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FedEx and UPS Tackle B2C Shipping Dilemma with Automation

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UPS peak season

Parcel providers, including FedEx and UPS, are saying enough is enough with delivery demands.

As retailers increasingly offer free shipping to lure consumers, FedEx and UPS continue to grapple with business-to-consumer (B2C) volumes–and the costs associated with them, DC Velocity reported. Both parcel providers are altering their operations to improve the e-commerce overload, while alerting retailers that they should find ways to compensate for delivery costs.

B2C accounts for 52.1% of the total volume of packages delivered in the U.S., up from 43.7% in 2010. To handle this ongoing increase in B2C orders, FedEx and UPS are advancing their fulfillment capacities with automation.

FedEx Ground, which handles most e-commerce deliveries added 19 automated stations in 2016, which was in total, a 10 million square-foot expansion. UPS is also spending millions of dollars to implement automation at its “Tier 1” U.S. hubs, which currently handle about half of its domestic volume. With the automation addition, which is set to be finished by 2019, UPS’ network productivity will increase by 25 percent.

Along with implementing automation, both parcel carriers also notified retailers about changes, including adjustments to their delivery windows and ground service guarantees during the peak holiday season. Furthermore, both companies are also trying to produce sufficient e-commerce delivery densities to capture more revenue they currently cede to USPS for last mile deliveries..

(Related on SJ: Retailers to Provide Less Friction, Better Experiences )

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