United Parcel Service Delivery Failures Raise Questions About its Readiness for e-commerce.

In December this holiday season, United Parcel Service just wrote the advertising campaigns for both FedEx and the United States Postal Service. Both competitors can go to potential e-commerce shippers with a very simple slogan: “We deliver when you need us most.”

United Parcel Service’s problems were bad enough to cause the Denver Post editorial board to comment.

While Federal Express and the U.S. Postal Service were able to get their packages delivered before Christmas without significant incident or complaint, the same can’t be said for UPS.

On Saturday afternoon, hundreds of people stood in line at the UPS customer service center in Commerce City hoping to retrieve gifts, medication and other must-haves in advance of the holiday — many without success.

The facility’s manager told The Post’s Jordan Steffen that as many as 50,000 packages would not be delivered before Christmas. “I’ve got an army out trying to find packages and I’ve got an army out trying to deliver packages,” he said. “The moral of the story is you have to ship early.”

Think about that line. “The moral of the story is you have to ship early.” Doesn’t that sound like a response that you would get from a government agency and not a private sector corporation, an excuse that blames the customer instead of taking full responsibility. They need a delivery carrier that can deliver as well as the competition, something UPS could not do in Denver. That is not what Lands’ End or JC Penney wants to hear and it could influence carrier choice decisions that these and hundreds of other e-commerce companies make when their contract comes up for renewal.

As the editorial writer noted:

Yes, people could have shopped earlier. But they made their purchases [and the merchants made their sale] with the expectation they would arrive in time for the holiday — often paying extra for rush delivery. [Merchant comment added]

Perhaps next year they should look for more reliable shipping options?

A spokesman for FedEx said their Denver operations last week were “normal with no significant delays.” USPS spokesman David Rupert said their Denver package facility handled 1.7 million packages last week and all were delivered on time.

For nearly three decades, United Parcel Service has seen its market share drift lower as FedEx expanded its ground delivery operations and proved that it could offer service equal to the safe choice in parcel delivery.   During this period, United Parcel Service played catch-up in offering the delivery service features that FedEx Ground offered, including track and trace and service guarantees.  Today its information systems are at least the equal to FedEx’s and its guarantees are identical, thereby limiting FedEx’s market share growth.  

Service failures such as the one that happened in Denver raise questions as to whether differences in the sales or operating models of FedEx, the Postal Service and United Parcel Service made it more difficult for United Parcel Service to handle the crush of volume in the last week before Christmas.  Even more importantly, the problems and UPS spokesman’s response to the problems raises a question as to whether differences in corporate culture led to the problems that United Parcel Service faced and its reaction to its failure.

Next year’s home delivery volumes will likely be just less than 20% more than shipments this year, so the challenge of dealing with a heavy home-delivery-focused peak will be even more difficult. United Parcel Service has nine months to plan for that challenge.   So United Parcel Service needs to start today and change the processes that caused failures. Even more critically, UPS needs to begin the process of reassuring its e-commerce customers that it can meet its commitments.  Otherwise the downward drift in market share will snowball.

A Personal Suggestion to UPS Management

UPS was pulling out the stops this year to hire package handlers and driver helpers.   However. its online job system probably caused it to lose candidates that it could have hired.   How do I know?   My daughter applied for a job as a driver helper, which she learned, after driving 15 miles to the UPS center in Laurel, Maryland conflicted with her other part time job as a barista.   She was told to apply again online and then schedule another appointment as a package handler.    She never did, as the process, including the long drive, seemed hardly worthwhile.

If UPS’s system would allow the interviewer to interview for either position, once it became that one or the other would not fit the person’s schedule, they would have likely had another employee.  Instead, they continued to post tweets trying to convince more people to apply.  

My daughter applied at UPS with my recommendation that it was one of the best places to work in the United States and a great place for her to start a career.  She understood that UPS management often started at the bottom and working in UPS operations could provide an entry to applying for a job at UPS that more fully uses her college degree.  I can’t say for certain that UPS would be a good fit for my daughter.  What I do know is, by having a rather rigid holiday hiring process, both she and UPS lost the opportunity to find out if there was a long term fit.


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