Christmas is just a couple of days away and that means that UPS and other shippers are rushing to get every package and gift to its final destination. Just how much work does that take? Quite a bit. Businessweek reports that UPS starts planing for its peak season in the previous January (UPS’s Holiday Shipping Master: They Call Him Mr. Peak, Dec 19).
There are several parts to their plans. One part is laying in extra capacity and it ain’t just hiring college kids to sort packages.
This year, UPS is adding 55,000 part-time holiday workers, leasing 23 extra planes, and effectively building a second trucking fleet to handle the seasonal package flow. None of this is cheap. It’s up to Mr. Peak to plan accordingly.
On top of that, UPS maintains a contingency fleet of 18 planes that are on the ground but ready to head out with 30 minutes notice to respond to unexpected volume or weather-driven disruptions.
The folks in brown also work with major shippers to learn their plans and then accommodate their volume.
Abell and his team meet with most of their 25 largest customers to see how they feel about the way things went. They’re especially attentive to Nordstrom. UPS develops an annual 50-page peak season plan solely for the store. Early in the season, the high-end retailer relies heavily on UPS’s trucks to deliver items within five days. But during the week before Christmas, Nordstrom runs out of time and has to start moving packages by jet. That means Abell has to schedule several daily flights in and out of the UPS hub in Cedar Rapids, Iowa, near Nordstrom’s distribution center.
Last year, Nordstrom surprised Abell with a last-minute spike in holiday orders. UPS won’t say if any of the retailer’s sweaters, scarves, and faux-leather jackets were late. This year, however, the peak team put a plan together to pre-sort Nordstrom’s packages by region before they leave the store’s distribution center to speed things along. “They spike up to 80,000 a day out in Cedar Rapids,” says Scott Duckett, a member of the peak planning team. “We have a huge operation where we actually put UPSers on-site at Nordstrom’s.”
This is a fascinating story with lots of interesting angles. One question is whether UPS actually makes much money on all this holiday volume. All that extra staffing and spare planes doesn’t come cheap. However, it may just be a question of locking in customers. While the average consumer may believe that big shippers don’t have a whole lot of choice in who handles their packages, Nordstrom and Amazon may have more options than you realize. See this Wall Street Journal article on the growth of large regional shippers. Having the resources and proven expertise for handling the Christmas rush may be what creates customer loyalty for the whole year.