Snow, holiday shipping loads delaying 10 million packages a day

(CBS News) — A flood of mail, a historic boom in online holiday purchases and one of the biggest snowstorms in the Northeast in years are combining to overwhelm the U.S. shipping system.

An estimated 6 million packages a day are piling up in retailers’ warehouses or shipping centers and awaiting pick up by FedEx, UPS, Amazon, the U.S. Postal Service and other shippers. Another 3.5 million packages are being picked up daily but not reaching their destinations on time, the latest shipping data show. It could soon get even worse: On-time delivery rates for the USPS have dropped to just over 86% in the third week of December, down from 93% three weeks ago.

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 more than 100,000 locations in the U.S.

“Our entire industry is underwater because of the demand [for deliveries],” 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 added.

Indeed, the deadline for packages reaching their destination using standard shipping before the Christmas holiday has likely passed for most retailers and shippers. The USPS’s official last day for pre-Christmas delivery is Friday, December 18. But even more expensive two-day, or overnight, shipping may be running out of capacity as well. Small business owners, according to Business Insider, say FedEx is rationing the number of deliveries it will complete for retailers due to the crush of demand. Some have been held to a limit of 75 packages a day, it reported.

A FedEx spokesperson told CBS MoneyWatch following its queries about retailer shipping limits that the company “worked closely with customers” prior to the holiday season to “ensure the best possible service.” She added, “Throughout Peak, we continue to regularly collaborate with customers on ways to leverage our network flexibility and seven-day operation during this busy time.” The spokesperson declined to comment as to whether FedEx had imposed package limits.

The gridlock described by shipping industry veterans — worse this holiday season than in past years, they said — is curtailing the holiday shopping season, frustrating both consumers and retailers as well as potentially hurting the economy as the recovery from the coronavirus pandemi appears to be sputtering.

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.

“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 said 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,” the FedEx spokesperson said. She also said 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 December 15, 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 Postal Service, said customers have been experiencing delays since late November and that some orders are delayed by as much as two weeks. On December 16, 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. December 16 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 said. “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.”

“They have no idea where it is”

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 Merevick 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 Postal Service, adding to mail delays that started this summer before the November election. 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.”

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