Will Your Gifts Arrive on Time This Year?

How Carriers, Retailers Are Bracing for the Short Holiday-Shopping Season

Nov 14, 2019
Logistics

SMITH BRAIN TRUST  Thanksgiving is rather late this year. Does that mean your holiday gifts will be too?

The usual Christmas shopping period, which traditionally kicks off on Black Friday, can be as long as 31 days, depending on when Thanksgiving falls. But this year, that period is at its shortest – just 26 days.

For consumers who don’t start their holiday shopping until after the pumpkin pie is polished off, that might make for some last-minute hand-wringing about whether those final bundles will arrive on time.

Fortunately, some retail giants have been planning for this very situation building parcel shipment capacity that will help them avoid the kinds of backups that have foiled holiday plans in the past when the shopping calendar runs short, says Maryland Smith’s Philip T. Evers. The big difference, he says, is about what Amazon.com is doing. “They’ve simply added a lot more capacity to the market this year.”

By far the leader in e-commerce, Amazon has been aggressively expanding its delivery capabilities, investing in a network of contractors, vehicles, hubs and aircraft. That means it’s relying a lot less on UPS, Fedex and the U.S. Postal Service to make its deliveries.

Target has made a similar shift, recently acquiring same-day delivery errand service Shipt, which allows consumers to buy online and have their Target gifts – and groceries – delivered same day by a “Shipt shopper.”

Retailers and consumers know that the holiday buying rush can cause major backups for package carriers. And that can mean that customers won’t get those gifts under the tree in time.

“Everyone’s trying to take control of their delivery more,” says Evers. “If the final customer doesn’t get the product on time, they don’t really see that as a failure by the carrier. They see it as a failure of the seller, whether that’s Target, or Walmart, or Macy’s, or wherever.”

Roughly 8% of packages handled by UPS and FedEx arrived late during the 2018 holiday season, according to a study by lateshipment.com. That’s about 98 million tardy gifts.

UPS and Fedex have made holiday plans as well, learning from past seasons, improving processes and bracing for the busiest online shopping weeks of the year.

UPS has been trying to incentivize online shoppers to have their packages delivered to lockers and other central destinations, Evers says, rather than having them delivered right to the customer address. It’s about speed, efficiency – and cost. “The big cost in all this is that ‘last mile,’” Evers says. “And that's true for every type of transportation mode, whether we are talking about small package delivery or individual rail car delivery. It’s that last piece – that last mile – that costs the most.”

It’s a pricey challenge and a big one, with e-commerce gobbling up an increasing portion of overall holiday spending. Last year, U.S. consumers spent an estimated $122 billion online during the holiday shopping weeks, a 17.4% increase over the year-earlier period.

“It may be that it’s a good problem to have, in a sense. If the carriers have a problem delivering all the gifts on time this year, that may be a good thing, because that says that more people are probably buying,” says Evers. “And overall, that’s good.”

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About the Expert(s)

EversPhilip

Dr. Philip T. Evers is an Associate Professor of Logistics Management at the Robert H. Smith School of Business, University of Maryland, College Park. Joining the faculty at Maryland's main campus in the fall of 1993, he received his B.S. in transportation and logistics from Tri-State University in 1987, his M.B.A. from the University of Notre Dame in 1988, and his Ph.D. in logistics management from the University of Minnesota in 1993.

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