By Mark Minton, The News & Observer, Raleigh, N.C. Knight Ridder/Tribune Business News
Nov. 15--If you're shipping Christmas presents this year, your choice may come down to peanuts: Pay them or pack them?
The holidays are closing in, and the big three package-delivery services -- FedEx, UPS and the U.S. Postal Service -- all want to deliver your presents.
But in an industry where the real competition is to sign contracts with big shippers such as catalog companies, there are no price wars or flashy packaging innovations to draw holiday shipping customers in. It's still foam peanuts or bubble wrap, and shipping costs have been creeping up across the board.
Still, with their peak season at hand, the big three package shippers are making holiday pitches that emphasize convenience and cost, all hoping to maximize a peak shipping period that begins around Thanksgiving and runs through Christmas.
"It's a good season," said Art Hatfield, an industry analyst at Morgan Keegan in Memphis. "But I don't characterize it as a war. There's plenty of business to go around for everybody."
About 500 million packages will move during the peak period, during which companies lease extra planes and trucks and bring in temporary workers to handle the volume.
You can choose the cheap route, preparing the packages yourself and dropping them at the post office; or choose UPS or one of the smaller pack-and-ship companies that supply the box and packing material, wrap your package for you and then ship it. But the extra service -- and those packing peanuts -- will cost you more.
The big three calculate their peak holiday periods differently. The Postal Service says it began last month; UPS figures its peak season from Thanksgiving to Christmas; and FedEx said its busiest stretch is typically the week before Thanksgiving. But all three say their volumes rise significantly.
They are expected to increase more this year than last year.
The National Retail Federation projects a 5.7 percent increase in holiday sales in 2003, with U.S. consumers spending $217.4 billion. That would be the biggest increase since 1999.
Package-delivery companies are expected to see a surge of deliveries from increased Internet buying. Forrester Research predicts that online holiday spending will grow from $8.4 billion last year to $12.2 billion this year.
Overall, UPS has the biggest share of the U.S. package-delivery market, Hatfield said. The Atlanta-based company has $30 billion in annual revenue. It ships mostly by truck, with union drivers hauling the freight in their familiar brown vehicles.
Memphis-based FedEx operates the world's largest air delivery service, but has been diversifying as shippers, facing a tough economy, have cut back on pricier air deliveries. FedEx, which has $22 billion in annual revenue, bought a truck delivery company five years ago and now operates North America's second-largest ground-delivery business. To improve profitability, the company has been reducing staff by offering incentives for some workers to retire or quit.
The Postal Service, a federal agency that says it's the only delivery service that goes to every address in America, also has been cutting positions, among other steps, as part of a "transformation plan" to improve efficiency and customer service.
For the holidays, post offices have rolled out The Cat in the Hat displays -- a tie-in to the movie based on the Dr. Seuss book that stars Mike Myers -- to promote a strategy of bundling shipping options to make them easier for customers to order. Much like fast-food restaurants that offer value meals, post offices are promoting "value-added" features for priority mail on menu boards over the counter.
One menu option offers priority mail with delivery confirmation starting at $4.30.
The goal is to simplify choices for customers in a hurry.
With its ubiquitous UPS Stores -- the result of buying 4,000 Mail Boxes Etc. in 2001 -- UPS is emphasizing convenience for customers who will be pressed to cram all their shipments into the 18 delivery days between Thanksgiving and Christmas, said UPS spokeswoman Christine McManus.
"You don't have to stand in a long postal line," McManus said. "We're selling convenience."
Besides offering faster service, the stores, nearly all of which have been rebranded UPS, have a selection of packing supplies. Clerks wrap packages themselves. Insurance comes automatically with all packages up to 100 pounds.
At FedEx, spokeswoman Allisson Sobczak stressed prices.
"We offer great rates," said Sobczak, a spokeswoman for the company's FedEx Ground division.
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(c) 2003, The News & Observer, Raleigh, N.C. Distributed by Knight Ridder/Tribune Business News.
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