Santa’s elves are working overtime this year.
Shipping companies and major retailers have taken a number of steps to avoid a repeat of the debacle that struck the holiday shopping season last year, when more than 1 million packages weren’t delivered in time for Christmas.
Delivery companies have hired more seasonal workers, added hubs around the country, and plotted with retailers to predict shopping patterns and limit the number of packages that will be shipped in the waning hours before Christmas.
“Not only are companies finding ways to enhance their ability to ship, the customers are getting more and more savvy about who they shop with and who can get it to them on time,” said Madison Riley, managing partner and retail analyst for Kurt Salmon in New York. “If they had a bad experience with a brand last year, they won’t buy from them this year.”
A surge of late orders from shoppers, fueled by promises by retailers that goods purchased as late as Christmas Eve would be delivered in time, overwhelmed the shipping industry, and the backlog was compounded by a spate of poor weather.
“The retailers were offering a lot of unrealistic shipping cut-off dates,” said Ani Collum, a partner at the Norwell consultancy Retail Concepts. “They were really pushing the limits of the system.”
Stung by the public relations nightmare, FedEx Corp. and United Parcel Service Inc. have worked with large retailers to forecast the volume of packages that will be shipped around the holidays, they said. Based on those predictions, delivery companies and retailers signed contracts that set thresholds on the numbers of packages that each will ship during the holiday period.
UPS, the country’s largest package delivery company, expects to deliver 585 million orders in December, an 11 percent increase over 2013 and enough boxes to circle the Earth nearly 4.5 times.
UPS spokeswoman Susan Rosenberg said the company is requiring retailers to provide more detailed information about promotions and buying patterns, and early warnings on the contents of each truck before it arrives at its sorting facilities. The extra details, Rosenberg said, will help reduce processing times and allow UPS to better prepare its network.
“We’re doing more collaborative planning and asking retailers to be more straightforward with their customers about their cutoff dates,” Rosenberg said.
The company also installed temporary mobile distribution centers around the country and increased its hiring of temporary workers by 10,000, to bring its total seasonal labor force to 95,000.
FedEx, also facing higher package volume, has boosted its seasonal hiring by 10,000, as well, and provided retailers with “very clear expectations about what we can deliver and what we can’t,” said senior vice president Patrick Fitzgerald.
Despite last year’s problems, retailer L.L. Bean is sticking to the same shipping cut-off date for this holiday season — noon on the day before Christmas Eve. On its busiest day a year ago, L.L. Bean received 197,000 orders. Nearly 20,000 purchases did not get delivered in time for Christmas.
“That’s 20,000 people who were expecting packages and didn’t get them,” said spokeswoman Carolyn Beem. “Even if it’s a small percentage, it’s too big of a percentage.”
‘The customers are getting more and more savvy about who they shop with and who can get it to them on time.’
So this year, Beem said, L.L. Bean began planning its holiday shipping with UPS in January and has added a third shift at its warehouses so the facility is operating around the clock.
Collum, the retail analyst from Norwell, warned retailers not to make the same mistakes again this year.
“The retailer is the one that at the end of the day is at fault in the minds of the consumer,” she said. “They set an expectation by saying you will get something guaranteed by his date. When that doesn’t happen, they’ve let down the customer.”Taryn Luna can be reached at email@example.com. Follow her on Twitter @TarynLuna.