UPS Warns of Temporary Delays as Cyber Monday Swamps Network
(Bloomberg) -- United Parcel Service Inc. is expecting slight delays in package deliveries through the middle of this week after a surge in e-commerce sales swamped its network in the days after Thanksgiving.
Online orders on Cyber Monday and the days after overwhelmed expectations, UPS spokesman Steve Gaut said Tuesday, causing a “bubble” to develop at certain package centers. Heavy volumes forced one- or two-day delays for certain items ordered last week, even as the company worked over the weekend to catch up.
Much of the backlog is already cleared, and UPS doesn’t expect to miss Christmas deadlines because of it, Gaut said. The world’s biggest package-delivery company has been preparing for months to handle the spike in shipments during the peak holiday season, implementing a 27-cent surcharge for the first time on packages sent to U.S. residences over certain weeks. UPS also expects to add 95,000 temporary workers.
“The bubble has worked its way through the system, and we expect everything to be back in line with our forecasts by tomorrow,” Gaut said.
UPS fell 2.7 percent to $120.37 at the close in New York, the biggest drop in four months. The shares have climbed 5 percent this year, trailing the 15 percent advance of a Standard & Poor’s index of industrial stocks and FedEx Corp.’s 26 percent gain.
The shopping surge prompted the company to notify many of its drivers that they would be required to work as many as 70 hours over an eight-day spell, Gaut said. Sixty hours over a seven-day period is more typical during peak season. Drivers are entitled to an extended rest following that period.
The International Brotherhood of Teamsters said that UPS made that move without first consulting the local unions representing employees.
“This is, after all, the third consecutive year in which Cyber Monday purchases have overwhelmed the company’s capacity to deliver packages for the holidays,” Teamsters General President James Hoffa wrote in a letter to UPS Chief Executive Officer David Abney on Monday.
UPS has implemented the temporary 70-hour workweek over eight days in the past, although it is using it more broadly around its network this year, Gaut said. News of the delays at Atlanta-based UPS was reported earlier by the Wall Street Journal.
The courier’s Express unit delivered 89 percent of packages by the end of the expected delivery day between Nov. 27 and Dec. 2, compared with an on-time rate of more than 99 percent at FedEx, according to ShipMatrix Inc., a data provider that tracks shippers’ performance.
UPS’s Cyber Monday week performance was at least 95 percent in the previous four years, according to ShipMatrix. The survey only measures UPS’s Express deliveries and does not measure its much larger Ground unit.
Gaut declined to make any internal UPS on-time statistics available.
UPS delivers almost double the volume of packages over peak season that FedEx does. UPS expects to deliver 750 million packages globally during peak season, compared with as many as 400 million at FedEx, according to each company’s forecast. FedEx alerted customers that Monday night storms at its airline hub in Memphis, Tennessee, disrupted sorting and flight operations and could delay some shipments Tuesday.
“FedEx is proud of the outstanding service we’ve been able to provide during the first week of the peak holiday season,” the company said by email. FedEx is “well-positioned” to meet expected record demand, it said.
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