How FedEx is Using Automation During Peak Season

FedEx is Using Automation During Peak Season

November and December are like the playoffs of parcel delivery. UPS and FedEx deliver enormous numbers of packages. The pressure to deliver those packages on time and without errors gets much more intense, because customers aren’t just buying goods—they’re buying gifts.

As peak season approaches, U.S.’s delivery leaders are staffing up to combat delays. The United Parcel Service (UPS) is hiring an estimated 100,000 temporary workers to meet holiday demand and an influx of e-commerce orders. For context, its unionized workforce includes about 250,000 people.

FedEx has been integrating new technologies in its warehouses, trucks and tools that package handlers use for years. The company says these investments, (now coming online) will allow it to continue six-day delivery beyond the holiday season as a standard offering.

For that reason, FedEx’s Executive Vice President and Chief Marketing and Communications Officer, Raj Subramaniam, argued in the company’s last earnings call that FedEx is poised to thrive during the 2018 holidays and into 2019. He wishes we’d spend more time talking about that and less time talking about Amazon, whose moves into the delivery market have cast a shadow over the industry.

“While there has been significant media interest in what Amazon is doing to expand their in-source deliver capability, this should not be confused as competition with FedEx,” Subramaniam said.

How The World’s Largest Carriers Are Prepping For The Holidays

The parcel industry has been adopting automation for a long time. From algorithms that maximize efficiency on delivery routes to robots that pack and label parcels, carriers and shippers have integrated dozens of different technologies over the last 20 years.

This trend shows no sign of slowing down as carriers race to keep up with ongoing growth of e-commerce business shipments.

Carriers don’t typically use the holiday season to pilot new technologies. It’s too important to test methods and mistakes are too risky. But once these technologies are proven, November and December can reveal exactly how well they work.

How FedEx is Using Automation For Peak Season

When FedEx announced that it would start delivering six days per week, the company had to explain how it had developed the capacity for an expansion like that. After all, a 20 percent increase in delivery days is no small feat.

FedEx pointed to its technologies. The company has built 15 new hubs nationwide. In those as well as its existing hubs, it has rolled out robotic unloading systems, which are robots that actually unload trucks and take packages down from warehouse shelves; geo-fencing and GPS technology, which can automatically register when trucks arrive at hubs; and yard management systems, which optimize truck operations as they come and go.

The company has a total of 130 automated facilities.

On that same earnings call, President and Chief Operating Officer, Dave Bronczek said these facilities are “truly remarkable. You’ll hardly see our any employees at all. And the speed to which our package gets through our hubs now is unbelievable. So we’re able to handle a lot of volume, especially at peak (season), because of all the investments we’ve made over all the years.”

This winter, FedEx is predicting “another record year, with four Mondays during peak season expected to be among the busiest days in the history of FedEx,” Subramaniam said.

UPS is Hiring 100,000 Temporary Holiday Workers

UPS is making plenty of technological strategic investments of its own. But that’s not what the company is touting during peak season this year. Instead, they’re talking about the 100,000 seasonal workers that will grow the staff by nearly 40 percent. UPS has a unionized workforce of about 250,000 people.

That huge increase in staffing shows just how significantly volume increases during the holiday season. UPS moved about 700 million packages during the four-week holiday season last year, an average of 25 million per day.

Year-round, UPS says it averages 20 million packages per day. About 17 million of those are in the U.S.

Holiday positions are also a common entry point for people who will go on to have long careers with UPS. Of the people who worked seasonally for UPS over the last three years, the company says 35 percent of them were hired for permanent positions after the holidays were over.

How Shippers Can Prep For The Holiday Demand

Many retailers and e-tailers staff up during the holidays to handle high volumes of orders, residential deliveries and customer service calls. But shipping feels largely the same as it does the rest of the year with two key exceptions: customers are much more stressed if packages are late, and shipping gets much more expensive.

The first challenge is one that shippers can’t do much about in the moment unfortunately. Carriers are responsible for delivering packages on time. But after the fact, shippers can hold carriers to account—and absorb the potential cost of lost business—by claiming every possible refund for late deliveries.

But the second challenge is one that shippers can prepare for. Holiday surcharges are here to stay, so it’s essential that shippers plan for them. Supply chain managers who have data about 2017’s holiday shipping can easily apply 2018’s fees and surcharges to get a sense of how much their shipping costs will rise. Supply chain managers who don’t: what are you waiting for?

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