UPS's Record-Smashing Day

Image source: UPS.

In just one day this year -- Monday, Dec. 16, to be exact -- UPS (NYSE: UPS  ) expects to move a record 34 million packages through its system.

That works out to about 1.5 million deliveries per hour, or an incredible 23,611 packages each minute.

A few factors are working together to push UPS's business into that record territory.

For one, the holiday shopping season will be over in a relative flash this year. With six fewer days between Thanksgiving and Christmas than in 2012, this will be the shortest shopping season we've had in more than a decade.

That time crunch puts extra pressure on each of the 26 days that do fit into this year's season, especially as total holiday shopping is expected to rise by 4%. Altogether, UPS will probably endure five individual shopping days this year that each surpass last year's peak volume day of 28 million deliveries.

On top of having less time on its hands, UPS will also have to grapple with more overall shipments. Spiking e-commerce sales are set to boost demand for package deliveries. Amazon.com (NASDAQ: AMZN  ) , for example, saw its product sales jump by 33% in North America this past quarter, and it expects to log overall revenue growth of as much as 25%, to $26.5 billion over the holidays. The online retail giant may be pushing media content sales through its tablets and e-readers, but its biggest business by far is still selling traditional, non-digital stuff.

eBay (NASDAQ: EBAY  ) sounded a more cautious tone on its holiday forecast this week, saying that it has noticed a dip in online sales lately. However, the company has a strong foothold in mobile, which is the fastest-growing shopping category. eBay still expects holiday-quarter revenue to rise by between 13% and 15% over last year's tally.

Either way, there won't be a shortage of hot products that people will want delivered quickly this season. Next-generation video-game consoles, in particular, could see strong sales after the nearly eight-year break in between upgrades.

So will UPS crack under the pressure of that record volume? There's no denying that the company has a huge operating challenge ahead. But UPS is trying to get ahead of the crush. It plans to quickly hire 55,000 seasonal employees, including drivers, package sorters, and loaders, to help process all of those holiday shipments.

Once the new workers are in place, things should move smoothly for UPS. And the good news is that this year's banner numbers for online shopping should help UPS improve overall earnings by a strong 5% over last year.

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  • Report this Comment On October 27, 2013, at 5:03 PM, loulou59 wrote:

    Just amazing! A company that is making record profits, and is seeing even bigger profits in the future, is screwing its employees over their new contract! Hmmmm....what will they do if we're on strike this Christmas shopping season....

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