In Anthony Mayor’s two decades with St. George Logistics, he’s never known fulfillment center employees to work the Saturday after Thanksgiving.
That changed this year, a result of record high holiday demand for shipping and trucking companies and the increasing popularity of e-commerce.
Workers at St. George facilities in Santa Fe Springs, Calif.; Fontana, Calif.; Savannah, Ga.; and Dallas collected overtime pay all day Saturday as they loaded merchandise onto FedEx and UPS trucks and other delivery vehicles.
It’s a necessary move to keep up with clients such as Macy’s, Target and Bed, Bath & Beyond.
“Between the Black Friday and Cyber Monday orders last year, the volume crushed us,” said Mayor, the South Kearny, N.J., company’s executive vice president. “We were a full three days behind on outbound processing, which caused us to suffer the next two weeks with our on-time numbers.”
Companies all along the American retail supply chain are hustling hard this holiday season to contend with an onslaught of online orders and with promotional strategies that start early and continue relentlessly until the new year.
Consumer spending is steadying, with personal expenditures increasing 0.5 percent in September from August, according to the Commerce Department. More retailers than ever are embracing so-called omnichannel sales — a bricks-and-clicks philosophy that relies on both in-store and digital presence.
Retail sales (excluding autos, gas and restaurant bills) will rise 3.6 percent year-over-year in November and December, outpacing the 2.5 percent average pace over the past decade, according to projections from the National Retail Federation. Non-store sales will increase between 7 and 10 percent.
To adapt to the surge, freight movers, trucking firms and distributors are expanding their infrastructure and improving their technology.
Between Black Friday and Christmas Eve, FedEx expects its average daily volume to balloon from its typical 12 million packages to upward of 25 million. In preparation, the company added 30 new aircraft to its FedEx Express fleet since last year, as well as 12 million square feet of new sorting space to its FedEx Ground distribution hubs and automated stations.
That gives FedEx more than 650 planes, 150,000 vehicles and 400,000 employees — 50,000 of them temporary seasonal workers — to help meet holiday delivery deadlines.
“These investments in people, facilities, aircraft and technology are all made to enable us to provide outstanding service, even during the busiest days of the year,” T. Michael Glenn, FedEx Services chief executive, said in a conference call with investors in September.
Rival UPS expects to move more than 700 million packages between Black Friday and New Year’s Eve — a 14 percent increase from the 2015 holiday season. The average daily volume will soar to 28 million from 18 million normally.
The company has prepared for the onslaught by opening or expanding 15 hubs across the country this year. More than 95,000 temporary seasonal workers are coming on board at UPS, including delivery helpers, package sorters, loaders and drivers.
And instead of having merchandise move directly from ports and factories to warehouses and then on to stores or homes, UPS is using an intermediary network of so-called Access Points. Consumers can pick up packages in the evening and on weekends at certain UPS Stores and local businesses such as dry cleaners, drug stores and coffee shops.
Similarly, FedEx said more customers are using its retail locations as e-commerce fulfillment centers. Amazon operates lockers for the same purpose.
Online retail is also causing buying patterns to morph. Weekend shopping sprees — intensified by targeted holiday bargains — have logistics companies bracing for heavy demand for package delivery on Mondays. UPS, for example, thinks Monday, Dec. 19, will be its busiest day.
Many companies are turning to innovation to smooth out the volume during the week to avoid bottlenecks during peak days.
“In addition to investing in temporary seasonal processing facilities, UPS is implementing new technology and automation systems to increase capacity, efficiency and flexibility within the operations,” said Kate Gutmann, senior vice president of sales and solutions at UPS.
The company is tapping truckload brokerage systems from Coyote Logistics, which it purchased in August for $1.8 billion, to track truck contents and arrange contract hauls and return-trip loads.
UPS also fully rolled out its On-Road Integrated Optimization and Navigation system. The technology, which uses advanced telematics and algorithms to create an optimal route, could help streamline trucker miles during the holidays.
The already-intense season was made more stressing for logistics companies and truckers by the August bankruptcy of South Korean giant Hanjin Shipping.
Retailers such as Wal-Mart, Kmart and J.C. Penney had cargo stranded in ports as port operators waited to be paid. Hanjin canceled its “port-to-door” delivery pledge, which left clients scrambling to find freight movers to take over the transport. But truckers were stalled, because the chassis they required were sitting idle, occupied by empty Hanjin containers that went unclaimed until last month.
With trucking and storage capacity already slim, the Hanjin situation made holiday planning even more taxing.
But some logistics companies have tried to plan ahead. Eli Navon, president of Morgan Shipping Lines and Shipping.com, avoids smaller terminals during the holidays and encourages clients to place orders during October or early November so he can ship inventory and secure cargo space with truckers in advance.
Temporary seasonal employment at Morgan dispatch center swings up 20 percent during the holidays, padded by employees shifted from the documentation department.
Navon said that many fulfillment centers struggling with space shortages are diverting freight movers to smaller, short-term warehouses. The industry is also turning to online platforms such as Flexe, a sort of Airbnb for warehousing, which links empty space with companies that need short-term storage. Other options even rent out space by the shelf.
At the St. George warehouses, holiday planning has gone on for months. Seasonal hiring and training has ramped up over the past 30 days. The company has sent specialty equipment to the facilities — pick carts, radio frequency scanners, mechanized conveyors and more. On Mondays during the holiday season, operations will start up at 5 a.m. instead of the usual 6 a.m. to get a jump on replenishing stock sent out over the weekend.
Most retail clients expect 95% on-time same-day shipping, Mayor said. If consumers place an order by noon, it needs to be on a FedEx or UPS truck by 7:30 p.m.
“It is sustainable? We’ll see,” he said. “Is it something being mandated right now by retail? Absolutely. We want to be known as a provider that can offer e-commerce.”