Weekend escalations of fulfillment and delivery capacity enabled UPS to eek out a successful holiday season despite a heavy surge in e-commerce this year and many orders placed well after Black Friday, UPS CEO David Abney told CNBC Tuesday.
FedEx this year had more trouble keeping up with orders, and scrambled after Christmas Day to deliver late packages.
Earlier this month, the major shippers had already seen some difficulties due to by some measures was a 20% increase in e-commerce this year, to the point where UPS’s on-time deliveries fell to 91% from its 97% average in nonpeak months, and FedEx’s fell bellow its 95% average, according to shipping software company Shipmatrix. But Abney said that overall the company was able to maintain a 97% to 98% effectiveness rate throughout holiday season.
The specter of late deliveries that happened in 2013 due to a confluence of bad weather and late orders has hovered over the shipping companies ever since.
In response, and in an effort to avoid a repeat of the past, UPS in particular has made major changes to its systems, the company says, which allowed it to make all its deliveries by Christmas Eve, according to Abney.
Abney and UPS spokesman Steve Gaut both employ the word “discipline” to describe the shipper’s method of handling the peak holiday season. That includes working with retailers regarding cut-off dates for promises about on-time delivery, stepping up operations on the weekends, and keeping close watch on capacity at all times and adjusting accordingly. Abney gave credit to the legions of workers that remained flexible and hard-working.
"It seems like the third time's a charm for UPS," Kent Winegar, portfolio manager asset management company Terry McDaniel & Co, which holds some $15 million in UPS stock, told Reuters. "But if e-commerce keeps growing at such a rapid rate we'll see how they do next year.”
Abney addressed that in his remarks to CNBC, and appeared to be confident about next year and the increase in e-commerce in general. He also said that he and the company remain “very comfortable” in its relationship with Amazon, which the Wall Street Journal reported was considering wresting some of its fulfillment and delivery from its long-time partner and bringing it in house.
“Really we just don't see how any of our large retailers would be better off without us," Abney told CNBC.