UPS Expects 800,000 Returns on Jan 6; Ups Delivery Outlets

After timely delivery of the packages during the Christmas holiday season, United Parcel Service, Inc. (UPS) — a leading package delivery company — expects nearly four million parcels to be returned to retailers across the U.S. in the first seven days of Jan 2015. In fact, the company expects to mark Jan 6 — UPS National Returns Day — with 800,000 returns.

Shoppers can send their parcels to 4,400 UPS stores or drop their items at any of the 38,000 UPS Drop Boxes. The company’s stores can be easily located through the UPS app available on Apple Inc.’s (AAPL) iOS and Google Inc.’s (GOOG) Android.

The surge in online shopping and increased promotional efforts by retailers during the festive season triggered considerable rise in shipments during the holidays.

According to UPS Pulse of the Online Shopper Study, 62% customers returned their parcels purchased online in 2014 against 51% in 2012. It was also found that customers prefer those online retailers which have a free return policy.

Per UPS, 585 million parcels were shipped in December, an 11% rise from the last year. Likewise, FedEx Corporation (FDX) delivered nearly 290 million packages between Black Friday and Christmas Eve, up 9% year over year.

Last year, UPS suffered huge supply constrain due to inclement weather and excessive last-minute delivery of packages from retailers. To avoid such a situation, the company invested nearly $500 million to upgrade its air cargo network by adding more fuel-efficient aircraft.

Moreover, UPS recruited 95,000 workers to facilitate timely deliveries. Furthermore, it decided to charge higher rates for overloads. FedEx followed UPS’ steps to counter delivery pressure during peak holiday season.

UPS expects to efficiently handle the heavy parcel returns post the holiday season backed by its vast store network and extra workforce. Though the popularity of online shopping has been a boon for these package delivery companies, lack of operational efficiency can significantly hamper their business.

Currently, United Parcel carries a Zacks Rank #3 (Hold).