FedEx says an 'unprecedented' surge in online shopping caused Christmas delays

The company said that it had made all the scheduled deliveries ahead of December 25, increasing investor worries regarding FedEx's operational performance during the peak season.

However, FedEx remains numb on how its network of jets, sorting facilities and delivery vehicles failed to handle the last minute rush. Shoppers came out in force in mid-December after a slow start to the holiday season, said Craig Johnson, president of consultant Customer Growth Partners. Retailers also upped their game by providing free delivery for online purchases, one of the triggers of aggressive online shopping. If the delay shipment keeps happening, customers may lose confidence in FedEx and turn to UPS, FedEx's biggest rival. If they hire too many extra workers and have too many trucks on the road, they could overspend when the package volume is just not there. "You really don't make anyone really happy if you take a lot of last-minute packages, and then you don't get them delivered", Mr. Abney said.

Indeed, as explained by Satish Jindel, president of ShipMatrix, which tracks delivery performance across major shipping companies, FedEx had to deal with tornadoes, storms and flooding wreaking havoc in the South, Midwest and Southwest. At that massive volume, even if the carriers delivered 99 percent on-time performance, that still means 600,000 packages would not have made it to their recipients in time. Between UPS, FedEx, and the United States Postal Service (USPS), an estimated 60 million packages were delivered on Christmas Eve day alone. The transporter was also forced to put its drivers on the road on the Christmas Day to at least reduce the delivery backlog. "Some retailers provide return labels within outbound shipments, while others have technology that allows them to offer a consumer credit or refund as soon as the item is scanned into the UPS network", it said. Some customers said that their packages sat for extended periods within the SmartPost system without making any forward progress. UPS struggled early in the holiday season, with an on-time delivery rate of 93 percent in the week following Black Friday. Delayed deliveries could be an indication that the company was subjected to record volume levels this holiday season. UPS required an extra day for delivery for its three-day and two-day shipping options during Christmas week, a move that prompted retailers to send more packages over the weekend.

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