Amazon refunds shipping after UPS can’t deliver by Christmas

Amazon.com Inc. (NYSE:AMZN), the largest online retailer, offered customers $20 gift cards and refunds on shipping charges after an avalanche of orders caused United Parcel Service Inc. to miss delivery of some packages by Christmas.

Amazon cited failures in UPS’s transportation network in messages to customers, saying its own fulfillment centers processed customers’ orders in time for holiday delivery. Amazon is reviewing the performance of the delivery carriers, spokeswoman Mary Osako said in an e-mail.

UPS, the world’s largest package-delivery company, said in a service update on its website that the volume of air packages exceeded its capacity immediately preceding Christmas. The company would resume normally scheduled service today after making no pickups or deliveries on Christmas Day, it said.

“You had a perfect storm of events from the consumer side, the retailer side and the shipping side,” Craig Johnson, president of Customer Growth Partners LLC in New Canaan, Connecticut, said in a phone interview.

“At the last minute this year, a number of retailers extended their cutoff date to get there by the 24th,” Johnson said, to compensate for a “mediocre” holiday shopping season. “Normally those kinds of schedules are all kind of prepared or coordinated with the carriers.”

UPS has long dominated the holiday shipping business in the U.S. because of its fleet of 101,000 signature brown trucks, vans, tractor trailers and motorcycles, according to the cover story for subscribers to Bloomberg Businessweek in its Dec. 23 issue. Its rival, Memphis, Tennessee-based FedEx Corp., has more jets though its ground-delivery fleet is less than one-third the size, at about 32,000 vehicles.

Holiday Rush

In October, UPS and FedEx announced their holiday shipping forecasts. FedEx said it would carry more than 85 million shipments in the first week of December. UPS, based in Atlanta, predicted it would deliver 129 million packages that week, and would see a second holiday rush during the week before Christmas.

FedEx declined to discuss whether there were any delays in deliveries. In an e-mail, FedEx said 99% of its ground packages arrived on time. At UPS, spokeswoman Peggy Gardner wasn’t immediately available for comment.

UPS added 55,000 part-time holiday workers, leased 23 extra planes and effectively built a second trucking fleet to handle the seasonal package flow, according to the Businessweek cover story.

Johnson said retail sales for the week ended on Dec. 24 totaled $88 billion, up from $85 billion last year. That’s the single biggest retail sales week in history, he said.

Record Sales

U.S. online holiday retail sales were projected to climb 15% to a record of more than $78 billion by Forrester Research Inc. in a report published last month. UPS expected to ship more than 132 million parcels globally during the week before Christmas,

“We’re deeply sorry for disappointing our customers expecting delivery in time for Christmas,” Jen Johnson, a spokeswoman for Kohl’s Corp., said in an e-mail. “Although a limited number were impacted, we take each customer experience seriously.”

UPS, FedEx

Shares of UPS, fell 0.1% at 9:47 a.m. in New York to $104.41, while FedEx rose 0.5% to $142.65. Amazon, based in Seattle, fell 0.2% to $398.48. All three stocks have beaten the 29% rise in the Standard & Poor’s 500 Index so far this year.

Kohl’s is contacting those affected and the company will fully cover the cost of all items not delivered on time, Johnson said. Spokesman David Tovar of Wal-Mart Stores Inc. didn’t immediately respond to e-mails seeking comment on the Christmas holiday.

Johnna Hoff of EBay Inc., Kathleen Waugh of Toys “R” Us Inc. and Laura Jones of Zulily Inc. didn’t respond to e-mails and calls seeking comment.

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