Is America Overspending?

by Tuesday, April 12, 2016

Is America Overspending

Christmas is the season for FedEx and United States Postal Service (USPS) to send a combined total of possibly over 350 million packages! 2015 was one of the business seasons yet. USPS is projected to deliver over under half that — 30 million packages.

Why is there such a dramatic increase in sales for the holidays? Online shopping seems to be the culprit, in this case, and the industry is grower larger and larger. There are more people who are shopping for their holiday gifts on the web. When more people learn about online shopping, find out how simple it is, they’re more likely to spend more.

There is so much online traffic going on that it’s beginning to clog up various delivery networks as well as the sorting facilities for shipping companies. The National Retail Federation for 2015 suspects that online sales to grow twice as much as with overall sales. It’s forecasted that the overall increase will be six to eight percent in the months of November and December (it was originally about 3.7% in overall sale).

The numbers have grown far more than what was previously believed. With all these hungry shoppers, there needs to be enough package companies on standby to ship a potential 15.5 billion holiday items. The Postal Service is planning on employing about 30,000 seasonal workers as helping hands for the overload. USPS believes that this holiday season will be so busy that they will have to begin delivering seven days out of the week. This temporary change will go on up until Christmas.

Christmas is not the only holiday where everybody is sending out gifts. The Postal Service believes there will be over 600 million packages send out between New Year’s Eve and Thanksgiving alone. It is a 10.5% increase compared to the previous year. USPS will have a lot on their shoulders, but FedEx may be the one with a tougher time. The shipping company mentioned that they are preparing to deliver 317 million packages during the holiday season.

FedEx believes that their package volume will be about 2% more than what USPS has to take care of. FedEx expects their busiest holiday shipment times to be a mix between Christmas Eve and Black Friday. The shipping company suspects that more shipping will occur on Cyber Monday, which gets celebrated on November 30th and the first two Mondays in the month of December. Their workers will have to handle a package volumes more than twice the normal amount.

FedEx is planning on employing over 55,000 seasonal workers to assist them this year, which is about 50,000 more workers than last year. FedEx has other plans to investing billions of dollars in hopes to improve the capacity and automation of their network. It also includes going their current locations as well as constructing completely new buildings. They believe that the investment will be worth it as they notice the dramatic shift in buyer shopping habits. There is now more pressure on repairs and shipping companies alike to come up to snuff and make sure everything runs smoothly regardless of the increase in work.

Online shopping sites like Amazon or Ebay, and international sites, like DHgate and Alibaba, are flooded with work, but that does not mean major retailers are completely out of the picture. Regardless of how e-commerce sites are doing, they too are expecting more package volume. These companies also are working on adding more seasonal workers to handling all online orders at their fulfillment centers. Macy’s, for example, is planning on employing 85,000 works. About 12,000 of those people will work in direct consumer fulfillment facilities. This year, it will be over 2,000 more temporary workers.

Kohl’s, another major retailer, is planning an adding about 2,000 temporary workers in their centers compared to what they have the previous year. Wal-Mart is just as busy with holiday orders this year, but will be working on a different approach. As with Amazon, the company is hoping to make if more efficient to order online by using drones. When large companies make moves like this, they are ensuring they will be more prepared to take care of all incoming online orders. While online and physical retail stores work hard to ensure all online orders get handled promptly, Michele Dupre, vice president for Verizon, says they still rely heavily on shipping companies to ensure they meet buyer demands. They want to ensure a more successful time this year more than ever as there were times in the past packages were not always delivered right on time for Christmas.

In 2013, UPS was not able to send thousands of holiday packages by Christmas Eve. They employed more seasonal workers last year. However, they soon discovered that the demand was nowhere near what they presumed, and it hurt the fourth-quarter of their performance. This year, UPS is planning on hiring the same number of workers for the holiday, about 90,000-95,000. Stores and Shipping companies are hoping this year will be a successful one.

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