UPS: We Tried Too Hard To Deliver Your Holiday Packages On Time
Bloomberg reports that UPS is blaming the costly extra measures it took to ensure on-time delivery leading up to the 2014 holiday season for its lower than anticipated earnings and for a possible increase to shipping costs.
Coming off a disastrous 2013 holiday shipping season where many consumers’ gifts didn’t make it under the tree in time, UPS announced early last year that it would do things differently in 2014.
In all, the company hired 95,000 extra workers and spent nearly $675 million on improvements to software, driver aids temporary sorting facilities and extra staff.
Those added maneuvers – along with reasonably cooperative weather – paid off in a 98% on-time delivery rate for express packages, Consumerist reported earlier this month.
However, the company’s total volume package for most days between Dec. 1 (Cyber Monday) and December 22 (the peak shipping day before Christmas Eve) fell far below projections. That means, as Bloomberg reports, that much of the company’s new workers and trucks were left idling.
Officials with the company say the drop in productivity, coupled with the extra expenses for training and overtime resulted in UPS’s 2014 preliminary earnings falling far below expectations.
“UPS invested heavily to ensure we would provide excellent service during peak when deliveries more than double,” said David Abney, UPS chief executive officer. “Though customers enjoyed high quality service, it came at a cost to UPS. Going forward, we will reduce operating costs and implement new pricing strategies during peak season.”
Translation: We probably won’t hire as many seasonal workers and will likely charge more for holiday shipping next year.
UPS Prepared Too Well for Holiday Rush and Paid the Price [Bloomberg]
UPS slammed by a different holiday season mess-up [Fortune]
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