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 The lag in deliveries — which triggered intense criticism on social
media — could encourage eCommerce companies, like online retail
giant Amazon <AMZN.O>, to spread their shipping contracts across
more companies to lower risk.
"I do think it creates an opportunity for companies other than UPS
and FedEx to make some inroads here," said Anthony Gallo, a senior
air freight and logistics analyst with Wells Fargo Securities LLC.
"There's no downside to the retailers at this point to have more
competition on the delivery side."
The bad press didn't seem to worry investors. UPS shares closed at
an all-time high, hitting $104.67 per share by the market's close on
Thursday. UPS shares are up 42 percent so far this year,
outperforming the Dow Jones Transports Index <.DJT>, which is up
about 39 percent over the same period.
UPS said on Wednesday that a confluence of factors from bad weather,
a shorter shopping season and a surge in online shopping were to
blame. It stressed that only a small percentage of total packages
were delayed.
All outstanding packages will be delivered by Friday, UPS
spokeswoman Natalie Black said on Wednesday.
Neither UPS, nor smaller rival FedEx Corp <FDX.N>, which appeared to
have had more limited problems with late deliveries, would say on
Thursday how many packages had been delayed.
FedEx said it experienced "no major service disruptions."
"It's mainly a UPS issue for this Christmas," said Wells Fargo's
Gallo.
While the problems could open room for smaller rivals at the
margins, ground deliveries in the United States are dominated by
UPS, FedEx and the United States Postal Service. Shipping companies
like Eastern Connection, a regional small package overnight
transport company serving the eastern corridor, represent only about
2 percent of the market.
Eastern Connection's chairman, Ted Kauffman, said the glitches would
not dramatically change the landscape of deliveries in the country.
But he said UPS' woes could help a trend of companies relying on
regional providers.
"We're beginning to see more and more of that around the country. I
don't know if this incident opens that up, but it doesn't hurt,"
Kauffman said.
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Amazon, which has benefited from an overall surge in online
shopping, acknowledged on Thursday that it had to limit new members
of its next-day "Prime" delivery service in the run-up to Christmas
to insure that current members would not be affected.
Online sales rose 22 percent between Thanksgiving and the following
Monday, for example, even as Americans spent 2.9 percent less over
that weekend overall, according to figures from the National Retail
Federation.
Amazon spokeswoman Mary Osako said in an email that orders were sent
to delivery companies on time for holiday shipping and that the
company was "reviewing the performance of the delivery carriers."
Osako said shipping charges for late packages would be refunded and
affected shoppers would receive $20 gift cards, though she did not
provide a number of how many shipments were delayed.
Reactions on social media were still fiery on Thursday. A Twitter
user who identified herself as Amanda Perry tweeted to UPS,
"Christmas didn't come for my fiancé & his father because of your
issues — I am thinking I might just pull my wedding registry."
Another user who went by the screenname, Greg Bueno, tweeted, "@UPS
ruined my Christmas!!!".
Going into the shortened holiday shopping season, senior UPS
officials anticipated possible problems.
"If weather is bad, it will be a challenge for us," UPS Chief
Executive Scott Davis said during a conference call in October.
FedEx did not provide the number of delayed packages, saying in a
statement only that, "it's believed to be very few," that didn't
make it in time.
(Additional reporting by Nivedita
Bhattacharjee; editing by Tim Dobbyn)
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