Lost UPS packages: a glimpse of the future

A United Parcel Services Inc. (UPS) worker delivers boxes on February 1, 2011 in New York City.

Searching through a pile of 100,000 packages

Heath Thompson thought he’d covered every base, and come  today he’d be on his way to the Caribbean. Then he forgot his passport.     

"I had a friend ship it early on the 22nd priority overnight with UPS," Thompson says.

The passport did not arrive overnight. Or on the 24th.  Or on the 25th.  He became concerned that, "I wasn’t going to be able to go on vacation with my family."

Thompson flagged down a UPS driver, got the number for the warehouse, and inquired there. 

"It might be lost," he was told at one point. 

But a warehouse worker took pity and personally searched through a vast pile of 100,000 packages at the distribution center.  She and another worker gave Thompson their cell phone numbers and he was able to stay in touch with them as they looked. 

Finally, success. 

He drove to the distribution center and called her on his phone, "she ran the package out through the freezing weather, came out and delivered it in the car window," just hours before his plane took off.

"I’m sure they’ve been getting tons of calls of people whining and complaining but they were very sweet, helpful ladies," Thompson says.

Not everyone was as lucky. Twitter was awash with venom directed at UPS and FedEx.

So how does something like this happen? 

Bottom line: Shippers always have to predict demand, and this time they got it wrong. 

UPS was expecting peak holiday package traffic to run 15-18 percent higher than their daily average of 15.5 million packages per day, according to Satish Jindel, president of SJ Consulting. 

On Christmas Eve, UPS was looking at 34 million packages.

FedEx was overloaded too, going from handling 10 million packages on an average day to 22 million Christmas Eve, says Jindel.

Why the last-minute crush?

"What was not expected and could not have been planned for was the change in the weather patterns in the days leading up to Christmas Eve," says Jindel.  He is not, however, saying that bad weather delayed the shippers, but rather, it paralyzed shoppers. "They were placing online orders that they otherwise would’ve gone to the brick and mortar stores if the weather was better."

Add to that eager retailers who, with six fewer shopping days this season, tried to snag as many last minute shoppers as possible by pushing back deadlines. 

"It really compresses the logistics providers’ ability to make those schedules and have any flex at all in their system," says Doug Fisher, director of the Center for Supply Chain Management at Marquette University.  

Consumers want – and are offered – instant gratification. 

"You don’t build a church just for Easter."

Fisher says that during the holidays, shippers have to expand capacity and there is little room for last minute finesse . 

"UPS has close to 400,000 employees, about the size of Milwaukee, with a  fleet of 230-240 jets and 100,000 trucks," he says. "Over the holiday period they hire 50,000-60,000 temporary workers, they lease another 20-25 airplanes, and will try to build another trucking fleet for capacity purposes."

Demand prediction is an art, and there is increasingly little wiggle room.

"I used to know demand planners," says Fisher. "They used to introduce themselves as the people who are always wrong.”

Moving forward, retailers and shippers may well promise less, and consumers may have to expect less.

Questions of brand damage

Jindel, with SJ Consulting, says it’s important to bear in mind that the number of affected people is probably relatively small.

He says service is usually so good, and consumer opinion normally so favorable (far better than the airline industry), that FedEx and UPS will probably be able to weather this incident.

Remember, 90 percent of packages make it on time on an average day, he says. 

In this instance he thinks mailers “probably still achieved close to 96-97 percent, which I would remind you is a very high number.”

It’s just that when those missed deliveries happen on Christmas ... everyone notices. 

About the author

Sabri Ben-Achour is a reporter for Marketplace, based in the New York City bureau. He covers Wall Street, finance, and anything New York and money related.

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