The warnings started going out early this fall: buy early or you may not get your freebies on time.
Global supply chain issues that have caused lengthy manufacturing and shipping delays could ripple outward, slowing package deliveries to millions of Americans in the weeks and days leading up to Christmas, warned the experts. The prospect has even become a talking point in conservative attacks on President Biden’s policies.
Despite early fears, however, holiday shoppers received their gifts mostly 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 crushed by a deluge of packages at the last minute, like the Post Office 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 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. UPS and the Postal Service delivered about 99% of their packages on time by this metric between Nov. 14 and Dec. 11, and FedEx was just behind at 97%, according to ShipMatrix.
“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 doesn’t mean the supply chain turmoil is over. About 100 container ships are waiting off the west coast to unload their cargo. Big-ticket items, such as new cars, are still hard to come by due to a shortage of some essential parts like computer chips. And prices are rising for all kinds of goods.
But at least when it comes to in-stock items, delivery companies have given consumers little reason to complain. By some measures, 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. That compares to around 4.6 days for UPS and over five days for the Postal Service.
Understanding the supply chain crisis
For UPS and FedEx, those numbers represent about a 40% improvement over a similar period after Thanksgiving in 2019, according to NielsenIQ. For the postal service, it was a 26% improvement.
“There are all these different moving parts that worked together to get us through what could have been a perfect storm to cause trouble,” Bill Seward, president of global sales and solutions for UPS, said in an interview. “We feel really good where we are right now.”
The achievement is all the more notable as Americans are on track to spend more this holiday season than last — up 11.5% from 2020, according to the National Retail Federation, a trade group.
But this year was different in one critical way: many people started shopping earlier.
Consumer surveys, including those commissioned by UPS and NPD Group, a market research firm, found that Americans have ramped up their holiday shopping this year, driven by shortages, shipping delays or previous retailer sales.
Jennifer Grisham, who lives in Southern California with her husband and three young children, was one of them. Worried about news of supply chain disruptions, Ms Grisham asked her children to make their Christmas wish lists before Halloween, weeks earlier than usual. She had finished 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 end those two really dramatic years for us with them suddenly not getting what they wanted.”
Ms Grisham said she had little trouble finding the big-ticket items she was looking for: a Barbie dream house for one daughter, Lego sets for her son and a cat condo for her other daughter, who plans to spend some time there. to use as a home for her stuffed animals. .
“I’m glad I was able to do it early because I didn’t have to worry about the risk,” she said.
Retailers urged consumers to shop early. Amazon and Target, for example, launched holiday deals in October. According to UPS’s Seward, 26 of the company’s 30 biggest retail customers started offering substantial deals ahead of Black Friday.
Many Americans also eased pressure on UPS and other delivery companies by shopping more in stores. After consumers turned to online shopping in droves when the pandemic took hold last year, in-store purchases have rebounded strongly this year, according to retail and logistics experts. In September, in-store sales accounted for about 64% of retail revenue, up 12 points from their low point during the pandemic, but still somewhat below 2019 levels, according to NPD Group.
“We miss people,” said Katie Thomas, a senior analyst at Kearney, a consultancy, of the compulsion to visit stores rather than buy online. “There is pent-up demand. We see that people want to dress up again.
How the Supply Chain Crisis Unfolded
The pandemic triggered the problem. The highly complex and interconnected global supply chain is in upheaval. Much of the crisis can be traced to the Covid-19 outbreak, which triggered an economic slowdown, mass layoffs and a halt in production. Here’s what happened next:
Retailers and delivery companies have also been working behind the scenes to ensure supply chain disruptions don’t take their toll on holiday packages. Retailers worked harder to forecast sales and moved inventory to areas where UPS, FedEx and others had more capacity to pick up packages. Businesses that previously relied primarily or exclusively on a single delivery service have started doing 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 in much of the country, has been expanding its weekend service for years. It now offers Saturday deliveries to about 90% 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 packages than other delivery companies, began renting additional space and installing faster package sorting machines across the country. .
Companies have also reacted by raising prices, imposing surcharges for larger packages that could slow down their networks, limiting the number of packages they will accept at peak times and penalizing retailers who ship much more or much more. fewer packages than they had anticipated.
“We used to think every package was the same,” Carol Tomé, UPS chief executive, told financial analysts in October, explaining its strategy of prioritizing quality over quantity. “We don’t think about that anymore. So, for some shippers, we don’t deliver their packages anymore, and we don’t mind. »
The Postal Service doesn’t have the luxury of easily turning down business, but even it has better managed holiday package delivery expectations. Despite introducing its first-ever holiday supplement last year, its delivery performance has suffered. This year, however, it fared much better, thanks to 13 million square feet of new processing space, 112 new high-speed processing machines, and the decision to hire peak-season workers earlier. .
“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 crunch doesn’t stop at Christmas. Online returns will keep delivery companies busy for weeks.
And the pandemic is not over yet. Fear of the spread of the Omicron variant of the coronavirus could drive consumers back to shopping online in the coming months, placing new pressures on delivery companies and retailers.