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Holiday shipping gridlock is delaying 6 million packages a day

DECEMBER 17, 2020 / 7:12 AM / MONEYWATCH

A flood of mail and online holiday purchases is overwhelming the U.S. shipping system. An estimated 6 million packages a day are being left stranded, sitting idle in retailers' warehouses or shipping centers and awaiting pick up by FedEx, UPS, Amazon, U.S. Postal Service and other shippers.

That's according to estimates from ShipMatrix, a software company that helps retailers and others track shipments and that collects data on millions of packages sent from over 100,000 locations in the U.S. Another 2.5 million packages are being picked up daily but are not reaching their destinations on time, the data show.

"Our entire industry is underwater because of the demand," said Satish Jindel, president of ShipMatrix. Friday will likely be the last day consumers can ship things by regular mail so they arrive by Christmas, he said.

The gridlock is curtailing the holiday shopping season, frustrating shoppers and retailers, as well as potentially hurting the economy as the recovery from the coronavirus pandemic appears to be sputtering. Some experts are warning that packages that have not yet been mailed will not reach their destination using standard shipping before the Christmas holiday.

Another industry insider with access to internal data from a major shipping company told CBS MoneyWatch that the number of packages not being picked up each day is far higher this holiday season than in past years. A large winter storm bearing down on the Northeast could mean more delays.

Both FedEx and UPS declined to disclose how many packages are delayed in transit. A spokesperson for UPS said that 96% of its shipments have arrived on time this holiday season. But that figure only includes the packages that UPS picked up — not the ones it missed.

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"This is one of the most successful peak holiday shipping seasons ever as we focus on maintaining a reliable delivery network that all of our customers can depend on," a UPS spokesman told CBS MoneyWatch in an emailed statement.

"Data provided by third-party consultants can vary widely based on the specific markets, customers and shipping lanes they choose for their analyses," a FedEx spokesperson said by email. She also said that the company's role in helping to distribute the Pfizer-BioNTech vaccine is not affecting regular shipments, noting that the company is using a separate fleet of trucks and airplanes for that effort.

"As stated previously, we continue to work closely with our customers to manage their volume and help ensure we provide the best possible service," the FedEx spokesperson added.

"Waiting for the refund request"
A number of retailers say they are facing shipping delays. Earlier this month, Victoria's Secret owner L Brands warned investors in a filing with the U.S. Securities and Exchange Commission that "additional constraints" in shipping capacity during the holiday season could hurt sales. On Tuesday, Etsy also updated its shipping cut off dates for its retailers and asked them to add the dates to their product description pages.

Arlene Marie Mathews, a Milford, Pennsylvania-based vendor who sells bath and aromatherapy lotions on Etsy and generally ships through the U.S. Postal Service, said customers have been experiencing delays since late November and that some orders are delayed by as much as two weeks. On Wednesday, she updated her product page on Etsy to warn that orders may arrive as many as 10 business days late.

"I am presently inundated with messages from customers asking where their packages are. Some are understanding, some are not," Mathews told CBS MoneyWatch. "I am waiting for the refund request messages to begin flooding my inbox any moment now."

Etsy said it will allow sellers to flag for removal any negative reviews from customers complaining solely about shipping problems. A spokesperson with the ecommerce company said it has "dynamically adjusted estimated delivery dates" on its website to provide buyers with the latest information.

"We know the holidays are an incredibly important time for the 3.7 million creative entrepreneurs selling on Etsy," the spokesperson said in a statement. "To address carrier delays in the U.S., we're focused on supporting sellers by making available the latest information we have."

Olive & Cocoa, an online gift-basket retailer based in Salt Lake City, Utah, is warning customers about possible delays and that shipping slots are running out. Wednesday was the last day the website said it could ship orders by standard shipping for delivery by Christmas. Later orders won't arrive until December 29. Two-day shipping is unavailable on the website until January, though slots remain for faster — and pricier — deliveries.

"Olive & Cocoa recognizes that the entire shipping system is overloaded," a spokesperson for Olive & Cocoa said in an emailed statement to CBS MoneyWatch. "We are working closely with our shipping partners to provide our customers with the best information we can as to shipping availability and timelines, and to ensure that holiday gifts ordered from Olive & Cocoa are being delivered in a manner consistent with our high customer service standards."

Mounting frustration
The holiday shipping delays are causing headaches for consumers. Christine and Bruce Merevick of Chicago are unable to see their family in Alabama for Christmas because he is undergoing chemotherapy and is considered at high-risk for COVID-19. Heightening their frustration, the Merevicks' holiday package, which they sent priority and insured in early December, still hasn't arrived. They filed a claim, but were told to check back in two weeks.

"It's just very frustrating," Christine told Tara Molina of CBS Chicago. "They have no idea where it is."

CBS News correspondent Janet Shamlian reported this week that FedEx and UPS have told some retailers that they will not pick up additional packages beyond their previous commitments before retailers saw a spike in orders. That has resulted in more orders being pushed to the USPS, adding to mail delays that started this summer. Earlier this week the USPS in a public statement encouraged customers to send their holiday gifts and cards "as soon as possible."

Even before the holidays, shipping delays had been a problem during the pandemic, which spurred some consumers to increase their online orders and avoid in-person shopping. FedEx and UPS began ramping up hiring as early as November to be ready for the expected surge in deliveries, adding as many 170,000 workers combined for the season. But those issues are now intruding on many people's holidays.

"It was not possible for shippers to be ready," said ShipMatrix's Jindel. "It would have taken two or three years to be ready for this year's jump in demand."

First published on December 16, 2020 / 4:33 PM