Heavy Volume, Weather Compounding Holiday Peak Strain

UPS van in snow holiday peak season feature

Heading in the home stretch of the holiday peak season in an extraordinary year, and past the cutoffs for Christmas delivery by ground at the major parcel carriers, transit time performance is holding up well even though expected reports of delays are appearing across the board.

From Oct. 1 through Dec. 5, UPS has posted the highest on-time performance, in the 97%-98% range, according to data from ShipMatrix, followed by FedEx (95%-97%) and the U.S. Postal Service (93%-97%).

Many retailers have been proactive in notifying customers of the potential for delays, while also setting earlier deadlines than in the past, knowing this holiday peak is experiencing an unprecedented deluge of ecommerce deliveries.

Deliveries of COVID-19 vaccine from Pfizer are adding another difficult wrinkle into an already overburdened peak season, with FedEx and UPS divvying up the country.

The vast majority of vaccine deliveries are made at business locations such as hospitals and clinics, places where we are already making deliveries. So adding a few boxes of vaccines to a driver’s truck that is already going to that location, might add a minute or two total to his or her routine.

Dan McMackin, a UPS spokesperson, said the vaccine deliveries aren’t adding to the peak season strain, as the vast majority of them are hospitals and clinics where drivers are already making stops.

“So adding a few boxes of vaccines to a driver’s truck already going to that location might add a minute or two total to his or her routine,” McMacklin said. “It’s the surge of ecommerce and holiday packages going to residential addresses that adds a large number of individual and unique stops. But the vaccines will not delay other shipments, even if and when the Moderna vaccine is approved and shipped.”

As if that all wasn’t enough, a major winter storm brought a foot to two feet of snow to the mid-Atlantic and New England regions, adding to transit delays as roads were covered.

UPS and FedEx both set Dec. 15 as their ground cutoff for Christmas delivery, which Matthew Hertz, co-founder of fulfillment consultancy Second Marathon, saw as a potential problem as it created a slim one or two-day buffer for long-zone shipments, especially with late orders on Dec. 15.

“That does not leave much room for error, be it for vaccine resources as well as winter weather,” Hertz said. FedEx said it reserved network capacity for the vaccine shipments, with both carriers transporting them by air express, with ground mostly reserved for holiday volume.

On Monday, shipping software firm ShipBob released its most recent report card on major carrier performance as of Dec. 5. It listed UPS at the head of the pack with 2.5 average days in transit, besting a pre-COVID baseline of 2.96 days from Jan. 4 to March 7. DHL eCommerce was next with 4.05 days in transit, followed by FedEx (4.23 days) and the U.S. Postal Service (4.59 days).

One transportation consultant said UPS has been “a little soft on volume, not overwhelmed” going into the home stretch of the holiday peak, which may help explain its performance figure from ShipBob.

Kenneth Moyer, vice president of supply chain strategies at LJM Consultants, said on-time performance thus far has held up well despite the surges in volume, as carriers have invested significant sums in network upgrades and personnel. But this is partly due to a strategic shift on their part, Moyer said.

“They have significantly increased the time from order to delivery to handle volumes,” he said. “And the carriers are limiting pickup volumes from large shippers in order to not overburden their networks.  So, while the transit times are close to historical commit times, some packages may be sitting on a loading dock for several days before they move into the carrier network.”

Moyer said this practice may increase the total time to delivery substantially, while allowing the carriers to tout positive transit times.

Hertz said he is hearing reports from clients of daily pickup quotas from major carriers, resulting in backlogs at their fulfillment centers. In some cases, he said, they’re driving excess packages to the carrier hub for direct injection.

“This all suggests the bottlenecks are in the delivery drivers and package vans, and not necessarily on the sort and linehaul side of the house,” Hertz said.

Backing up the ShipBob report, Hertz said the biggest complaints from ecommerce brand clients have been with USPS First Class and Priority Mail services. “Shipments have a much higher lack of acceptance and intake scan, which is causing much higher customer outreach of ‘where is my package?’ ” he said. “Obviously that’s hurting smaller businesses like Shopify merchants, eBay and etsy sellers more so than Amazon, which mostly does Parcel Select DDU injections.”

USPS spokesperson Kimberly Frum said the Postal Service’s usual peak planning has been challenged by the historic holiday volume, compounded by a temporary employee shortage due to the COVID-19 surge, as well as capacity challenges with airlifts and trucking, leading to temporary delays. The USPS is currently short 14,000 workers who are quarantining due to COVID-19, half of whom tested positive.

“These challenges are being felt by shippers across the board,” Frum said. “We continue to flex our network including making sure the right equipment is available to sort, process and deliver a historic volume of mail and packages this holiday season.”

It’s worth noting that Amazon, UPS and FedEx all rely on the USPS for some last-mile deliveries to save costs, said Gavin Creado, a national account manager at LJM. “And those packages often end up in the same delivery trucks carrying other standard USPS mail, which could contribute to delays,” Creado said.

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