Most of the time, shipping carriers have pretty stringent guidelines about what constitutes on-time delivery. If packages are even minutes late, shippers can claim refunds for late deliveries. (If you don’t already do this, here’s how.)
But during the peak holiday season, the rules change. FedEx, UPS and other carriers move significantly more packages between Thanksgiving and Christmas than they do during the rest of the year. Often those packages are bigger and bulkier than carriers typically handle. And as holiday parties approach, customers are angrier than ever if packages arrive late.
In 2016, parcel carriers widely failed to keep up with holiday e-commerce orders. Scores of packages were delivered late. The next year, carriers hired tens of thousands of seasonal workers and funded those positions by charging shippers peak-season fees. Still, many packages were late.
Now, many carrier contracts include clauses that redefine what “late delivery” and “on-time shipping” means. They might insert blackout delivery dates, when shippers cannot collect refunds if a package is only a little late. FedEx and UPS may extend the late-transit time window by 90 minutes or until the end of the day, or even forgo refunds altogether. And that’s on top of peak season surcharges.
This holiday season, make sure you know the rules — and how to play the game of shipping speeds.
What is Considered On-Time Delivery During Peak Season
During peak months, carrier commitments to on-time delivery are extended or waived altogether. This doesn’t always show up in carriers’ internal reports, because the definition of on-time changes — packages that would be considered late in October because they arrived 60 minutes after the scheduled delivery time aren’t marked as late in December.
Even with those modifications, carriers see a drop in delivery time performance within many shipping services. On average in 2017, on-time delivery performance for the U.S.’s major carriers slipped four percent. Ground shipping on-time performance fell by five percent for both FedEx and UPS. UPS 2nd Day Air fell four percent and FedEx Standard Overnight slid two percent.
Carriers say this is to account for the huge number of parcels they move during the holiday season. These delays slow down delivery drivers, trucks and requires everyone to work more hours.
But remember, these reports differ from usual on-time performance reports. The metrics are different. Fewer packages are technically considered late — and still, more packages arrive late.
These practices are confusing at best, intentionally obtuse at worse. But unfortunately, there’s little shippers can do about it. Read the fine print to make sure you know which refunds you’re still eligible, and then claim them as often as you can.
Peak Season Surcharges
Even though carrier performance slips during the holidays, shipping can get dramatically more expensive.
This year, the cost of shipping certain packages with FedEx could rise anywhere from 10 percent per package to 211 percent with their large package surcharge. For UPS, prices rise between 24 percent and 104 percent, plus residential delivery surcharges.
UPS and FedEx have pursued different strategies for holiday surcharges for two years now, which suggests that both earned enough in 2017 to consider these fees successful.
Remember, both carriers say they need to impose fees to cover the costs of hiring seasonal staff and delivering extra packages.
But because UPS and FedEx change their on-time performance metrics during the holidays, it’s difficult for shippers to tell if their surcharges are working — that is, if the company is actually performing as well as they say surcharges allow them to.
What Can Shippers Do To Get Ahead
Succeeding during the holiday season is a two-pronged challenge: getting your packages to your customers on the correct delivery date, and doing so at a reasonable price.
First, because your carrier isn’t going to call on-time performance like it is, hold your carrier accountable. Monitor your invoices closely for dips in performance. If you notice consistent issues, it may be time for a conversation with your carrier.
Second, make sure you’re getting every dollar you should in refunds and rebates. Review your carrier’s holiday policy for late delivery refunds, identify packages that were mistakenly marked on time or were marked late, and file claims whenever possible to recoup those costs.
Further, study your holiday shipping data from 2017, if you have it. Notice which products and shipments incurred surcharges, and make notes of how surcharges have changed from 2017 to 2018. What can you to to avoid or minimize those fees this year?
Resource: Decoding Your Shipment Data
For some businesses and brick-and-mortar retailers with specific needs, it may make sense to create a multi-carrier strategy for the holidays. The U.S. Postal Service, for instance, charges no surcharges, although it also ships more slowly.
Auditing invoices, claiming refunds, reviewing data, and ensuring you’re continuing to collect good data requires hours and hours of work — far more than most supply chain managers can spare. But a trusted third-party shipping consultant can help lighten this load for your company. Reveel’s team can help you understand where you’re paying too much, how you can avoid fees, and what you can change so that shipping doesn’t steal your holiday cheer.