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UPS, FedEx Holiday Troubles Open Door for Competition

Despite a holiday shopping season that was six days shorter than the 2012 edition, US consumers still spent $42.8 billion from their desktop PCs between Thanksgiving and December 22 according to comScore. But quite a few shoppers who waited until the last minute to spend that money and relied on express shipping options from major shipping firms UPS and FedEx encountered a surprising outcome – delayed deliveries.

These delays meant consumers missed out on their expectations even though they had chosen shipping options advertised as guaranteed delivery dates. For UPS, package volume exceeded available air capacity.

FedEx has publicly claimed it suffered no major service disruptions leading into the Christmas holiday. Public reports like this one claim otherwise. Meanwhile US Senator Richard Blumenthal (D-Conn) called UPS on the carpet and urged the carrier to refund customers whose packages did not arrive on promised delivery dates.

The real long term change could come as ecommerce companies facing disappointed customers look for additional shipping options beyond the biggest names in package delivery. While one Wells Fargo analyst suggested opportunities for more delivery competition exist, it seems logical that a question of trust about such new options will be at the forefront of the minds of online sellers.

Additional shipping options include regional shippers, which, according to this December 18th Wall Street Journal article, can typically get a package between two points in one region faster and cheaper than national carriers. “By cobbling together networks, the regional shippers are grabbing market share from UPS, FedEx and the U.S. Postal Service as e-retailers look for cheaper, faster delivery options for their online shoppers.”

And if any one firm could benefit by making greater commitments to package delivery, especially options for guaranteed delivery, the US Postal Service looks like a good choice. USPS has existing infrastructure for servicing customers and experience in high volume package delivery.

The USPS challenge would be scaling up to reach as many delivery addresses as ecommerce pros will reasonably expect, while meeting any guaranteed delivery time. Currently the Priority Mail Express page notes availability of “overnight delivery to most U.S. locations,” a feature that USPS will need to define clearly to its customers to succeed in expanding into express delivery.

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.