Impact of seasonal variations in the delivery business
Starting off with UPS, seasonal variation is normal life for a company operating in the delivery business. The spike around the holidays in package delivery is exorbitant, and can provide the company with a girth of extra income in which to disperse throughout the company. However, during non-peak seasons, the delivery business can really take some hits financially. During any season, UPS and other delivery businesses still need to keep their delivery promise dates. The profit in the delivery business really starts to come through when the company’s trucks and planes are full of goods to ship. The cost in fuel to the company stays the same, plus or minus variation in fuel cost, but the more packages in one shipment the more money the company will make in delivery fees. The method of planning for this yearly occurrence would fall under percent of sales method of forecasting. This method is “a method of financial forecasting that involves estimating the level of an expense, asset, or liability for a future period as a percent of the sales forecast” (Keown). If the company has done its due diligence, they should be adequately prepared for the lulls in sales/shipments.