The past months have given rise to a series of changes in how parcel carriers accommodate shippers’ needs. And while the money-back service guarantees are indeed back in business, there are still issues happening. According to a recent report by The Wall Street Journal, FedEx is struggling to deliver packages on time. From March through mid-April 2021, late deliveries occurred across 13% of FedEx packages and 5% of UPS packages. And these failures come in tandem with the return of service guarantees and more surcharges too.
Meanwhile, DHL Express implemented a temporary piece weight limit of 30 kg (66.15 pounds), effective May 28, 2021, on shipments originating from and destined to the USA. As such, shippers need to stay apprised of these parcel carrier challenges. They need to think about how those issues will impact an organization financially and operationally, using transportation data to understand the real impacts. And it will be critical to understanding how those changes translate into a more significant need across all supply chains, particularly the retail supply chain, to stay strategic, and they must use data to keep costs in check.
What’s Really Happening to UPS, FedEx, and USPS Customers
The issue is relatively simple. Some shippers are not getting their packages delivered on time. Yet, FedEx and UPS have both managed to maintain a 2.2-day average on all deliveries. It sounds unusual to have such short times associated with late deliveries, but there is another side. Amazon, which uses its own fulfillment service, has managed to avoid such delays. The problem goes back to how both FedEx and UPS are still over capacity in their networks. Yet, the money-back service guarantees are active on select priority services. As such, shippers could tap that fact to reimburse customer shipping costs or refine their shipping standards to provide peace of mind to customers. Of course, it’s not only the direct-to-consumer shipments affected by these delays. Business-to-business shipments are running late too. Therefore, the risk of out-of-stocks is increasing.
Now considering what’s happening with DHL, there is yet another risk for stock-outs. As both international and domestic parcels become subject to the new weight limit restriction, there will likely be an increased demand for FedEx and UPS parcel carrier services. In turn, it will exacerbate an already-existing problem around the peak season ramp-up with late deliveries and could push your customers even further away from these traditional parcel carriers. In fact, Amazon hit the problem on the head by effectively moving advance inventory orders further ahead this year than any other time in history.
USPS has further taken steps that would indicate a future increase in rates or perhaps capacity limits comparable to the other parcel carriers as well. On May 28, 2021, USPS initiated a formal request to increase the pricing on first-class mailpieces effective on August 29, 2021. The specific increases include:
- A $0.03 increase to 1 oz. letters.
- A $0.03 cent increase to metered 1 oz. letters.
- A $0.16 cent increase to 1 oz. flats.
- A $0.10 cent increase to 1 oz. outbound international letters.
These requests for increased rates come as no surprise as USPS experienced its fair share of delays and challenges with managing parcel capacity over the past year. And as demand remains high, a slight increase might hint at a future increase in larger parcel package rates and more. Either way, the solution for shippers is to start thinking more strategically about how to keep parcel costs in check—-from the smallest letters to packages of the typical 150-pound range.
What Can Shippers Do to Stay Strategic
The biggest issue driving the delays and restrictions is sheer demand. While the pandemic continues to subside, e-commerce growth remains higher than ever. As a result, the burden of staying strategic grows more prevalent across shippers of all sizes. There’s simply not enough capacity, or perhaps not enough drivers, to get shipments from A to B within the same-day or next-day turnaround times. Moreover, ocean delays have led to more air freight, and in turn, that’s resulting in more strain on the network. Rather than leaving retail shipping to the fringe of sub-par service and without hope, shippers can take a more active role through the following steps:
- Regardless of the issues, the first step for shippers is to recapture their costs for late deliveries on both FedEx and UPS, as well as audit invoices to catch discrepancies and errors. That’s essential to reducing the financial burden of late deliveries for priority services with active service guarantees.
- Next, shippers need to start thinking outside of the box, considering new regional parcel carriers to expand their networks and reduce reliance on the primary parcel carriers. However, it’s critical to ensure existing contracts do not forbid such activity before doing so.
- For shippers that routinely use DHL, it might be time to consider working with FedEx and UPS and regional parcel carriers to find capacity for parcels above the 66-pound mark but below the weight limits for FedEx and UPS.
- Other opportunities to reduce reliance on these traditional parcel carriers may further include freight consolidation to skip air-freight zones and still get packages to their destination on time. Or they may opt to leverage hub injection or team drivers to reduce capacity constraints in localized markets.
- And lastly, it’s important to start tracking parcel carrier performance across all partners to know when to switch from one to another and consider other options, such as zone skipping, as already noted. That’s where having a dedicated data transportation analytics platform like Intelligent Audit can provide the most value.
Choose Intelligent Audit to Overcome This and Future Parcel Carrier Shipping Disruptions
While recovery from the pandemic is imminent, shipping service failures appear imminent as well. Even worse, parcel carriers are actively reducing their customer support and solutions staffing levels. That amounts to putting the responsibility for data tracking and managing carrier service in the hands of shippers. And that includes filing late claims for reimbursement and holding carriers accountable. Fortunately, a robust data analytics solution such as Intelligent Audit can make all the difference and enable customized, on-demand reporting to keep everyone accountable. Contact Intelligent Audit to learn more about how we’re making shippers smarter through deeper insights into their transportation and shipping data to improve decision making and improve transportation spend management.