Jay's Parcel Notes: Jan 1 - 15

I’m Jay Kent, managing director of SLB Performance, a consulting firm that helps companies reduce supply chain costs, implement BI tools, and improve in-stocks and customer service.??After 25 years of leading some of the most complex supply chains in the industry, I began advising companies in multiple industries and verticals.?To mitigate costs and improve efficiencies, it’s important to understand the market.?So twice a month, I’ll share parcel news and thoughts.?Be sure to hit the subscribe button to receive the latest newsletter in your LinkedIn notifications.

The 2022 holiday season ended with an estimated 30 billion parcels during the peak period, just like the pandemic years of 2020 and 2021, according to consulting firm Shipmatrix.

No clear ‘winner’ in terms of parcel delivery carrier can be declared (Perhaps the small parcel regional carriers?). It’s likely UPS and FedEx lost some volumes, while the USPS noted year-over-year declines for the period between Nov 26 and Dec 30.?According to Government Executive, USPS delivered 11.7 billion mailpieces, an 11.4% decline from 2021’s 13.2 billion mailpieces. But it improved delivery time, averaging 2.5 days to deliver compared to 2.7 days in 2021.

Returns

January is typically considered a period of high returns volume due to the holiday season. Supply Chain Dive reports that UPS expects to handle up to 70 million returns from Nov. 20 to Jan. 21, an increase from an estimated 65 million returns for the same period in 2021.

Returns continue to increase thanks to the ease of online shopping. As such, a number of returns management options are emerging.

For example, DoorDash introduced Package Pickup. With Package Pickup, consumers can request a Dasher to pick up their prepaid packages from their homes and drop them off at their local carrier, including UPS, FedEx, and USPS.?For a flat fee of $5 or $3 for DashPass members, consumers can get up to 5 packages picked up and dropped off in the same order.?

FedEx Freight

Meanwhile, FedEx Freight’s FedEx Freight Direct e-commerce offering for big and bulky items expanded its services to include returns.

According to the press release, there are three service offerings:

• Basic Pickup:?Pickup from the ground-level front or back door or from the garage; no appointment required, and delivery confirmation via photo capture, where the delivery is documented by photo.
• Basic by Appointment Pickup:?Pickup from the ground-level front or back door or from the garage, with a two-hour appointment window and photo capture.
• Standard Pickup:?Pickup through the door from the first ground-level room in a home or business with a two-hour appointment window.

What’s more, the company said that FedEx Freight Direct covers almost 100% of the U.S. population for Basic Pickup and Basic by Appointment Pickup, as well as 90% of the contiguous U.S. population for Standard Pickup. The service offerings provide label-less returns, flexible pickup windows with proactive notifications, shipment visibility, and technology capabilities that connect the return to the original shipment.

Speaking of FedEx….

FedEx plans to cut more Sunday delivery services in mid-March, according to Business Insider. According to the article, the full list of territories maintaining Sunday service will be finalized next month, according to an internal memo. A FedEx spokesperson told Insider that it will continue Sunday deliveries for "more than 50% of the U.S. population, primarily in densely populated areas with proven customer demand."

While this is being done as part of an overall cost reduction plan, I think it’s important to note that it is focusing more on density and hence, profitable delivery services.

Note this quote from the article: "With more than two years of data from providing Sunday deliveries, we are better able to target specific markets where we have seen proven demand.”

Utilizing data to analyze its markets is a very smart move, in my opinion, and one you will see more of from all delivery carriers, retailers, and other shippers. What does this mean for retailers and other shippers? Providing more delivery options for customers and perhaps thinking outside of the box, similar to what retailers American Eagle Outfitters, Target, and Walmart are doing.

In fact, Walmart is expanding its last-mile delivery services by partnering with Salesforce. Walmart Commerce Technologies and Walmart GoLocal announced a partnership with Salesforce to provide retailers with access to technologies and solutions that power local pickup and delivery for shoppers everywhere. Both Walmart Commerce Technologies Store Assist local fulfillment app and Walmart GoLocal local delivery solutions will be available through Salesforce AppExchange.

“Through this partnership, retailers can leverage the same innovative and scalable technologies that power Walmart’s pickup and delivery experiences,” said Anshu Bhardwaj, senior vice president of technology strategy and commercialization at Walmart Global Technology. “The same technology that powers Store Assist has enabled Walmart to fulfill over 830 million*?orders across over 4,700 Walmart stores. Together with Salesforce, retailers can scale their business and deliver the personalized, convenient experiences shoppers expect.”

“Shoppers continue to expect brands to deliver highly connected and frictionless experiences across physical and digital touchpoints. In fact,?1 in 5 online?orders placed the weekend before Christmas was picked up in-store,” said Rob Garf, vice president and general manager of retail at Salesforce. “With the combined power of Walmart and Salesforce, retailers can drive success with best-in-class technology to advance their omnichannel capabilities, drive efficiency and ensure that every purchase quickly gets into the hands of the shopper – no matter where they are.”

Electric Vehicles

Lastly, electric vehicles continue to be used in last-mile deliveries. The latest is from shipping platform provider Rollo, which launched its delivery fleet in Las Vegas earlier this month. Through its fleet of three Ford E-Transits, Rollo will offer delivery within Las Vegas for a $5 flat fee. The company expects packages picked up in the morning will be able to be delivered the same day. “We are?bringing legacy shipping into the 21st century, which of course, includes using electric vehicles to prove that shipping can and should be painless for everyone, including the environment,” said Kevin Faro, Founder, and CEO of Rollo. “Industry predictions?are forecasting a 36% rise in the number of delivery vehicles in the world’s top 100 cities by 2030, leading to an emissions increase of over 30%. We are doing this to minimize our carbon footprint as a powerful e-commerce ally for businesses looking to ship fast and easily."

Parcel Reminders

Jan 30 - Updated FedEx Express fuel surcharges go into effect, and a $13.25 per package DAS surcharge also goes into effect.

Jan 31 - UPS reports Q4/2022 earnings.

That’s it for now. Comments are always welcomed. Let me know what I missed. Stay tuned for the next newsletter on Jan 18, and don't forget to hit the subscribe button to ensure you receive it in your LinkedIn notices.

-Jay