Shippers fall short, blame online shopping, weather

Published on Sunday, 29 December 2013 23:57 - Written by Staff and Wire Reports

Tina Vega had a Christmas surprise: a UPS delivery man.

“To my surprise a UPS guy showed up here about 9 a.m. on Christmas Day. He had his little Santa hat on and everything,” the Tylerite said via Facebook. It was one package she was waiting for but not worried about.

But that wasn’t the case for many waiting for packages to arrive before the holiday as some of Santa’s helpers fell short this season.

Across the country, shipping problems at UPS and FedEx delayed packages, leaving some without presents to open Christmas morning.

Carrie Cole Brantley, of Tyler, was waiting on one package from the U.S. Postal Service.

“Maybe this will teach people (read: me) to order earlier next year,” she said via Facebook. “I’ve always been a mall rat, and this is the first year in my life I didn’t go to the mall one time during the holiday season.”

Justin Londagin and his wife ordered their 7-year-old son a Seattle Seahawks jersey from NFL’s website on Dec. 19. They paid $12.95 extra for two-day shipping to get it to their Augusta, Kan., home before Christmas, but it didn’t arrive in time.

“We had to get creative and wrote him a note from Santa to tell him that the jersey fell out of the sleigh and Santa will get it to him as soon as he could,” he said.

The delays were blamed on poor weather earlier this month in parts of the country, as well as overloaded systems. The holiday shopping period this year was shorter than usual, more buying was done online and Americans’ tendency to wait until the last possible second to shop probably didn’t help either.

Neither company said how many packages were delayed but noted it was a small share of overall holiday shipments.

Shippers “really had their work cut out for them this year; (I) don’t know how they did it,” Ms. Vega said. “I wish people would stop being so hard on them.”

Between Thanksgiving and Christmas, FedEx handled 275 million shipments, said Scott Fiedler, a spokesman for FedEx Corp.

Natalie Godwin, a spokeswoman for United Parcel Service Inc., said the volume of packages shipped exceeded the capacity of UPS but would not share the number of packages shipped or what the company’s maximum capacity is.

While the bulk of consumers’ holiday spending remains at physical stores, shopping online is increasingly popular and outstripping spending growth in stores at the mall.

Heavy overall spending in the final days of the mostly lackluster season sent sales up 3.5 percent between Nov. 1 and Dec. 24, according to MasterCard Advisors SpendingPulse, which tracks payments but doesn’t give dollar figures. Online shopping led the uptick, with spending up 10 percent to $38. 91 billion between Nov. 2 and Dec. 22, research firm comScore said.

“We always have last-minute Charlies, but this year even people who normally complete shopping earlier completed shopping later,” said Marshal Cohen, chief retail analyst at market research firm NPD Group.

The last-minute surge this year solidifies the increasing popularity of online shopping, which accounts for about 10 percent of sales during the last three months of the year. It also underscores the challenges that companies face delivering on the experience, particularly during the holiday shopping season that runs from the beginning of November through December.

Analysts say FedEx and UPS typically work closely with big retailers to get a sense of the volume of packages they’ll handle during peak times like the holiday season. Extra flights, trucks and seasonal workers can be added if the projections are large.

But this year, David Vernon, a senior research analyst at Sanford C. Bernstein, said weather played a role. The early December ice storms in Dallas could have hurt operations, he said, and packages can start to accumulate. And that got compounded by a late surge in shipments, he said.

“Clearly, as a group, (they) underestimated the demand for Internet retailing during the holidays,” Vernon said.

Jeff Cormier and his Dallas family were among those who ordered gifts that didn’t arrive.

He had three separate UPS packages — including two for which he paid extra for expedited shipping — delayed.

“I’ve had to apologize to three different people when I thought I had everything wrapped up and good to go way before …” Cormier said. “My wife and I had our presents to open. Our daughter had her presents to open. And my grandma — she didn’t have anything to open.”

“We apologize that our customers did not receive their packages on Christmas,” Godwin said.

Godwin said snow and ice in the Midwest last week and an ice storm that hit Dallas two-and-a-half weeks ago were partially to blame.

Some FedEx customers were able to pick up packages Christmas Day at their local FedEx Express centers.

Those that were not delivered in time, Fiedler said, “would be very few.”

Another problem was the growing popularity of retailers offering free shipping. Amazon, for one, has a two-day free shipping offer that comes with its $79 annual Prime membership. The company said in the third week of December alone, more than 1 million people signed up for the membership. And throughout the holiday season, the company said it shipped enough items with Prime to deliver at least one gift to every household in America.

Amazon.com has been notifying some customers affected by the UPS delays that it will refund any shipping charges and is giving them a $20 credit toward a future purchase.

Amazon spokeswoman Mary Osako said the company processed orders and got them to its shippers “on time for holiday delivery” and is now “reviewing the performance of the delivery carriers.”

Macy’s and other retailers said they were looking into the situation.

“Frankly the right hand wasn’t talking to the left,” said Forrester analyst Sucharita Mulpuru. “The marketing teams of a lot of Web retailers (offering free shipping) were not talking to the operations and supply chain teams.”

The resulting delayed shipments could be a problem for shippers.

“The central pillar of their business is a perception of reliability with their customers,” said Jeremy Robinson-Leon, COO of Group Gordon, a corporate and crisis PR firm. This year’s snafus “just really erodes trust among customers.”

Still, analysts say people will still shop online. “Consumers tend to have a short memory, especially if you fast forward to another year,” said Andrew Lipsman, vice president of industry analysis for comScore.

Indeed, some shoppers are taking the delays in stride.

Traci Arbios, who lives in Clovis, Calif., did about 90 percent of her shopping online. Most items included free shipping and everything arrived on time except one package she ordered from a seller on eBay that was sent first class by the U.S. Postal Service on Dec. 12. It still had not arrived on Thursday.

“Everything arrived on time except this one item,” she said. “It’s not going to stop me from shopping online.”