FedEx CEO blames retailers for Christmas delays
Forget the ice storms and overwhelmed carriers. Much of the blame for the widely covered late arrival of Christmas gifts this past holiday season should fall on retailers, charges FedEx’s CEO Fred Smith.
On FedEx’s Q314 conference call, Mr. Smith said the firm operationally had "very, very good" performance during its peak shipping period versus past years, and company executives were "disappointed" that they kept "getting pinged with the big problem in e-commerce." Indeed, retailers’ internal delivery shortcomings "didn’t get enough publicity last year because they were an integral part of the problem even more than the weather and the carrier performance."
His list of e-commerce provider shortfalls includes:
- Poorly packed shipments leading to damaged packages;
- Shabbily affixed labels resulting to processing delays or lost packages;
- Retailers promising online buyers that shipments had reached the carrier when they hadn’t.
Exacerbating matters are social media remarks that "make anecdotes much bigger than perhaps they are," Mr. Smith said. Also, extensive online tracking tools are creating delivery-time anxieties for recipients more than in the past, especially in cases in which shipments are incorrectly claimed to have reached the carrier.
Mr. Smith said FedEx focuses on working with customers that "don’t overpromise or say we do things that we end up not being able to do." But it’s also "working very carefully" with customers to better manage peak times.
"I can promise you that the customers are not going to tolerate those types of things over the long haul," Mr. Smith warned.
For its part, UPS, which was more affected by the delivery issues, on its recent quarterly call solely blamed the compressed holiday season, much greater-than-expected holiday online buying and last minute ordering, and inclement weather. Its CEO Scott Davis vowed to "make the necessary investments and operational improvements to ensure we effectively manage peak demand in the future."
According to the Wall Street Journal, only Kohl’s has admitted that "operational challenges" had an impact on its fulfillment centers. Its CFO also said the retailer may have to become "more realistic" around delivery dates just before Christmas day.
A report in early March on dcvelocity.com indicated Amazon plans to revamp its U.S. shipping with a mix of private fleet, regional carriers and the USPS. There would be a diminishing role for UPS and FedEx. The report, citing a consultant with knowledge of Amazon’s plans, said most of the changes were set before the Christmas issues arose.
- FedEx Corp. Reports Third Quarter Results – FedEx
- FedEx Corporation’s CEO Discusses F3Q2014 Results – Earnings Call Transcript – Seeking Alpha
- FedEx Takes Sloppy E-Tailers to Task – The Wall Street Journal (sub. required)
- FedEx Cuts 2014 Forecasts on Storms as CEO Scolds Retail – Bloomberg News
- United Parcel Service’s CEO Discusses Q4 2013 Results – Earnings Call Transcript – Seeking Alpha
- Amazon plans revamp of U.S. shipping with mix of private fleet, regional carriers, USPS – DCVelocity
- Delays Ruins E-Christmas for Some – RetailWire
With holiday shipping challenges during peak delivery times likely to recur, how should retailers be reassessing internal processes and infrastructure? Should Christmas arrival guarantees be moderated?