Given the influx of e-commerce activity brought on by the ongoing COVID-19 pandemic, which has resulted in myriad consumers remaining at home, due to social distancing measures, one major takeaway has been how increased online ordering activity has severely impacted parcel delivery operations.
It makes all the sense in the world, too, especially during the “early days” of the pandemic, when ostensibly every retail business—with the exception of grocery stores, gas stations, and pharmacies—were closed. And even with the United States economy taking steps to reopen, that has not, by any stretch, dinted the fervent rate of e-commerce activity.
As previously reported, these current (and permanent?) market conditions have led to carriers, most notably UPS and FedEx, delivering far more residential packages than commercial packages. What’s more, it has been widely viewed as a peak season, of sorts, minus the standard amount of planning and preparation that is needed and required for the traditional fall holiday season peak.
Parcel experts have referred to that situation as one in which “there is too much business. While that may be a good problem to have, it has resulted in some companies having to cap weekly pickups and volumes, as the latter, as mentioned, have been running at peak season levels.
These surges in volume have been in the forefront, as expected for the parcel duopoly of UPS and FedEx, as well as Amazon. Not only have there been caps on weekly pickups; there have also been suspensions of service guarantees, and COVID-19-based peak surcharges.
So, with all this COVID-19-led increases in activity, how is actual delivery performance going in light of everything?
Data provided to LM by ShipMatrix, a subsidiary of Pittsburgh-based SJ Consulting, showed, that, in many cases, parcel on time performance (OTP) by FedEx and UPS has shown annual declines in 2020.
Here is a look at the data for each company.
FedEx:
UPS:
Satish Jindel, president of SJ Consulting, said that when looking at these numbers it is important to keep in mind that starting in January 2020, FedEx started to do more SmartPost deliveries with its ISP drivers, which added more than one million parcels per day to its Ground network.
“Then, in late April, COVID-19 dumped even more parcels than could have been expected, thereby creating a peak of greater level than the planned Christmas peak,” he said. “That is because UPS still utilizes the U.S. Postal Service for final delivery or a much larger volume [for] its SmartPost service.”
This spike in parcel deliveries is not unique to FedEx and UPS alone.
That was made clear in data included in a monthly performance index released by Convey, an Austin, Texas-based provider of delivery experience management software that helps shippers connect disparate data and processes from parcel to freight in the last mile.
This index showed that total shipment volume was up 52% annually in May, short of April’s 60% annual gain. The company explained that the stockpiling from earlier weeks of COVID-19 has likely lessened in tandem with some stores re-opening that resulted in lower volumes for May, when compared to April.
Convey’s data also showed that on-time deliveries fell from 79% in April to 75% in May and were down 15% annually, which the firm attributed to the surge of shipment volume and decrease of logistics labor in April leading to some backlogs in various parts of the supply chain.
That was also seen in annual on-time performance metrics, too, for both UPS and FedEx. For UPS, on-time rates fell from 81% in April to 75% in May, and for FedEx, it fell from 77% in April to 75% in May.
Fulfillment times have also seen major shifts, due to COVID-19, with Convey citing a freight fulfillment spike of 433% in May, from an average of 14.1 hours at the beginning of April to 75.2 hours, at the end of May.
Convey’s explanation for this spike was this: “In addition to supply chain slowdowns, part of the reason we are seeing this is because receiving the shipment often requires interaction with the driver and in some cases letting the driver in one’s home for white glove services. We’ve heard feedback from our customers and carriers that consumers are refusing freight shipments because they do not want to interact with drivers. Since it is difficult to return/dispose of large and bulky shipments, the increase in shipments that do not have dispositions (i.e. instructions on what to do next with a refused piece of freight) is likely driving up the average fulfillment time.”
These datasets, as well as others, all share a somewhat common theme, in that COVID-19 has greatly changed the script, in the form of a massive re-write on the fly, to be sure. While we all weave our way through these new and different logistics shifts and challenges, delivery networks remain firmly entrenched on the front lines. While your delivery may be running late, due to overcrowded delivery networks, it is safe to assume you will receive it. That is the price of doing business in this new world.