FedEx ruins Christmas for some
Missed Christmas deliveries again made the headlines this holiday season. The culprit this time was FedEx.
Like 2013, when both UPS and FedEx failed to deliver holiday packages on time, weather took some of the blame. FedEx’s major air hub in Memphis was blasted by storms in the days before the big day. But even before the storms, FedEx’s systems were being overtaxed by high delivery volume.
On Dec. 20, a Pacific Sunwear e-mail sent to customers blamed FedEx for delayed shipments, and Eddie Bauer made similar comments on Dec. 22. Jet.com the prior week warned customers that the company could miss holiday delivery deadlines due to “nationwide shipping delays that have affected many of our shipping partners.”
FedEx employees volunteered to work extra shifts on Christmas to complete deliveries. A few FedEx stores were open to enable customers to pick up packages on the day.
Much like two years ago, an avalanche of complaints about FedEx landed on social media with many labeling FedEx the “Christmas Grinch.”
Many news reports traced the shortfalls to accelerated online spending. Both FedEx and UPS were also delivering well below average in the first week of December following a Black Friday Weekend surge. Online holiday sales are expected to grow from 6 to 8 percent (National Retail Federation) to as high as 14 percent (Comscore).
Both carriers have been investing and resetting strategies to handle peak delivery periods while also partnering and enforcing volume limits with retailers.
A spokesman at UPS, which didn’t report any unusual rate of botched deliveries, told the Wall Street Journal on Dec. 23 that the company “has worked closely with customers to establish detailed operating plans to ensure available capacity and cut-off times are understood, so there are no surprises for either party.”
But on FedEx’s second-quarter conference call held on Dec. 16, Fred Smith, CEO, indicated that some retailers were collaborating better than others. Mr. Smith remarked, “The people that have the real problem in the e-commerce business by and large are those that view the transportation companies as some sort of utility or a vendor and they make some really, really bad decisions.”
- UPS holiday deliveries off to a rough start – CNN
- FedEx is shipping on Christmas to get delayed packages to customers – CNN
- FedEx Plans Christmas Delivery in Some Markets After Delays – Bloomberg
- FedEx Says Employees Working Extra Shifts on Christmas – Wall Street Journal
- Some Retailers Warn of Delivery Delays and Blame FedEx – Wall Street Journal
- Jet.com’s Strategy: Low Prices, Fast Delivery, Happy Workers – New York Times
- Jet.com Misses Last-Minute Christmas Sales and Shows Downside of Its Model – Re/code
- FedEx’s (FDX) CEO Fred Smith on Q2 2016 Results – Earnings Call Transcript – Seeking Alpha
What lessons should retailers take from FedEx’s challenges meeting Christmas Eve delivery targets this year? What pain points are likely frustrating collaboration between retailers and third-party carriers?