Retailers and eCommerce companies need to be on alert for the 2019 holiday season. The USPS, Fedex, and UPS shipped a combined 2.15 billion packages between Thanksgiving and New Years in 2018. With a total of 32 shipping days, carriers delivered an average 67.18 million packages per day. In 2019, carriers will only have 26 shipping days and they will need to deliver at least 86.9 million packages a day.
That means carriers will need to improve capacity by 29.3% in order to avoid massive delivery delays.
2018 has proven to be another record year for holiday sales with ecommerce
Revenues grew 19.1% according to the Mastercard SpendingPulse. Of course, ecommerce revenues have been steadily increasing for years now with no sign of slowing.
The shipping industry has continued to grow in pace with the ecommerce boom. USPS estimates that it shipped 900 million packages between Thanksgiving and New Year’s Day. Although exact statistics aren’t readily available yet, UPS and FEDEX are estimated to have shipped 800 million and 450 million packages during that same period of time. Carriers are seeing consistent, year over year increases in both demand and shipping volume.
2018 also saw improved delivery rates
In addition to that good news, on time delivery improved for each carrier in 2018 according to data from Shipmatrix. Large investments into new facilities, automation, and an expanded workforce helped contribute to this success in meeting demand and delivery expectations.
However, carriers have been lucky to have longer holiday shipping seasons for the past 6 years. In fact, 2018 had the longest period of time between Thanksgiving and Christmas possible at 32 days. 2019 will be a different story altogether with the shortest possible holiday shipping season. Carriers will have just 26 days to deliver what is sure to be a record number of packages in 2019. The question is, how much will losing 6 shipping days affect deliveries overall?
Short shipping seasons have had bad outcomes in the past, most recently in 2013
Ecommerce has been growing at such a quick rate that there are not many comparable examples from history on what to expect this holiday season. The last time we saw this short of a shipping season was in 2013. That year, news outlets and consumers slammed carriers for missing delivery deadlines that they had set and many retailers had to offer refunds or compensation. Carriers cited weather disruptions and record volumes for the delays, but it seems too much of a coincidence that it just so happened to be a short shipping season year.
In 2013, one study found that 12% of deliveries were delivered late. Consumers had little tolerance for those delays in 2013, and consumer expectations have only continued to rise as the years have passed. There can be little doubt that if this year repeats 2013’s performance, it will spell disaster for some.
In 2013, the USPS shipped 440 million packages. It would be reasonable to expect USPS’ shipping volume to exceed 900 million packages this holiday season and that’s where the concerns begin. The USPS averaged 12.7 million packages per day in the 2013 holiday season. We can reasonably assume 900 million packages in 2019 which would mean the USPS will need to ship 27.2 million packages a day to meet demand. That’s a 104% increase in demand since the last short shipping season.
Today’s fulfillment industry is much more mature and prepared for the holiday rush than it was 6 years ago. All carriers have continued making investments into people and infrastructure but have they doubled capacity?
Low unemployment, another short shipping season risk.
As if the short shipping season and increased volumes weren’t enough, the low unemployment rate poses another potential concern. In 2013, unemployment was at 7% nationwide. That year UPS and Fedex hired 55,000 and 25,000 temporary seasonal workers respectively. Today’s unemployment is below 4% and the need for seasonal help has doubled. UPS hired 100,000 for the 2018 holiday season and FedEx hired 55,000. Concerns over the available supply chain workforce are nothing new, but they add additional challenges to what could be a difficult holiday shipping season for Ecommerce companies and shipping carriers.
2019 will undoubtedly be an unprecedented year in Ecommerce. The never before seen combination of historic shipping volumes, low unemployment, and the shortest possible shipping season will present an entirely new challenge to retailers, 3PLs, and carriers alike. Winners will begin planning for this reality now and formulate a strategy based on what we saw in 2013.
At IDS we are already working with many of our clients and our carriers on holiday 2019 plans. We may be wrong, but we currently are anticipating the most difficult holiday shipping conditions that the ecommerce channel has ever experienced. Click here to get in touch with IDS about your holiday plans.