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December 11, 2015

Holiday shipping crisis? UPS, FedEx reportedly flooded with packages

Fulfillment executive says E-commerce logjam causing 2-day delay at some facilities

E-Commerce Holidays
121115_FedExtee Mark Humphrey/AP

A FedEx tee marker is seen during the first round of the St. Jude Classic golf tournament Thursday, June 11, 2015, in Memphis, Tenn.

Holiday shoppers beware: If you buy online, you could be risking the possibility that your gifts don't arrive on time this year as major shipping companies like UPS and FedEx face a glut of packages at their distribution centers.

The carriers are under significant pressure after an unexpected surge in online orders, dating back to Thanksgiving and Cyber Monday promotions, produced logjams at fulfillment centers from New Jersey to California, BusinessInsider reports.

Online sales from the Thanksgiving weekend hit $11 billion in 2015, generating record sales for Target and other retailers, but the deluge has left UPS and FedEx scrambling to catch up with delays reflected in their respective on-time delivery rates. 

The software company ShipMatrix, which tracks package deliveries, noted that the UPS on-time delivery rate fell to 91 percent compared to a rate of 97 percent during the same period in 2014. The rate for FedEx fell to 95 percent from 97 percent last year.

Are strong odds of receiving your packages? Sure, but the backup could affect more than just consumers. In 2013, under pressire, Walmart opted to offer customers $25 gift cards to make up for weather-related package delivery issues, while Kohl's provided refunds for delayed packages.

A UPS spokesman acknowledged the exceptional volume but claimed the issues have largely been worked out. Customers can expect "service-level commitments" to be met according to shipping priority, according to the company.

Likewise, FedEx provided a statement to assure customers that their network is operating as planned and employees are working hard to absorb the record volume of packages.

Still, one executive at a fulfillment company, who asked not to be identified, said that packages were sitting idle in trucks and could now be as many as two days behind schedule.

Holiday shopping online may be the ultimate convenience, but you might want to get on it immediately if you haven't placed your orders already.