In fourth-quarter 2015, UPS delivered 1.3 billion packages, up 1.8 percent compared with volume from the same 2014 period. The primary driver: an extremely active peak delivery season between late October and December.
Propelled by busy holiday shoppers and retailers — who rang up robust online purchases — UPS’ fall peak volume reached 612 million packages versus 572 million a year earlier. Some hubs that process 100,000 packages on a typical day were sorting 200,000 daily during the harried holiday season.
“It was the heaviest peak we’ve ever had from a volume perspective,” says UPS Vice President of Corporate Transportation Services Ken Buenker.
And kudos to the railroads for providing exceptional on-time performance throughout the period despite the tsunami of packages, he says.
Ken Buenker Photo: UPS
The world’s largest parcel delivery company is served by all the Class Is, as well as dozens of regionals and short lines that lend a hand in moving packages from Point A to Point B. Parcels need to arrive and depart sorting hubs during strict time windows so UPS can meet delivery promises for customers.
Every railroad except one — which Buenker declined to identify — provided perfect performance without any service failures, he says.
“On-time performance is critical because it can interfere with our [sorting] operations,” says Buenker. “We usually give railroads an A grade for the peak. But for this past peak, they get an A-plus, with a star on it.”
To meet tight transit schedules, the railroads in some cases provided an extra train or eliminated a stop between an origin and destination. For example, a train that usually moved from Chicago to Toledo, Ohio, to Buffalo, N.Y., at times didn’t stop in Toledo, says Buenker.
“Train dynamics are critical. Every railroad we work with added trains,” he says.
The railroads’ performance also got a boost from intensive pre-peak planning, says Buenker. UPS worked with the carriers to determine the best ways to handle what was expected to be heavy package volume. The railroads then focused on optimizing locomotive and crew assignments, expediting train inspections and locomotive maintenance/services, and bolstering bad-order processes.
Railroads rated an “A-plus” grade from UPS for their service performance during the fall peak. Photo: UPS
UPS managers “had fairly good indications” it was going to be a busy fall peak after holding discussions with various retailers, says Buenker. The retailers shared the trends they were sensing, which distribution centers likely would be active and how online purchases were growing, he says.
This year, UPS completed more pre-peak planning work than usual — given the volume forecast — and the efforts “delivered exceptional results,” says Buenker.
In terms of rail service, the railroads planned their maintenance-of-way work around the peak, as usual. But they also more quickly recovered any mishandled single cars during the busy timeframe and strived harder to avoid service failures, says Buenker. One misplaced trailer of packages can impact thousands of UPS customers.
Overall, rail performance during the peak likely gained a small lift from the lower volume on Class Is’ lines compared with the same 2014 period, says Buenker.
“I think the availability of track capacity helped. There definitely were some velocity benefits,” he says.
But that doesn’t diminish the efforts that were apparent among all the railroads to meet UPS’ stringent transit schedules, Buenker says.
A misplaced trailer in railroads’ networks can impact thousands of UPS customers. Photo: UPS
Now, the emphasis is on finding ways to match that performance for this year’s peak. As they do every year, UPS officials in January held a post-peak meeting with railroad managers to review what did and didn’t work well last year.
“Perhaps the railroads will do some of the same things at the next peak,” says Buenker.
And what will package volume be like come November? For all intents and purposes, a similar big wave, Buenker believes.
“The early indications from shippers is that we will likely see the same type of peak,” he says.