Holiday shipping problems cause UPS to invest $100 million

After the holidays, one of the hottest topics of conversation was the shipping problems that UPS and FedEx experienced. They involved the last minute online ordering that caused a spike in volume that led to delayed delivery. While the hit to these businesses' reputations has been covered, what happened financially is starting to come to light.

A recent article from Bloomberg recapped the effect that this snafu is having on how UPS operates. The biggest impact is that company profits fell 8.5 percent after the holiday shipping problems. To help fix this, the company announced that it will spend more than $100 million to improve its shipping operations during peak periods of the year.

The piece features an interview with Chief Executive Officer Scott Davis. He said that the business plan is to speed up the introduction of technology that will improve delivery route efficiency, boost communication with shippers and step up the expansion of some facilities.

"We did not meet the service standards UPS historically does at Christmas," Davis said. "We will make the necessary investments to insure we effectively manage peak demand in the future."

Chief Operating Officer David Abney, who is in charge of the company's evolution after this peak crisis, added that the company believes it has a plan in place to handle all volume in 2014.

It is clear that shipping is an important aspect of business. One poor performance is costing UPS a large sum of money. To avoid being the victim of this, businesses should partner with a local shipping and logistics company that is able to handle all of these processes successfully.