this year; last year they were only open the Sunday right before, Taylor said.

Also evidence of the shipping boom in Charlotte: Mail rooms at apartment complexes can’t handle the volume of deliveries.

Take Camden Properties, for instance, which owns 13 apartment buildings in Charlotte including the new Southline complex in South End. The company accepted about 1 million packages at its properties nationwide last year and predicted an increase of 30-50 percent in 2015.

Starting this year, Camden decided to have carriers deliver packages directly to residents’ doorsteps instead of in the mail room.

“In the Charlotte area … we just didn’t think that the package room inevitably would be able to keep up,” said spokeswoman Julie Keel, adding that Charlotte properties haven’t reported any problems like theft because of the new policy.

Figuring the right hiring formula

The influx of packages is mostly a result of the rising popularity of online shopping, experts say. Approximately one-third of all U.S. annual e-commerce sales happen in November and December, according to data from Forrester Research.

In an effort to avoid a repeat of 2013, when UPS was so inundated with last-minute orders that it failed to deliver all its shipments on time, the shipper overcompensated in 2014 by hiring too many seasonal workers, resulting in higher costs.

The hope was to meet somewhere in the middle this year, though so far it’s not quite looking like UPS has hit the mark, said Edward Jones analyst Logan Purk.

“The end result is we probably will need another holiday season before these guys can figure out how to handle the online surge that is driven largely by the e-commerce boom,” Purk said.

In Charlotte, UPS hired just over 330 seasonal workers this year, the same number as 2014, a year when the shipper notoriously overhired nationwide. UPS anticipates total holiday shipments will have increased 10 percent this year, so the company may have hit the sweet spot with local hires.

And UPS customers in the area might not need to worry about any major delays this year after all. UPS’ operations in Charlotte and the rest of the Southeast have been “pretty stable,” spokesman Steve Gaut said. “This is not one of the areas where we’ve had a volume of packages coming in at a level greater than we’d anticipated.”

Still, the company describes this weekend as “Super Weekend,” when shoppers have their last chance to make their online orders for on-time delivery. Gaut said the company expects Dec. 22 to be its busiest of the year, with an anticipated 36 million deliveries, exactly double its average number of daily deliveries.

FedEx couldn’t provide details on what it’s doing in the Charlotte market to keep up with demand but said its team is “working hard to absorb the extra volumes,” including hiring 55,000 seasonal positions this year nationwide, 5,000 more than last year.

“A record number of holiday shipments – fueled largely by the steady rise of e-commerce – are flowing through the FedEx global networks,” spokeswoman Davina Cole said.

An added challenge for shippers: When retailers say that an order can be delivered on time, they can’t technically guarantee it, Purk of Edward Jones notes. The blame falls on the shipping company, so you’re not going to hear about someone blaming, for example, Old Navy, if a package arrives late, Purk said.

“Online retailers are saying we can guarantee this delivery, but they can’t, because they’re not the ones running the network,” Purk said.

This story was originally published December 19, 2015 at 2:00 AM with the headline "Shipping companies brace for continued delivery boom from online shopping."