Why Christmas gifts arrive on time this year
The warnings were streamed earlier this fall: Buy early or you might not get your gifts on time.
Global supply chain problems, which have resulted in long delays in manufacturing and shipping, could spread outward and slow package deliveries to millions of Americans in the weeks and days leading up to Christmas, experts warned. The prospect even became a talking point during conservative attacks on President Biden’s policies.
Despite early fears, however, Christmas shoppers have mostly received their presents on time. Many consumers have helped themselves by shopping early and in person. Retailers ordered goods ahead of time and prevented further bottlenecks. And the delivery companies have planned well, hired enough people and built enough warehouses not to be overwhelmed by a flood of parcels at the last minute like the post office was last year.
The vast majority of packages delivered by UPS, FedEx, and the Postal Service this Christmas season are residential gifts, according to ShipMatrix, a software company serving the logistics industry. And almost all of them arrived on time or with minimal delays, defined as a few hours delay for express parcels and no more than a day for land shipments. Between November 14 and December 11, UPS and the Postal Service delivered about 99 percent of their packages on time, and FedEx was just behind at 97 percent, according to ShipMatrix.
“The porters have done their part. Consumers have done their part, ”said Satish Jindel, President of ShipMatrix. “When they work together, you get good results.”
That’s not to say that the supply chain turmoil is over. Around a hundred container ships are waiting off the west coast to unload their cargo. Large volume items like new cars are still hard to find due to the lack of critical parts like computer chips. And prices of all types of goods are rising.
But at least when it comes to stock items, the delivery companies have given consumers little to complain about. By taking some measures, they actually did a better job this Christmas season than they did before the pandemic. In the full two weeks after Thanksgiving, it took about four days from the moment a package was ordered online to delivery by FedEx, according to NielsenIQ, which tracks online transactions of millions of online shoppers in the United States . This corresponds to around 4.6 days for UPS and more than five days for the post office.
For UPS and FedEx, those numbers are about a 40 percent improvement over a similar time after Thanksgiving in 2019, according to NielsenIQ. For the Postal Service, it was a 26 percent improvement.
“There are all these different moving parts that worked together to help us weather a perfect storm that would have created problems,” said Bill Seward, UPS president of global sales and solutions, in an interview. “We feel really good about where we are now.”
The success is all the more remarkable as Americans are well on their way this Christmas season to spend more than the previous one – up to 11.5 percent from 2020, according to the National Retail Federation, a retail group.
But this year it was decidedly different: Many people started shopping earlier.
Consumer surveys, including those commissioned by UPS and the market research firm NPD Group, have shown that Americans have sped up their Christmas shopping this year, motivated by bottlenecks, delivery delays or earlier sales from retailers.
Including Jennifer Grisham, who lives in Southern California with her husband and three young children. Concerned about news of supply chain disruptions, Ms. Grisham asked her children to create their Christmas wish lists before Halloween, weeks earlier than usual. She finished shopping the day after Thanksgiving, which is usually when she starts shopping for gifts.
“I have three children who still believe in Santa,” she said. “I didn’t want to postpone these two really dramatic years for us because suddenly they weren’t getting what they wanted.”
Ms. Grisham said she had no problem finding the coveted items: a Barbie dream house for a daughter, Lego sets for her son, and a cat apartment for her other daughter who wants to use it as a home for her stuffed animals.
“I’m glad I made it early because I didn’t have to worry about the risk,” she said.
Retailers attracted consumers to shop early. Amazon and Target, for example, launched vacation offers in October. UPS’s Mr. Seward said 26 of the company’s top 30 retail customers started offering large sales ahead of Black Friday.
Many Americans also eased pressure on UPS and other delivery companies by doing more in-store shopping. After consumers flocked to online shopping when the pandemic broke out last year, in-store shopping has rallied strongly this year, according to retail and logistics experts. In September, in-store sales accounted for around 64 percent of retail sales, 12 points more than during the pandemic but still slightly below 2019 levels, according to the NPD Group.
“We miss people,” said Katie Thomas, a top consumer analyst at Kearney, a consulting firm, of the need to visit stores rather than buy online. “There is a lot of catching up to do. We see that people want to dress up again. “
Retailers and delivery companies also worked behind the scenes to make sure the supply chain disruptions didn’t wreak havoc on vacation packages. Retailers worked harder on forecasting sales, shifting inventory to areas where UPS, FedEx and others had more capacity to pick up packages. Companies that previously relied mostly or exclusively on a single delivery service began doing business with multiple companies.
The delivery companies have also built up capacities in the last two years due to the sharp rise in demand. UPS, which in the past did not deliver on Saturdays in large parts of the country, has been expanding its weekend service for years. It now offers Saturday delivery to approximately 90 percent of the US population. FedEx has added nearly 15 million square feet of sorting capacity to its network since June. And from spring on, Swiss Post, which processes more mail and parcels than the other delivery companies, has rented additional space and installed faster parcel sorting machines across the country.
Companies have also responded by increasing prices, charging surcharges on larger packages that could slow their networks down, limiting the number of packages they accept at peak times, and penalizing retailers who send many more or fewer packages than they do had forecast it.
“We used to think that every package was the same,” Carol Tomé, CEO of UPS, told financial analysts in October, explaining her strategy of focusing on quality over quantity. “We don’t think so anymore. For some senders, we no longer deliver their parcels, and that’s fine with us. “
The postal service cannot afford the luxury of simply turning down deals, but even they have better met expectations of vacation package delivery. Despite the introduction of the first vacation allowance last year, delivery performance suffered. This year, however, it has done much better, thanks to 13 million square feet of new processing space, 112 new high-speed processing machines, and the decision to hire employees earlier in the busy season.
“USPS is perhaps the most exciting story of all,” said Josh Taylor, senior director of professional services for Shipware, a consulting firm. “The fact that they are not overwhelmed, that their network can continue to deliver on time, is a great development for consumers.”
But the holiday crisis doesn’t end at Christmas. Online returns will keep delivery companies busy for weeks.
And the pandemic is not over yet. Fear of the spread of the Omicron variant of the coronavirus could push consumers back to online shopping in the coming months, which would put new pressure on delivery companies and retailers.