Parcel giant UPS (NYSE: UPS) announced last week that it expects to hire about 100,000 seasonal employees to support the anticipated surge in package volume that will begin in November and continue through January 2019. E-commerce is projected to continue its strong growth during the holiday season, and the company regularly ramps up hiring to accommodate the peak months.
Traditionally, the parcel market has largely been focused on commercial shipments between businesses. However, the last 15 years has seen a dramatic shift in the industry, as the emergence of e-commerce within retail has forced parcel delivery companies like UPS and FedEx (NYSE: FDX) to rethink their delivery network. The majority of the growth in the parcel industry is now being driven by rising demand for e-commerce, bringing along with it added demand for last-mile residential deliveries.
Retail and e-commerce activity peaks during the holiday months of November and December, and have posed challenges to parcel carriers as they attempt to make tight delivery deadlines during this time period. To facilitate this, UPS brings on additional workers during the peak season to help with sorting and delivering packages.
“Every year, we deliver the holidays for millions of customers,” said Jim Barber, chief operating officer. “In order to make that happen, we also deliver thousands of great seasonal jobs at our facilities across the country.”
Hiring in an increasingly tough market
E-commerce growth has performed well thus far in 2018, rising over 15% year-over-year in each of the first two quarters on the year. Strong job and income growth and elevated consumer confidence point to particularly strong growth during this holiday season, and parcel companies are getting prepared. The current plan of 100,000 additional workers for UPS would be a 5% increase over last year, and exceeds rival FedEx’s recent announcement of plans to hire 55,000 temporary workers for this peak season. Many of these temporary workers go on to become full time employees, staffing UPS’ expanding network.
The parcel companies won’t be the only businesses hiring for the holidays, however. UPS’ announcement come on the heels of Target also announcing its intentions to hire 120,000 The parcel companies won’t be the only businesses hiring for the holidays, however. UPS’ announcement come on the heels of Target (NYSE: TGT) also announcing its intentions to hire 120,000 holiday workers this year, while fellow retailer Macy’s (NYSE: M) plans on adding 80,000.
Businesses may find it more difficult to hire this year than in years past, however. Unemployment has been hovering near historic lows throughout the year, and remains below 4% into the 3rd quarter. Businesses across industries have begun reporting challenges finding available labor, even for unskilled labor which is typically in greater supply.
With the recent wave of holiday hiring plans, the question then becomes where are all these workers going to come from. Parcel companies and retailers will likely find themselves competing for a small pool of workers during the holidays, and may have to boost pay or other incentives to fulfill their hiring needs.