New data from Convey Inc. shows how COVID-19 continues to impact retail delivery and the last mile – including performance and market share for FedEx, UPS, USPS and regional carriers. The dataset is derived from tens of millions of packages shipped from more than 500,000 locations in North America in March 2021, and key finding include:
• On-time performance returned to pre-COVID levels for the first time since the pandemic began: Across all carriers, 82% of parcel shipments were delivered on time in March 2021 (compared to 85% in March 2020). FedEx performed significantly lower than other carriers last month (75% OTP compared to 86% for UPS and 90% for USPS) with its cheapest service levels hit hardest.
• Market share stabilized with FedEx and UPS dominant…for now: So far in 2021, UPS and DHL have held steady in Convey network market share. FedEx has steadily gained at the expense of the USPS who has seen a gradual decline in market share since peak season of Dec 2020. March 2021 market share for the carriers are: FedEx (38%), UPS (26%), USPS (9%), DHL (11%), Regional Carriers (16%).
• On-Time Performance (OTP) suffers as FedEx SmartPost moves away from USPS, rebrands to FedEx Economy: In March, FedEx announced that their SmartPost business was being rebranded as FedEx Economy and that last mile delivery operations formerly handled by the USPS had been fully integrated into the Ground network. More than a rebrand, this announcement marked a shift in strategy aimed at making the service more profitable and more competitive in transit by moving to 7 days/week delivery. Convey analyzed nearly 30,000 SmartPost/Economy shipments from January 2020 through March 2021 to quantify the transition and understand its impact on transit time and on-time percentages.
The data shows a precipitous drop in USPS handoffs starting after May 2020 where 69% of SmartPost shipments were delivered by USPS in the final mile vs. 3% delivered by USPS in March 2021. In other words, FedEx is moving 97% of Economy shipments fully within its own Ground network.
However, FedEx’s OTP for SmartPost/Economy has dropped to 66% (compared to 86% in March 2020). Convey’s data shows that FedEx is promising faster EDD (estimated delivery dates) that aren’t being met. This decline in overall performance could negatively impact their business if it’s not corrected.
Carson Krieg, Co-Founder | Strategic Partnerships at Convey told SCRM in an interview that supply chain leaders can monitor on-time performance data for the big 3 (FedEx, UPS and USPS) and use it to optimize the carriers they are using.
“For example, during a peak period, a retailer might shift volume away from a carrier who is under-performing and move it to a carrier who is delivering a higher percent of packages on-time,” he says.
In addition, this month’s data shows FedEx’s SmartPost on-time performance is poor (64% in March 2021 vs 86% in 2021) and suggests that FedEx is struggling to “re-introduce” residential delivery volume back into their network via SmartPost.
“They are setting delivery dates & expectations that cannot be met as they stretch capacity to accommodate the additional volume,” concludes Krieg.
About the Author
Patrick Burnson, Executive Editor
Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected]