September on-time performance metrics from ShipMatrix are mixed

Data recently provided to LM by ShipMatrix, a subsidiary of Pittsburgh-based SJ Consulting showed varied on--time performance (OTP) ranges, in September, for major parcel carriers, including UPS, FedEx, and the United States Postal Service (USPS).    

ShipMatrix President Satish Jindel said that this data is based on millions of packages shipped via UPS, FedEx, and USPS.

ShipMatrix reported the following for September OTP metrics, which it broke down into two separate categories:

• for commitment by time for express services and by day for ground services, it reported that FedEx was at 85.1%, UPS was at 95.2%, and USPS was at 95.5%; and
• with more parcels being delivered to residential addresses, the firm offered up another OTP measurement for delivery by end of day for express and one extra day for ground service, with FedEx at 95.8%, UPS at 99.2%, and USPS at 97.8%

Jindel told LM that, for the second grouping, with parcels delivered via express to a home, with, for example a 10:30 AM, 12 PM, or 3 PM commitment, it is not top of mind for the recipient, as the recipient retrieves the parcel upon arriving at home at the end of the day.

“Even if the recipient is home, it is not like they are going to do something with it in the next half-hour,” he explained. “So, if you relax that time commitment, to be delivered anytime within the day, for express and for ground, to be delivered by a day, in addition to the day they had….if a 3 PM commitment came a day later, is where you see FedEx go from 85.1% to 95.8% and UPS going from 95.2% to 99.2%, and the USPS going from 95.5% to 97.8%. Relaxing it by one extra day should not matter to almost anyone in the B2C world, and in B2B, for most of them, it won’t matter, and these numbers are pretty good.”

Another way to look at the data, he explained, is as the days move further on into Peak Season, if the second dataset with the extra day does not show much improvement, then it shows things may be more flawed than they otherwise appear to be.

Looking ahead, Jindel said it would be encouraging to see FedEx’ 85.1% OTP for commitment by time for express service and by day for ground services go up to 90%.

“If that does not head up then its 95.8% reading [for the second dataset] may get worse,” he said. “That said, I think the challenge that the consumers and general public will experience is not going to be for FedEx and UPS to pick it up to make deliveries in that timeframe, it is more that the retailers who are selling are going to have a challenge in fulfilling the orders when the order is placed, because they will be accepting the orders with the expectation that the product will be in their hands to ship within 24 hours, and that 24 hours becomes 48 and then 72. This is because the products in the containers are not moving out of the ports to the warehouses. Once they get to the warehouses, they can’t get unloaded, because they cannot find workers to do that.”

Jindel added that on UPS’s earnings call earlier this week, the company did not say it would face challenges in meeting increased holiday season volume, as the company has been preparing for this. As for the USPS, he noted it has significantly increased capacity by 35% and is adding 45 new facilities to handle the Peak Season volume surge.

“The USPS seems to be in a good position to handle the volume and unpredictability of where that volume will show up,” he said. “It may see a decline and then a spike, with the spike not getting averaged with the decline. Service is a very perishable commodity. If you don’t use the drivers and the capacity you have today, it is not available tomorrow. It is gone.”

He added that the 2021 Peak Season is likely to be a bumpy ride, and consumers should place all of their holiday orders by Thanksgiving.

“If they wait until early December, it is not that the carriers won’t be able to deliver by Christmas,” he said. “It is more that they will not find the products to buy. If they do find them, it will be at a higher price than compared to November.”