By Matt Dickerson
Senior Vice President
The experts now have had more than two months to examine the aftermath of the well-publicized tailspin of FedEx and UPS during the 2013 holiday season, and it’s now becoming clear that the problem was found upstream.
The main catalyst for the shipping issues was with the retailers, led by Amazon and Walmart.com, and not the shippers. These online retailers and others like them promised consumers ever-faster and guaranteed overnight service and set expectations that both UPS and FedEx were stretched to fulfill.
For the rapidly growing e-commerce retail market, customer expectations may outstrip the current and near future capacity of delivery companies. The issue has become a growing concern for all parties as Amazon comprises approximately 50 percent of UPS delivery capacity. During the recent holiday season, retailers failed to check with their delivery providers to ensure capacity during the peak shopping weeks would be sufficient. As it turns out, the channel was stretched too thin. The failed deliveries created angry clients who then took to TV news to complain about their ruined holidays.
Only time will tell if greater balance is found between the retailers and shippers to meet consumer expectations this holiday season. Although both FedEx and UPS have steady growth projected, neither can ramp up for a one week spike in delivery service.
This issue came to a head during in December; if the same failure occurs this year, consumers may react and spend their dollars elsewhere.