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.
It appears this holiday peak season has returned to more ‘normal’ levels as the on-time performance (OTP) of FedEx, UPS, and the USPS greatly improved from the previous two years. According to ShipMatrix, a subsidiary of consulting firm SJ Consulting, from November 1 through November 23, OTP for FedEx, UPS, and USPS were 96.3%, 97.0%, and 96.2%, respectively.
In addition, average daily volumes of 90 million parcels were estimated between Thanksgiving and Cyber Monday, from November 24 to November 30, and hitting 100 million for Cyber Monday. OTP during this period fell slightly with FedEx, at 95.3%, UPS, at 96.6%, and USPS, at 95.8%.
Meanwhile, a couple of service announcements to highlight…
GEODIS announced it has expanded its GEODIS MyParcel product, the company’s direct-to-customer cross-border delivery offering, with a new Air Zone Skip Service from the US to Canada. The service consolidates individual shipments via air transport with final delivery to the end consumer, bypassing multiple touchpoints. The service includes full end-to-end tracking visibility and management over the entire shipping process from pick up to customs clearance through last-mile delivery.
“Zone skipping can be an extremely beneficial strategy for high-volume e-Commerce shippers who are looking to increase operational efficiencies, lower shipping costs per package and reduce transit times,” said Michael Lamia, Senior Vice President of GEODIS MyParcel and GEODIS eLogistics. “As e-Commerce shippers continue to navigate consumer expectations for faster speeds, it is vital to work with a trusted logistics partner with a full breadth of expertise across air, ocean, road, and the last mile—including alternative shipping methods like zone skipping—to remain competitive in today’s dynamic market.”
FedEx introduced its FedEx Consolidated Returns, a solution that will launch in early 2023. FedEx Consolidated Returns is facilitated through supply chain services offered by FedEx Logistics and FedEx Office. Shoppers who purchased from participating merchants can drop off the items they wish to return, no box or label required, at approximately 2,000 FedEx Office locations. The returned items will then be consolidated with other returns from a variety of merchants, saving materials and space. The items are then processed through FedEx Logistics and sent back to the merchants via a less-than-truckload option.
Locus Robotics announced that its LocusBots picked over 230 million units during the peak holiday shopping period on behalf of its global retail and third-party logistics customers, more than doubling the total number of items picked in 2021.
“Despite early predictions of lowered volumes, Locus customers once again picked a record number of items using LocusBots during this critical holiday shopping period,” said Rick Faulk, CEO of Locus Robotics. “It is now clear that scalable, cost-efficient robotics automation is an operational must-have as volumes continue to increase and the labor shortages persist. Locus is proud to help our customers again meet the seasonal challenge with robust, enterprise-scale automation solutions that position them for success today and in the future.”
During this same period, LocusBots averaged 3.3 million units picked per day, representing a 2X increase over 2021.
According to Locus Robotics, retailers again started peak season earlier in an effort to mitigate supply chain concerns and ensure product availability.
Indeed, recent retailer Q3 commentaries emphasized middle and last-mile strategies:
- Customers can return their order at the exact same time that they are receiving their next order. So, it reduces what used to be two transportation legs into one. We used to have someone come to the home to pick up the order from the customer and then a separate courier or delivery service has come to deliver that order. We have consolidated this down to one pickup, which, of course, saves Rent the Runway money, but it’s also great for the customer because it reduces the friction from the experience. Rent the Runway Co-Founder and CEO Jennifer Hyman, Q3 earnings call on Dec 7.
- In Q3, we shipped nearly 30% of our volume through our automated fulfillment center (FC) network, up from 10% in Q3 last year. Second, our inventory rebalancing efforts through enhanced software and planning capabilities have improved in-stock levels across our network, which has lowered costs by reducing average shipping distances by 25% compared to last year and announced customer experience by reducing click-to-deliver times and improving order accuracy. These efforts have been complemented by our middle-mile initiative, which also cuts average shipping distance and reduces costs. Finally, our two new import routing facilities are on pace to handle 90% of our import volume by the end of 2022, which further enhances our ability to optimize inventory distribution across our FC network and reduce inbound freight costs. Chewy CEO, Sumit Singh, Q3 earnings call on Dec 8.
- After launching our in-home delivery service last quarter, we are seeing relatively healthy adoption from our customers. While we don’t expect this to be a significant growth driver for the near term, we’re pleased with our customer response so far, and expect in-home delivery to gradually become a more meaningful revenue stream in the future. Kirkland’s President & CEO, Steven Woodward, Q3 earnings call on Dec 2.
- We also continue to reduce costs through the expansion of our private fleet, which consisted of more than 1,300 tractors at the end of Q3. As a reminder, we have been focused on significantly expanding our private fleet in 2022, as we plan to more than double the number of tractors from 2021, which we expect will account for approximately 40% of our outbound transportation fleet by the end of the year. Dollar General CEO Jeffery Owen, Q3 earnings call on Dec 1.
That’s it for now. Comments are always welcomed. Let me know what I missed. Stay tuned for the next newsletter on Jan 4 and don’t forget to hit the subscribe button to ensure you receive it in your LinkedIn notices.
-Jay