Holiday Shipping Capacity Is Ahead of Demand

Shipping companies including the U.S. Postal Service, FedEx, and United Parcel Service will have enough capacity to achieve on-time deliveries this holiday season.

Consumers were enticed to shop early to take advantage of early holiday sales, shop more in stores, and moderate spending to counter inflation.  As a result, shipping volume was reduced, and shipments were spread over a longer period.

Nevertheless, shipping companies are maintaining a buffer of excess capacity of 10 million to 20 million parcels each day to meet holiday shipping demand.

Video Spotlight:  

• CNBC: Ocean freight rates from China to the US fall 90% amid weakening global trade  (Dec 9, 2022, Spotlight on China)
• Regardless of holiday shopping volumes, shipping providers stay ready to meet demand (Nov 22, 2022, CNBC Television)

This post is based on the AP News article, Carriers feeling cheery about on-time holiday deliveries, by David Sharp, November 22, 2022, and the YouTube videos in the Spotlight. Image source: iStockphoto/Getty Images

Discussion Questions:

1.  Why are shipping companies confident that they will have enough capacity to achieve on-time holiday deliveries in 2022?

Guidance: Effective aggregate planning strategies give shipping companies the confidence that they will have enough capacity to achieve on-time holiday deliveries.  To boost capacity ahead of the holiday season, companies such as the U.S. Postal Service installed new package-sorting machines, improved their staffing, and hired part-time workers. Additionally, the volume of holiday shipping demand is expected to be reduced as more customers shopped and shipped their packages early.

2. How do shipping companies handle an increase in demand for holiday deliveries?

Guidance: To handle an increase in holiday deliveries, shipping companies maintain a buffer of excess capacity by hiring part-time and seasonal workers.  This is a form of workforce scheduling that meets variations in customer demands with workforce flexibility.