Dive Brief:
- Last-mile carriers posted an on-time delivery rate of 85.1% in August, the best performance the industry has seen since the COVID-19 pandemic tanked rates in Q1 2020, according to a Sept. 22 report from project44.
- That rate, based on a shipment's initial estimated time of arrival, marked an improvement of more than 4 percentage points from July. This suggests that delivery providers are entering the peak shipping season in ideal conditions, the report said.
- "The last mile market is healthy going into peak season," the report said. "While service levels are anticipated to drop-off, there are not current concerns of packages being able to be delivered in time for the holidays."
Parcel carriers' on-time performance recovers to pre-COVID levels
Dive Insight:
After a slow start this year, last-mile carriers appear to have finally recovered service-wise from the unprecedented volume surges brought on by the COVID-19 pandemic, which bodes well for their peak season performance.
On-time performance generally declines during the peak season, particularly in December as delivery activity spikes and inclement weather hobbles operations, project44 said. But carriers are in better shape to handle those bumps in the road now than in previous years, according to the report.
"The capacity required to accommodate peak volume is readily available, and shippers have diligently diversified their carrier portfolios, ensuring ample options for delivering packages to customers' doorsteps," project44 said.
Strong on-time performance will be an especially important metric for carriers this peak season, as they look to attract and retain more volume in a market that has tilted in shippers' favor.
"Service is good, and that's really what I'm focused on right now is delivering just awesome service, and so they want to stay with FedEx because we're the better provider," FedEx EVP and Chief Customer Officer Brie Carere said in a September earnings call.
But shippers have tapped a wider array of carriers beyond FedEx and UPS since the pandemic strained their capacity levels. The average number of carriers that shippers utilize in the last-mile delivery process was 6.1 in August, about the same as the previous three months.
Project44 expects high levels of carrier diversification, which had been fueled further by now-settled UPS labor negotiations, to continue through the peak season.
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