FDX FedEx Corp

By Laura Stevens 

Unable to deliver all its packages in time for Christmas, FedEx Corp. said drivers were working extra shifts Friday to help the company manage a surge in online shopping as well as severe weather during one of the busiest weeks of its year.

"FedEx Express continues to run limited delivery operations in some markets to deliver shipments that couldn't be delivered before Christmas due to unforeseen volume and severe weather in some areas of the country, " a FedEx spokeswoman said Friday afternoon. She declined to say how many packages were delayed.

FedEx's major air hub is located in Memphis, Tenn., an area that was affected by storms in the days before Christmas. Even before the poor weather, some retailers had warned shoppers that FedEx's network was experiencing widespread delays.

"It does appear FedEx is having issues," said John Haber, chief executive of Spend Management Experts, a supply-chain consultancy that works with retailers. "I think the e-commerce volumes were just too much, and they just couldn't process all the volume."

On Thursday, FedEx said it was operating with slight delays and making some operational changes due to weather. The spokeswoman said Friday that Express employees had volunteered to work extra shifts on Christmas to help get packages to customers. FedEx also opened some offices on Christmas so customers could pick up packages. The company has made Christmas deliveries in the past six years.

It was unclear how widespread the FedEx delays were, but a number of unhappy consumers took to Twitter and other social-media outlets to complain.

Both FedEx and rival United Parcel Service Inc. had been working to avoid a repeat of the 2013 holidays, when online shoppers flooded their networks with an unexpected surge of last-minute packages and not all of them made it on time. FedEx had forecast more than 317 million deliveries between Black Friday and Christmas Eve, an increase of 12% from last year. UPS predicted it would handle more than 630 million deliveries during its season, up more than 10% from last year.

UPS, whose biggest air hub is in Louisville, Ky., said Thursday it wasn't affected by the weather and that operations were running smoothly. UPS "will be working into the evening to get everything delivered" Christmas Eve, a spokesman said. UPS didn't immediately respond to requests for comment on Friday.

Consultants who work with shippers pointed to delays with FedEx's lowest-priced product, where it hands off the package for final delivery to the U.S. Postal Service, saying FedEx had not picked up some trailers full of packages. But only FedEx air packages are guaranteed for delivery if shipped this week, which could be causing some customer confusion.

FedEx's guaranteed Express packages, which typically operate as high as 99% on time, appeared to experience higher-than-usual delays this week, said Satish Jindel, a parcel-industry analyst with SJ Consulting Group Inc. Even if the company's on-time rate falls by a couple of percentage points, that "still is a pretty large number of packages," he added.

Delivery companies have reported that holiday package volumes have been even higher than expected as more shoppers buy presents online. Networks were strained and there were some delays in early December following heavy online shopping over the Thanksgiving weekend and on Cyber Monday.

Last week, FedEx executives said it was the company's busiest peak season ever, and they didn't expect things to slow down before Christmas. The company was also capping retailers who exceeded their volume forecasts.

E-commerce sales rose 11.8% from Nov. 26 through Dec. 20 compared with a year ago, according to ChannelAdvisor Corp., which makes e-commerce software and measures online transactions. All combined, FedEx, UPS and the U.S. Postal Service forecast more than 1.5 billion package deliveries during the holidays.

Write to Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

December 25, 2015 16:45 ET (21:45 GMT)

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