It’s a question that has plagued humanity for generations: What would Santa Claus want for Christmas?
And after a landmark surge in online commerce resulted in one of the most significant and widespread service failures to affect Christmas since the Grinch, we may be well on our way to finding an answer.

While it’s still too early to know whether he might want more reindeer or just a bigger, faster sleigh, it’s safe to say that a shiny red drone seemed a lot more logical on December 25 than it ever had before. And given the meteoric rise in demand felt far and wide during the most recent holiday season, one can safely assume that carriers everywhere – especially those heavily entrenched in the retail sector – are all ears to even the most farfetched possibilities.

2013 was a banner year for the parcel shipping industry. While continuing to increase prices for services to all-time highs was nothing new, the Wall Street performance of the world’s two largest parcel shippers, UPS and FedEx, respectively, made for some very happy investors, some of whom are now likely millionaires. 

FedEx stock closed the calendar year 57% higher than when it started; its biggest single-year jump since 1989, back when its share price was a whopping $11.43.
UPS turned in its highest single-year jump since its stock went public in 1999. At close of market on December 31, UPS’ all-time cumulative growth was just shy of 50% – with 46% of that total coming in 2013 alone.

But for all its successes relative to investors, the year, from its customers’ standpoint, was ultimately one to remember for all the wrong reasons. Just months after again taking their rates to new heights, a tectonic shift in online shopping orders (UPS said it had more than the 132 million it initially projected during the week before Christmas alone; more than it could fit onto its planes) resulted in an unspecified number of packages that failed to make service in time for Christmas, leaving retailers and carriers pointing fingers at each other and some of their customers empty handed.

What 2013 made abundantly clear is that the future of parcel shipping is hazy. Both retailers and carriers say that they will make adjustments to ensure that similar problems are avoided next year. And while next Christmas seems a ways off, in terms of solving a problem of this magnitude, it might as well be tomorrow.
This means changes – potentially large-scale ones – are on the way, and soon. Whether it’s as simple as retailers backing off those last-minute turnaround times, or as complex as carriers strengthening infrastructure enough to weather the next holiday storm, the implications are as uncertain as they are unprecedented.
Made more difficult by the fact that the two so heavily rely on each other in order to make their own businesses thrive, an amicable solution thus will likely be a give and take between the carriers and consumers. With so much focus on cutting costs (through employee buyouts, fleet retirements, etc.) perhaps the carriers will put more focus on ensuring that they are in fact ready and capable of keeping up with the emerging trend of online shopping.

According to an April 2013 study conducted by eMarketer, U.S. e-commerce sales are expected to rise by an average of 13.8% each year between now and 2017. Compounded, that’s about a 40% increase from where we are today.

If you apply that percentage to the approximately 5.3 billion packages that FedEx and UPS ship each year, then it’s easy to see how difficult effectively handling such a shift will be (The good news is they have one extra day to figure it out in 2014, since Thanksgiving falls a day sooner (November 27) than it did last year).
The bottom line, however, is pretty clear. As a shipper contracted with either major carrier, there are terms and conditions set forth and clearly defined within your agreement that contain guarantees based on the level of service in which you decided to ship your package. If your package is sent out Priority Overnight via FedEx or Next Day Air with UPS then (absent of a winter vortex in transit) it is to arrive no later than 10:30 a.m., so long as that package was tendered to the carrier within the terms and conditions set forth in your agreement.

That leaves the burden of reliability on the carrier, a burden which is generally met with staggering efficiency. Make no mistake, what evidence we have suggests the service failures that occurred during the Christmas holiday were about as predictable as the apocalypse. And the one benefit to any problem is that it provides the foundation for improvement. Both UPS and FedEx have made their money and developed trust in large part by providing a service that’s so reliable that it’s often taken for granted.

Therefore, the biggest lesson that a shipper can learn from the episode is as explicit as it is undeniably cliché: Expect the unexpected.

In order to prevent service failures to your customers next year, it’s now more important than ever for companies to dive into their data to determine the behavioral trends of their customers during the holiday season. If your company has the resources, purge your shipping data (which you can obtain from your carrier) and perform an internal audit of your customers’ online characteristics and implement changes on the front end that will protect you in the event that you run into the otherwise pleasant problem of overwhelming demand.

If such an initiative is too much for your own infrastructure, it might be time to give serious consideration to partnering with a third party that specializes in parcel auditing and carrier contract negotiation. Aside from the savings you will generate (which could be reinvested into solidifying your infrastructure or creating an actionable plan for more competitive peak-season promotions), enhanced visibility into your own data is another tangible, soft-dollar benefit they can provide that will put your company in a position to compete in an increasingly challenging and unpredictable economic landscape.

Studying your own information can provide insight into whether certain areas were more adversely impacted than others during the 2013 holiday season. Once you identify potential problem areas, the solution could be as simple as implementing language within the terms and conditions of your website checkout that notify customers that they reside in a potential problem area and thus limit expectations. Or you may take it as far as to utilize your web hosting platform to create parameters that set different ordering deadlines based on location to keep you customers in those areas from feeling singled out. In any event, the number of solutions that could become apparent from an internal investigation into your customers’ online behavior will put your business ahead of the curve and keep you protected from the potential of adverse conditions that are beyond your company’s control.

Who knows if that’s what Santa wants next year, but I’ve heard assembly is easy (much easier than a drone) and the only returns should be pretty positive.

Brandon Staton is the Marketing and Communications Manager for Transportation Impact, LLC, and First Flight Solutions, LLC, industry-leading parcel spend management firms and No. 547 on the 2013 Inc. 5000 and No. 183 on the 2013 Inc. 500, respectively. Brandon and the Transportation Impact team have helped negotiate small package contracts for some of the most well-known companies in the world, reducing their respective parcel shipping costs by an average of 22%. Brandon can be reached directly at 252.764.2885 or via email at bstaton@transportationimpact.com.