Carriers Gear Up for Strong Holiday Season

Reports suggesting an improving economy provide the basis for estimates from the U.S. Postal Service, FedEx Corp. and United Parcel Service Inc. that holiday package volume will rise this year compared with 2003.

Also, the National Retail Federation predicts holiday retail sales will grow 4.5 percent over last year. The NRF said higher gas prices and rising interest rates are unlikely to deter consumers from spending an estimated $219.9 billion across all retail channels, including stores, catalogs and e-commerce.

Mail-tracking firm U.S. Monitor, New City, NY, said volume is up this year. A study of its clients found that catalog and credit card mail received by 300 U.S. Monitor seed locations so far in the fourth quarter has increased 18.9 percent over the year-ago period.

The USPS said it is ready to deliver more mail than last year during the holidays, when it delivered more than 20 billion cards, letters and packages.

The postal service will use the same reduced number of planes from independent cargo carriers as it did last year, and send more volume via FedEx, UPS and commercial air carriers. These alternatives are cheaper than the independent cargo carriers. This year, as it did last year, it will use 10 independent cargo carrier planes, down from 120 three years ago and 80 in 2002.

“FedEx and UPS have a year-round relationship with us, and part of that relationship is an expectation on our part that during the holiday season, when the workload gets heavier, we expect similar pricing,” said Tony Pajunas, USPS manager, logistics. “The more independent carriers that we use for a very short period of time during the year have high capital costs and generally are more pricey than our year-round suppliers, which is what you would expect.”

The USPS also will use essentially the same surface network this year as last, when it ramped up the network and had mail riding longer distances on trucks.

“We've built flexibility into these networks so that if volume materializes above our expectations, we can handle it,” Pajunas said. “It could end up, at the end of the holiday season, that there is more [need for the surface network], but right now it is about the same.”

The 2003 holidays represented the first heavy mailing season that the postal service committed to its new ground network, said Jim Quirk, a USPS spokesman.

The USPS is making only minor changes to its network operations this holiday season. The postal service last year did not account for that as Christmas Day approaches, commercial air carriers get more passengers and baggage than earlier in the season, and “when they stopped having as much room for mail, a little bit of mail was backed up, and we had to make changes on the fly,” Pajunas said.

This year “we are anticipating losing that capacity, and as a result have planned to move it over to other carriers before there are any issues,” he said. “We expect that part of the operation to be smoother.”

The USPS is changing little from last year because it “saved $60 million in a two-week period by changing our operations, such as taking the 80 cargo planes down and adding in the surface [trucks],” Pajunas said. Service levels “were at their best ever” during last year's holidays, he said.

Hiring additional help is a decision made at the district level, the USPS said, so the agency does not publish a formal number. But Quirk said the USPS will need far less extra help than “10 or 12 years ago, thanks to all of the equipment and automation that has been implemented.”

FedEx also anticipates record volumes and will hire seasonal employees. During the week of Dec. 13, FedEx Ground volumes are expected to exceed 3.8 million packages a day. Last year, volumes in this peak week reached 3.2 million daily. Average daily volumes are about 2.4 million.

FedEx Express also should see increased volumes. On Dec. 20, expected to be FedEx Express' peak day, the company thinks volume will reach 4.6 million packages. Last year, volume on its busiest day was 4 million. Volume on an average business day is 3.2 million for FedEx Express.

On Dec. 13, expected to be FedEx's busiest day overall, volume for FedEx Express and FedEx Ground will hit 7.7 million combined. On last year's peak day, FedEx Express and FedEx Ground handled more than 7.5 million packages. Average combined volume is 5.5 million daily.

UPS said this month it expects to deliver more than 340 million packages between Thanksgiving and Christmas. It delivered just over 300 million packages in this period last year.

The biggest spike is expected Dec. 21, with about 20 million air and ground packages. UPS said this equates to 230 packages every second, or 6 million-plus packages beyond normal daily delivery volume.

Delivery of air packages will peak Dec. 22 with an anticipated global volume around 5 million, or 2.5 times the normal average.

UPS said it would hire nearly 70,000 seasonal workers in the United States, including package sorters and driver helpers. Its ground delivery fleet of 88,000 package cars, vans and tractors will increase by more than 7,000 vehicles. UPS Airlines will add two dozen large jets to its year-round operating fleet.

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