United Parcel Service has stepped up its game plan to take on the holiday season rush, Carol Tomé, who joined the shipping company as chief executive in June, told CNBC Wednesday.
“We’re planning a pretty peaky peak, and peak is so important to our customers that we’ve been planning for this for months,” she said in a “Mad Money” interview.
Tomé, who was previously Home Depot’s decades-long chief finance officer, brushed off any worries of what some are predicting to be a “shipageddon” this quarter, where delivery services like UPS and FedEx are projected to see a severe capacity shortfall of millions of packages per day. Delivery demand is only expected to swell amid the pandemic.
The two logistics giants have reportedly notified their largest shipping customers that their capacity loads have already reached their limits. ShipMatrix, a parcel shipping software company, expects the shortfall could average out as much as 7 million packages each day in the weeks between the Thanksgiving and Christmas holidays, Wall Street Journal reports.
In the Wednesday interview, Cramer noted that UPS has a reputation of missing revenue estimates in the fourth quarter. The company has missed Wall Street’s revenue expectations in seven holiday quarters dating back to 2011, according to Factset.
To prepare for this year’s rush, UPS has leased 14 new aircraft, expanded automated package sorting capabilities by 400,000 and is hiring 100,000 people to manage peak levels and transport deliveries, Tomé said.
She pledged that UPS will not have to pre-announce disappointing numbers prior to reporting results from the fourth quarter in the new year.
“We are ready for the volume that’s going to come our way,” she said. “We don’t expect to be issuing any warning.”
UPS shares plunged almost 9% to $155.78 as the broader market sold off in Wednesday’s session. The stock is up 33% year to date.
Disclosure: Cramer’s charitable trust owns shares of UPS.
