Peak season on-time deliveries fell as volumes increased in the US

Parcels Express

Peak season for last mile delivery is widely considered to be from Black Friday to New Year’s Eve. The recent advent of Prime Day, Singles Day and Black Friday has put into question the definition of peak season, which was traditionally formed around the holiday season. The 2019 holiday season was uncharacteristically short, with just four weeks between Cyber Monday and Christmas week, six days less than 2018. This put extra pressure on last-mile delivery.

According to a US study on 2019 peak season by ShipMatrix, a shipping data analysis firm, FedEx and UPS saw a lower rate of ‘on-time’ packages delivered during 2019 peak season (Thanksgiving to New Year’s Eve) compared to 2018. FedEx’s on-time delivery percentage from Black Friday to New Year’s Eve fell to 94.6% from 97.6% in 2018. UPS’ on-time delivery percentage was 96.6%, per the data, again a fall from last year’s 98.3%. USPS bucked the downward trend with its on-time deliveries increasing by 10 percentage points from 76% in 2018 to 86% in 2019. Although, still considerably lower than other providers, USPS has made headway with service improvements to change this. After famously being berated for poor service, and for losing parcels and other post, USPS used 2019 peak season to make developments including employing around 35,000 peak season personnel, expanding Sunday services and encouraging the use of Click and Ship options.

During peak season, UPS handled around 40m packages a day whist FedEx handled 37.7m on Cyber Monday, USPS estimated it would deliver around 800m from Thanksgiving to New Year. In Canada, PUDO managed 30% more packages over the season.

Amazon is in a league of its own, and its logistics arm is expected to deliver 65% of Amazon parcels by 2022, surpassing volumes delivered by UPS and FedEx. For 2019, Amazon’s on-time delivery rate hit 98.9%. It can be argued it is hard to compare Amazon’s delivery rate with the likes of FedEx or UPS in the US or counterparts in Europe, as Amazon products are generally shipped from somewhere much closer to the customer and therefore in theory it should take less time to deliver. However, its ever-growing influence and size gives it an advantage over the companies thriving to compete. In 2019 Amazon delivered 3.5bn packages globally.

There is no doubt that the surge in e-commerce has caused pressure and therefore has a negative effect on on-time delivery. Online sales in the US, from November 1, to December 24, 2019, were up 18.8%, according to Mastercard SpendingPulse. Cyber Monday saw record-breaking sales of $7.6bn in the US.

There were similar signs of a demanding season in Europe as well, as e-commerce continues to grow put extra pressure on last mile providers.

This season saw Hermes employ 7,000 more couriers, CitySprint recruited 500 couriers whilst Yodel acquired 1,000 more couriers for 2019 peak season. Hermes opened the Midlands Super Hub in Rugby worth £31m in October 2019, in preparation for increasing parcel volume. It is the largest of its kind in Europe and has enhanced the hubs handling capacity output by 40%.

Inevitably the new year brings returns. This year has seen peak returns, which is normally the week after Christmas, continue into second week of January. Royal Mail predicted an increase in online returns of over 70%, compared to the average number of parcels returned in December.

Expectations for free and fast delivery and returns, combined with huge volumes are the main factors leading to a falling in on-time delivery and customer service. In this peak season, the shorter time frame appears to have played a part too. Companies’ preparation must change to fit the changing customer demands. The ability to rapidly scale up peak season operations through more personnel, technology and assets is crucial but is unlikely to continue to meet the demands as it did over the last few decades. New technologies like robots and alternative delivery (& return) methods including lockers are required to have impact. The future of last mile delivery is in retailers and providers differentiating their delivery options.

Source: Transport Intelligence, January 9, 2020

Author: Holly Stewart

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