Editorial: Choking on volume

   To the casual observer, North America’s giant express carriers—namely UPS and FedEx—seem to have it all.

   They devote hundreds of millions of dollars to purchasing the latest transportation assets and information systems, and offer just about any service imaginable today to the shipper, from parcel and less-than-truckload to air and ocean freight forwarding and customs brokerage. They are the most recognized brands among the general public today when it comes to moving goods, and people will generally pay a premium, although not always happily, for one of these two entities to handle their shipments.

   However, they’re not invincible. With the increasing emergence of e-commerce—buying items online and having them primarily delivered to one’s doorstep instead of getting them at the store—UPS and FedEx have both experienced their share of service blunders. That became apparent in a most public way once again around the 2015 Christmas holiday shopping period, when the two express carriers in certain markets quite frankly choked on the amount of volume of packages being pushed through their transportation channels, resulting in missed delivery windows and unhappy customers. With the mild winter so far around most of the country, UPS and FedEx couldn’t blame that for the shortcomings. The increasingly frustrated mega-online retailer Amazon wants to reduce its reliance on UPS, for example, by entering the freight transportation and logistics services business itself. Rumors are swirling that it plans to buy a French parcel delivery company this spring. It’s uncertain how far Amazon will go with adding freight delivery services to its expansive retail operations, but the point is there are certain services and cost aspects about using express carriers that the company clearly doesn’t like and wants to change.

   Most retailers, even many big name brands, don’t have the internal wherewithal to internalize their freight transportation and logistics management, as they perhaps once did many years ago before third party services providers took over much of these activities.

   Yet, retailers are just as much to blame for the service failures experienced with the express carriers during the end-of-the-year holiday season. The fact is that tidal waves of freight being funneled through finite systems can cause even the most sophisticated transportation service provider to choke. UPS and FedEx, and even the U.S. Postal Service, did a noble job handling these volumes. But it doesn’t have to be this way.

   As e-commerce continues to take a larger portion of retail sales and drive more freight into the domestic transportation system, these waves of holiday packages will only get larger and more difficult to handle. That’s why it’s now more important than ever during the off-holiday periods for retailers to develop secure ways to more efficiently share shipping forecast data with their largest service providers, such as UPS and FedEx. If these companies have a clearer idea of what may be coming from their biggest customers, then they can devote the necessary resources to eliminate former and future service hiccups.

   The knock-on effect of efficient shipment data-sharing is clear—happy retailers and transportation service providers, and most importantly, happy customers, means a happy holiday season for all.