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>UPS works closely with retailers for months to map out how many orders are expected to flow out from which hubs and into what markets. This year, it started charging extra fees for deliveries during peak shipping days.

Are they actually forecasting demand? Are orders that predictable? If it were, then would they not be able to accommodate the spikes?

Very curious to see how well the forecast demand.

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Remember there’s two sides to the equation. Most of the shipments originate from large warehouses or regions that are centrally locates. That’s the aggregate demand part from the retailer. Most retailers can model that.

The delivery side is harder... nobody knows how many pants LL Bean is shipping to my zip code on December 4. You also have the variables of weather, congested highways, etc.

> nobody knows how many pants LL Bean is shipping to my zip code on December 4.

While making predictions of that resolution are not realistic, in general I would imagine that the shipping carriers are in a better position to estimate delivery volume in a certain area than the retailers would be. I would bet that overall volume can be predicted with decent accuracy using historical data.

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