During the holiday season, there is always a mad dash by retailers to have the best promotions to lure in customers. In more recent years, that opportunity has moved more and more towards e-commerce and away from the traditional brick and mortar stores. As a result, the pressure has been on large parcel carriers to not only deliver but deliver on time. Due to the increase in e-commerce orders as well as the increase in larger packages (furniture, rugs, etc.), parcel carriers have a tougher time ensuring packages arrive on time.
2016 & 2017 Peak Season in Review
During the 2016 holiday season, parcel carriers were unable to keep up with the influx in demand of e-commerce orders. As a result, packages were delivered late and even after Christmas in some cases. On-time performance slumped severely, and shippers were left scrambling to perform damage control while trying to get a grasp on the situation.
By the time the 2017 holiday season rolled around, large parcel carriers were already proactively hiring tens of thousands of seasonal workers to get ahead of seasonal woes they experienced in prior years. Additionally, peak season surcharges were introduced for some large shippers based on their forecasting margin of error during the carrier’s highest volume weeks. These measures as well as significant investments from each carrier almost guaranteed the need for preparation of yet another year of increased e-commerce volume.
And 2017 delivered on just that. As the holiday season kicked off, there was an even larger increase in e-commerce orders than originally predicted which led to initial slowdowns. With quick adjustments, the carriers were able to recover, but how much of an impact did that have on on-time performance?
How On-Time Performance Metrics Change During Peak Season
On-time performance is measured and reported by parcel carriers on a monthly or quarterly basis. However, during peak months, the commitments for on-time delivery are extended or waived altogether. In this case, carriers will expand their on-time criteria to ensure on-time performance has a broader window than it typically does throughout the rest of the year to account for the volumes moving through their network.
For example, carriers may decide to adjust what is considered to be “on-time” delivery by adding a pad onto the suggested delivery date of several hours afterwards.
On top of that, the criteria for an on-time delivery also is dependent on any exceptions that are self-reported by the carriers. That said, carrier-reported on-time performance during peak season is often considerably different than normal operating periods and can have a large impact on customer service.
On average during the peak holiday season, major parcel carriers saw a decrease of roughly four percent with on-time delivery. Ground shipping was accompanied by a reduction of five percent average while service levels such as UPS 2nd Day Air and FedEx Standard Overnight saw on-time percentages at four percent and two percent, respectively. These numbers reflect what many shippers would expect to see.
They do, however, differ from what parcel carriers usually report their on-time numbers to be. Looking ahead to the not-so-far-off 2018 peak season, you might be asking what you can do to ensure your packages are delivered on time.
Three Tips for Shippers to Get Ahead of 2018 Holiday Peak Season
- Start with being proactive and looking for dips in performance to try to stay ahead of the curve. If issues are identified early enough, you can work with your carrier representative to attempt to rectify the issue.
- Rely on your to identify packages marked delivered on-time that were in fact not, so you can file a claim to get money back, or short pay those invoices if you haven’t already done so.
- In addition to this, spreading service across multiple carriers will help reduce your risk. If one carrier struggles with on-time performance in a certain area, you can off-set that risk by leveraging a multi-carrier strategy.
Megan Bishop is a Senior Manager of Operations at . She joined the firm in 2009, and has since progressed through the Operations practice, holding positions as a Transportation Coordinator, Team Lead, Manager of Freight and Parcel Audit and now Senior Manager. In her positions, she has had the opportunity to work on numerous transportation analysis projects, implementations and other consulting projects. Currently, she oversees all Freight Operations, as well as managing the Freight Audit and Bill Pay and Parcel teams. Megan graduated from Indiana University – Indianapolis with a degree in Supply Chain Logistics Management.