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🕛 The World Not On Time?
FedEx and UPS restrict the number of package pickups, resulting in rising backlogs and extended delivery periods
Hey Global Investor, here's what you need to know before the US markets open.
Market Snapshot 📈
S&P 500 (Wednesday Close) 3,701.17 +6.55 (0.18%)
NASDAQ (Wednesday Close) 12,658.19 +63.13 (0.50%)
FTSE 100 (5 PM IST) 6570.97 +0.06 (0.01%)
NIFTY 50 (Today's Close) 13,740.70 +58.00 (0.42%)
USDINR (5 PM IST) 73.55 (1 Year +3.60%)
The World Not On Time?
FedEx and UPS restrict the number of package pickups, resulting in rising backlogs and extended delivery periods.
Background: It’s a familiar trend. People cooped up at home. Ordering things online. The holiday season amplifies the purchases. Gifting in person gives way to gifting through courier.
With holiday sales expected to jump by up to 5.2%, FedEx and UPS have been scrambling to meet soaring demand while trying to deliver packages on time, somewhat unsuccessfully. For companies that pride themselves on delivering shipments on time anywhere in the US (and indeed, the world), the inability to meet this all-important metric is an unwelcome development. FedEx and UPS have strived to upgrade their networks and hired thousands of seasonal workers to meet the increasing demand.
What Happened? FedEx and United Parcel Service Inc. had spent months planning shipping forecasts with input from their clients. To get a good handle on the demand, they even allotted the retailers a specific number of package pick-ups per day during the busy season, so they can be delivered efficiently. All that planning was upended as demand went through the roof.
Not to be outdone, both FedEx and UPS are enforcing the pick-up limits they had earlier agreed to with their clients. So while they’re meeting their delivery metrics, the shippers large and small have been left holding the package, along with a massive backlog.
This is having a ripple effect since consumers are only willing to wait so long for a package. If the delivery window is longer than a week, they might even refrain from placing the order in the first place. Or worse still, log complaints with the retailers about delayed shipping and missed packages.
Retailers are now urging customers to not wait until the last minute to place an order. Amazon, for its part, has sidestepped the entire situation because it had long taken control of its own deliveries. But for the rest of them, it’s not a feasible option, so the situation remains tenuous.
It remains to be seen whether Santa will arrive on time this year, since it’s clockwork no more.
Market Reaction: On Wednesday, FedEx closed at $288.81, up 1.07%, and UPS settled at $170.13, up 1.77%
Company Snapshot 📈
FDX $288.81 +3.07 (+1.07%)
UPS $170.13 +2.96 (+1.77%)
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Later Today 🕒
7.00 PM IST: Initial jobless claims (regular state program, SA)
7.00 PM IST: Continuing jobless claims (regular state program, SA)
Before Market Open: Accenture PLC Earnings (ACN)
Before Market Open: Jabil Inc Earnings (JBL)
After Market Close: FedEx Corp Earnings (FDX)
Fun Fact of The Day 🌞
The largest hurricane on record is Typhoon Tip, which occurred in 1979 in the northwest Pacific, with a diameter of around 2,220 km
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