Shipping volume for carriers soars around the Holidays in November and December, and UPS in particular is coming off of two rough holiday seasons in a row—one from a service perspective (2013) and the other from a cost perspective (2014). This is largely due to an increase in the volume and increase in the shipment of oversize packages that are not compatible with UPS’s sorting facilities, and therefore must be specially handled through every facility. The added time it takes to move these cumbersome packages puts a strain on UPS’s network capacity.
After finding itself short-staffed during the seasonal surge in 2013, the company added about 90,000 seasonal employees to help during the 2014 holiday shipping season. This year, UPS will attempt to add another 90,000 to 95,000 seasonal employees to handle the additional workload, though early reports indicate the carriers may have trouble finding those additional employees. As an additional measure to prevent the peak season service challenges that occurred in 2013, UPS has been approaching retailers mid-contract and adjusting conditions to either eliminate delivering oversize packages altogether, or charge the retailers more heavily to ship them.
But charging more to deliver packages that are creating a logjam doesn’t mean that the holiday shipping process will move more efficiently – it will simply help the carrier maintain its profits during the period of increased volume. You still need to be prepared for what could potentially be another challenging shipping situation this holiday season. Below are some tips from the experts at IA that will help you circumvent these unfavorable conditions and get all your shipments to their destinations on time.
1. At the local level, you should immediately make contact with your local industrial engineering, hub, feeder and package operations teams. Request a face-to-face meeting with them. Discuss your holiday plans with them. Make sure to inform the carrier well in advance if you know you will have a large volume of non-conveyable packages shipping at once; that discussion may lead to separating the non-conveyable packages from the regular size packages on the truck for ease of sorting and handling. Discuss any special opportunities for you to take advantage of the network. Find out about special sorts that you can take advantage of on the weekends, holidays or off hours. Make sure you get your packages serviced like they need to be serviced, and in some cases, advance your packages based on what the carriers are trying to do—protect capacity. UPS and FedEx will be trying to keep their networks as clean as possible, so they’ll be running special sorts starting in November to move that work all the way until Christmas.
2. Make sure you have good communication with carriers. If the carriers have problems, they should be comfortable proactively notifying you of those problems. Whether it’s capacity or weather-related, you need to be aware of these problems in order to let your customers know. (Keep in mind: El Niño is expected to last through Spring 2016, so shipping routes, especially in areas like Florida and Texas, could be affected during peak season by additional rainfall.) If you are a multi-source shipper using multiple carriers, you should be ready for all options and stay in touch on service levels for each of the carriers to take advantage of the one that is providing the best service. You have to proactively communicate with the carriers. If you’re utilizing multiple carriers, don’t think you can play them against one another to get the best possible service. If you drastically shift the volume of shipments with one carrier during peak season, do not expect those packages to get serviced effectively, as the carriers will not be prepared.
3. Contact your customers and the people you supply, even if you ship to internal customers or to your own distribution centers, and get them to advance as much of their December ordering into November or early December as possible. The more you can level your peak season shipping volume, or the earlier you can ship each package, the better. If you are an e-commerce or retail business, you need to find ways to incent your customers to order early and let them know that you cannot guarantee on time shipping if they wait too late. The better you work together early, the better off you can service your customers.
4. If you are stocking your warehouse to ship products, you need to start projecting that now and get as much of your product warehoused and staged as possible. We typically wouldn’t recommend warehousing and holding inventory, but instead of getting short on inventory and not being able to fulfill orders for customers, go ahead and get the products into inventory now, and for the short term, warehouse the product.
5. Analyze your own internal pinch points. Review your peak season shipping history from years past, especially 2013, and see if any facilities had issues. If they did, work with your management team and get out in front of any issues that could arise this year. The pinch points at those locations could have come from the business not being able to fulfill orders, not the carrier. Get the product ready in time, fulfill orders effectively and label shipments correctly to minimize lost and damaged goods. Just as carriers have employment and capacity problems during peak season, shippers do too. It is peak season for everyone, including your business. Now is the time to check all of the label printing equipment and do maintenance or preventative maintenance to ensure labels are printing without defects, which can cause a huge strain on the carrier’s ability to sort efficiently Common label defects include smudging, damaged print heads leaving a blank space in the barcodes or worn out print heads resulting in overall poor print quality. In addition, make sure you are starting to prepare with staffing and order cutoff management to help yourself serve customers. Don’t overcommit to customers. Don’t take an order too late and promise to fulfill it that night. Be realistic about your customers’ expectations and your ability to fulfill them.
When it comes to peak season shipping, companies have to do their own share of preparation to ensure that their packages end up where they need to be in a timely manner. Monitor service levels of your parcel and freight carriers, and schedule service reviews with your carriers for January to follow up on their performances during the peak season. Be sure to keep these tips in mind as the holiday season approaches, and contact Intelligent Audit with all of your transportation and logistics questions.