Parcel delivery performance a tale of two holidays

The U.S. Postal Service (USPS), generally considered the parcel carrier of last resort, saw its on-time performance decline over the past two months because it accepted parcels that UPS and FedEx, facing their own demand-driven chokepoints, have turned away, Convey said. The Postal Service’s share of e-commerce parcels rose to 20% as of Dec. 3 from 9% on Oct. 9, according to Convey data. Though the Postal Service’s on-time performance of 78% during the Black Friday-CyberWeek period exceeded that of FedEx and UPS, it represented a decline from 87% in the prior week and 94% during the week of Oct. 9, Convey said.

The biggest news of the holiday season so far is that, according to The Wall Street Journal, UPS temporarily halted pickups at a number of its largest retailer customers because their volumes were exceeding the agreed-upon ceiling set by the carrier and the customers. Parcel-delivery experts said the move was entirely prudent. “Some of our larger clients have been told by [FedEx and UPS] that they can’t exceed certain volume levels,” said Mike Erickson, founder and CEO of AFMS, a parcel consultancy. 

Neither carrier wants to risk major service issues by biting off more parcels than it can chew, Erickson said. “They are making sure they have the capacity in their networks for all shippers, not just the largest ones who are blowing out their normal shipping levels,” he said.

UPS executives told Bloomberg on Wednesday that the carrier has begun easing more parcels from those customers into its system. “We are sticking with our planned volume. That was always the intent. It’s not that we stopped serving them,” a UPS spokesman said in an email. Unplanned volumes will move as it aligns with UPS’ capacity, according to the spokesman.

Austin, Texas-based Convey said its data is “based on tens of millions of packages shipped from more than 500,000 U.S. locations across the company’s client base.” However, the Convey platform represents just one data source, and it doesn’t capture the totality of peak-season shipping, especially during 2020. Convey does not track parcels delivered by Amazon.com Inc. (NASDAQ: AMZN).

This year’s peak is also different in that it effectively started 45 days earlier than usual. Amazon moved its two-day “Prime Day” online sales extravaganza to mid-October from mid-June due to the pandemic. Other retailers then moved up many of their promotions to the mid-October period and advised consumers to “shop early.” The pull-forward spread out holiday deliveries over a long period, allowing for more orderly scheduling and less chaos than in the prior years. Total shipments in the week before Black Friday were 61% higher than the same period in 2019, Convey said.