Posted on: Saturday, November 20, 2004
New hires at UPS a good sign for holidays
By Rob Kaiser
Chicago Tribune
CHICAGO — A telling gauge of the economy's strength will be the number of packages to zip along the 65 miles of rollers and conveyer belts at the UPS hub in Hodgkins, Ill., this holiday season.
Early indications are traffic will be busy.
Around this time last year, UPS expected to hire 50,000 additional workers nationwide to collect, sort and deliver more than 300 million packages between Thanksgiving and Christmas 2003. This week, the company said it expects to hire 70,000 workers to ensure delivery of more than 340 million packages this holiday season.
"We're optimistic, but I don't think we're forecasting a barn-burner," said Kurt Kuehn, UPS senior vice president for worldwide sales and marketing.
Package delivery used to be a leading indicator of the prospects for an upcoming holiday season. Yet, with companies having more efficient ordering systems and consumers buying last-minute gifts online, the flow of packages is now more a mirror than a forecaster of the economy.
UPS handles about half of the more than 6 billion packages shipped annually by air and ground in the United States. Federal Express has 21 percent of the market, followed by the U.S. Postal Service with 19 percent and DHL with 6.5 percent, according to the research firm Colography Group Inc.
In recent years, more packages have been shipped using ground transportation and less by air as companies have tried to slash expenses. While UPS still controls nearly 70 percent of ground package deliveries, FedEx boosted its standing to 15.7 percent in the first half of this year, from 10.6 percent of the market in 1999, Colography found.
The increasing popularity of e-commerce has boosted package shipments.
The shipping companies do not estimate how many packages result from consumers completing online orders, but James Valentine, a freight transportation analyst at Morgan Stanley put the number at "well below 5 percent of their volume." Those in the industry said business-to-business shipping accounts for about 80 percent of the volume.
Holiday spending online is expected to exceed $15 billion this year, up by about 25 percent compared to last year, according to the Internet tracking service ComScore Networks Inc.
