In yesterday’s post, we noted that 2013 retail saw a massive package fail with packages being delivered two weeks or later than expected. The situation was so bad that, as reported in The Washington Post, Amazon, UPS offer refunds for Christmas delivery problems.

We also asked what really happened, and how can all carriers learn. In our attempt to answer this, we noted that Jim Tompkins penned a good piece over on in the Tompkins International Blog on “Realism and Final Delivery for Holiday 2013” where he noted that there were five really big factors that were going to impact final delivery and yet UPS and FedEx still failed to be realistic, practical, or pragmatic in communicating their failure to deliver on their promises for holiday 2013, even though both UPS and FedEx should have predicted all of the factors.

So how can carriers fix the mess they helped create? According to Jim, carriers need to do a better job at three things:

• peak planning
• contingency planning
• communications

And he’s right, especially where communications are involved (as the big shipping companies should have known by December 21, after being storm-stayed for 2 days, that they were in crisis and should have communicated that fact), but planning alone won’t be enough as next year could again bring the situation where the number of packages in the network overloads the entire capacity of the network.

So what do UPS, FedEx, and other carriers have to take away from this to avoid major package and delivery fails this year?

• plan for peak
  At some point, unless you’re (on the road to be) going out of business, you’re going to hit peak capacity. Plan for it. Be sure you can operate at peak efficiency during this time.
• plan for disruption
  Be it weather, strike, or some other unplanned natural or man-made catastrophe, you’re going to experience a major disruption — and, thanks to Murphy’s Law, it is going to occur at the worst possible time. Have contingency plans in place.
• plan for partners
  Not only will the disruption strike at the worst possible time, but it will result in your load exceeding your peak capacity. At this point, you have two options — accept that some deliveries will be late (and some customers will be really upset and possibly leave you for your competition) or offload some of the load to a partner with whom you have a bi-lateral contingency agreement. For example, if UPS and FedEx would have planned ahead, they could have offloaded a large number of packages to traditional 3PLs and local delivery services who were both under-capacity and looking for work. In order to take advantage of peak season, retailers need their goods on the shelves by black friday. So, the carriers that deliver to retailers will have likely made their last delivery by mid-December. There’s no reason that they can’t be used as the long-haul carriers from DC to DC, which was a big part of UPS and FedEx’s problem. Plus, most local delivery services, that often make their living couriering documents and local office supplies, are probably not going to be that busy by mid-December when office managers and legal departments start going on vacation. They could pick up from a local DC and act as additional delivery staff — they just need a hand-held scanner. Similarly, when traditional carriers hit peak capacity in November and have problems making delivery times due to weather or equipment failures, excess could be offloaded to FedEx and UPS which often only hit peak capacity during the big retail rush.

Murphy’s law, with a little help from Mother Nature’s black swan, will insure that any carrier that does a reasonable job of running their business will hit peak, will get disrupted, and then will not have the capacity to recover without help — especially if the retailers do not do anything to dispel the myth that waiting until the last minute to shop online is a good idea. So plan for this, and line up some help as part of your disaster-relief contingency plan. Then maybe you won’t end up with a tractor trailer of egg on your face. Just a thought.

As summarized in Martin Murray’s Logistics/Supply Chain blog on About.com, 2013 retail saw a massive package fail with packages being delivered two weeks or later than expected. The situation was so bad that, as reported in The Washington Post, Amazon, UPS offer refunds for Christmas delivery problems. (Specifically, customers of Amazon who failed to get their deliveries by Christmas day received $20 gift cards and refunds on shipping charges and UPS is refunding shipping costs. FedEx, on the other hand, is only going to work with people affected.) According to the Washington Post article, the delays were due to a combination of bad weather, shoppers waiting until the last minute, and the overwhelming surge in online buying. (A UPS spokeswoman said the volume of air packages in our system exceeded the capacity in our network.)

According to Mr. Murray, the situation with ordering from online retailers probably won’t improve next year, unless the major parcel carriers understand that people order late, they order a lot, and they expect it on time. SI agrees that an understanding will help, but only if they do something about it.

So what really happened, and how can all carriers learn? Jim Tompkins penned a good piece over on in the Tompkins International Blog on “Realism and Final Delivery for Holiday 2013” where he noted that there were five really big factors that were going to impact final delivery and yet UPS and FedEx still failed to be realistic, practical, or pragmatic in communicating their failure to deliver on their promises for holiday 2013. What were the factors?

1. 26 Days Between Thanksgiving and Christmas to Shop
2. 26 Days Between Thanksgiving and Christmas to Deliver
3. Growth of Online Shopping
4. Retailers’ Behaviour
5. Weather

As Jim notes, factors 1, 2, and 3 were based on fact, well-known, predictable and non-controversial. They pose significant challenges, but ones that have been around since the WWW, created by Bernes-Lee in 1990, began to be used commercially in 1991 (and definitely since Amazon.com and eBay launched in 1995). These should not have been that much of an issue.

Factor 4 could have been predicted too. As Jim notes, there is a clear sense among consumers that delaying online shopping is a good thing because the availability of great promotions and free shipping became more and more prevalent in 2011 and 2012 and there is no reason to buy early when it is better to wait and get a better deal. Since retailers did little to dissuade this notion, many consumers held out to the last minute to shop online hoping for a better last-minute deal.

And while the breadth of factor 5 can not be predicted in advance, there are recent precedents for bad weather that covers a wide geographical area several days in a row. As an example Jim reminds us that it was only nine years ago when an ice storm crippled Memphis and Louisville, resulting in major final delivery problems for Christmas — and with the effects of global warming (which exists, regardless of what overpaid scientists employed by mega corporations tell you^*) increasing by the year, massive storms should be expected.

So what should carriers take away from this fiasco? Stay tuned for Part II tomorrow!

^* With only a few exceptions, the average temperature of the earth has been increasing steadily for the last 30+ years. (See this graph from the NOAA.) Anyone who says there is no global warming is therefore a liar or an idiot. What is not known is the degree to which we are causing it with respect to pollution, etc. and the degree to which global warming is a natural part of the earth’s cycle — as an analysis of the history of the earth through extracted core segments shows that just like there were ice ages, there were also times of higher temperature. But the fact that some degree of global warming could be natural is not important — what is important is that this analysis also shows that when temperatures rise, droughts and natural disasters become more common and (mass) extinctions soon follow. Therefore, even if we are only responsible for a (small) fraction of the global warming that is currently occurring, we should be doing everything we can to minimize our impact!