UPS late, so Amazon to refund

Gift cards, shipping costs offer cites Yule delivery failure

A United Parcel Service Inc. (UPS) worker loads orders onto a truck in the shipping area at the Overstock.com Inc. distribution center in Salt Lake City, Utah, U.S., on Monday, Dec. 2, 2013. More than 131 million consumers are expected to shop Cyber Monday events, up from 129 million last year, according to the National Retail Federation. Photographer: Ken James/Bloomberg
A United Parcel Service Inc. (UPS) worker loads orders onto a truck in the shipping area at the Overstock.com Inc. distribution center in Salt Lake City, Utah, U.S., on Monday, Dec. 2, 2013. More than 131 million consumers are expected to shop Cyber Monday events, up from 129 million last year, according to the National Retail Federation. Photographer: Ken James/Bloomberg

Online retailer Amazon.com offered its customers $20 gift cards and refunds on shipping charges Thursday after United Parcel Service said overwhelming volume left it unable to deliver some packages by Christmas.

Amazon cited failures in UPS’ transportation network in messages to customers, saying its own shipping centers processed customers’ orders in time for Christmas delivery.

“We are reviewing the performance of the delivery carriers,” Mary Osako, an Amazon spokesman, said in an email.

UPS, the world’s largest package-delivery company, said in a service update on its website that the volume of air packages exceeded its capacity immediately preceding Christmas.

“You had a perfect storm of events from the consumer side, the retailer side and the shipping side,” said Craig Johnson, president of Customer Growth Partners LLC in New Canaan, Conn.

“At the last minute this year, a number of retailers extended their cutoff date to get there by the 24th,” Johnson said, to compensate for a “mediocre”Christmas shopping season. “Normally those kinds of schedules are all kind of prepared or coordinated with the carriers.”

U.S. online Christmas retail sales were projected to climb 15 percent to a record of more than $78 billion by Forrester Research Inc. in a report published last month.

“We’re deeply sorry for disappointing our customers expecting delivery in time for Christmas,” Jen Johnson, a spokesman for Kohl’s Corp., said in an email. “Although a limited number were impacted, we take each customer experience seriously.”

UPS expected to ship more than 132 million parcels globally during the week before Christmas, according to the cover story in this week’s Bloomberg Businessweek magazine.

Spokesman David Tovar of Wal-Mart Stores Inc. didn’t immediately respond to email seeking comment on Christmas. Johnna Hoff of eBay Inc., Kathleen Waugh of Toys R Us Inc. and Laura Jones of Zulily Inc. didn’t immediately respond to email and calls seeking comment. An email to UPS’ public-relations department and a call to Natalie Black, a spokesman, weren’t immediately returned.

UPS has long dominated the Christmas shipping business in the U.S. because of its fleet of 101,000 signature brown trucks, vans, tractor trailers and motorcycles, according to Bloomberg Businessweek. Its rival, Memphis-based FedEx Corp., has more jets though its ground-delivery fleet is less than one-third the size, with about 32,000 vehicles.

FedEx also appeared to have experienced delivery delays. A FedEx spokesman told The Associated Press that some customers would be able to pick up delayed packages at FedEx Express centers. FedEx did not return calls for comment.

UPS and FedEx announced their Christmas shipping forecasts in October. FedEx said it would carry more than 85 million shipments in the first week of December. UPS predicted it would deliver 129 million packages that week and would see a second rush during the week before Christmas.

UPS added 55,000 part-time seasonal workers, leased 23 extra planes and effectively built a second trucking fleet to handle the seasonal package flow, according to the Bloomberg Businessweek story.

Shares of UPS increased 0.2 percent to $104.67 at the close in New York, while FedEx rose 0.9 percent to $143.30. Amazon, based in Seattle, gained 1.3 percent to $404.39. All three stocks have beaten the 29 percent rise in the Standard & Poor’s 500 Index so far this year.

Information for this article was contributed by Craig Trudell, Sonja Elmquist and Felice Maranz and Josh Friedman of Bloomberg News and Elizabeth A. Harris and David Gelles of The New York Times.

Business, Pages 23 on 12/27/2013

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