Is FedEx losing its luster in the package delivery field?

Recently, it’s fallen behind even the USPS in on-time delivery performance.

FedEx’s 2021 YTD delivery performance hasn’t exactly been stellar.

The pandemic-fueled increase of online product ordering hasn’t let up in recent months.  And the tale it tells is FedEx struggling to keep up with its rivals when it comes to on-time parcel deliveries.

The most recent statistics covering March through mid-April show a significant difference in delivery performance – 87% on-time deliveries for FedEx Ground shipments compared to 95% in the case of UPS.  Those figures come from ShipMatrix, Inc., a company that tracks shipping and delivery performance.

According to The Wall Street Journal, the comparatively weak performance by FedEx elicited this anodyne statement from a company spokesperson:

“FedEx continues to experience a peak-like surge in package volume due to the explosive growth of e-commerce.  As always, we are working closely with our customers to manage their volume and identify opportunities to help ensure the best possible service.”

… As if the other delivery companies aren’t facing the same dynamics regarding the growth in online ordering volume.

Delivery tracking software company Convey has released figures that are even more problematic for FedEx.  In April, only around 70% of FedEx shipments were on-time, which means the company’s performance was weaker than UPS and even the U.S. Postal Service. 

In response, FedEx claims that Convey’s data haven’t aligned with its own internal stats, but the company hasn’t released figures of its own to illustrate the difference.

At the same time, FedEx reports that it’s doubling down on plans to increase its network capacity, along with recruiting additional workers.  Even so, it acknowledges that FedEx Ground capacity will continue to be constrained until the end of 2021.

Up to now, the unimpressive record on parcel deliveries hasn’t appeared to hurt FedEx’s financials, which recently hit their highest-ever monthly revenue and operating profit levels.  The question is, can that performance hold long-term if businesses and their customers continue to experience slower deliveries?  It isn’t as if there aren’t alternative suppliers in the parcel delivery business.

Have you experienced issues with FedEx’s delivery performance recently?  If so, are they significant enough to make you open to considering alternative shippers?  Please share your thoughts with other readers here.

Drones Start Delivering

But will they really deliver the goods?

Drone deliveries just got real. We’ve been reading about them for a good while, along with the occasional news story about a prototype drone model making a product delivery to someone’s doorstep.

But drone deliveries have suddenly taken a major step into the commercial mainstream with the announcement that the first home deliveries of packages from Walgreens have started. They’re being handled by Wing, a subsidiary of Alphabet — the parent company of Google.

Wing itself received a special certification from the Federal Aviation Administration recently that allows it to make commercial air deliveries directly to homes in the United States. That’s a first.

In addition to the Walgreens account, Wing is also delivering OTC medication, gifts and other items on behalf of Sugar Magnolia, a Virginia-based retailer.

How do these deliveries work? Customers order products via a special app, and can opt in to receive their items via FedEx Express delivered by drone, which lowers the packages to a designated spot in a yard or driveway.

Wing, Walgreens and Sugar Magnolia aren’t the only people nosing around this method of delivery. Walmart has filed a patent application for a system for retrieving packages delivered by drone, and UPS is also getting into the mix.  The FAA has given approval to UPS’s new Flight Forward subsidiary that will allow it to fly an unlimited number of drones with an unlimited number of remote operations. And right on cue, the first Flight Forward agreement for drone delivery services has just been announced, with CVS pharmacies.

So it’s pretty clear that drones have finally broken through to the point where they can be serioiusly tested for consumer use and acceptance. Next, it will be interesting to gauge consumer reaction.  Will drone deliveries break out into the mainstream, or are they destined to remain more of a curiosity?  Here’s one early read from online business owner Mark Reasbeck:

“[It’s] nice that everybody … has nothing else to do but to order stuff from Walgreens and just sit there and wait for the delivery. What happens if you’re not home?  How much [cost] for that service?  They have to pay for a ‘shopper’ and then all the pilots watching the drone.  This is not needed on so many levels.”

What are your thoughts on this latest transport frontier? Is it a flash in the pan? … or poised for phenomenal success?

Some good news for the U.S. Postal Service for a change …

psThe U.S. Postal Service has just implemented a price adjustment on first class letter mail – the first rate increase in quite a few years. Some other pricing adjustments have been implemented as well, but on the whole they are modest.

Hopefully the rate increases won’t throw water on the good news that the USPS experienced over the holiday season. According to a Rasmussen Reports consumer survey of ~1,000 American adults age 18 and over conducted at the end of December, Americans used the USPS more in the most recent holiday than in the 2015 season.

The public also continues to give the USPS higher marks than its major competitors – FedEx and UPS – on the way it handles their packages.

For the record, ~21% of the respondents surveyed by Rasmussen reported that they used the U.S. Postal Service more this holiday season than they have in previous years, while ~18% reported they used it less. The remaining ~61% kept their USPS usage at around the same level of activity.

On the commercial side, for many businesses who do not have the kind of high volume shipping needs to qualify for special pricing from FedEx or UPS, the USPS also appears to be a far more lucrative choice from a price-to-value relationship.

usIn mid-2015, FitSmallBusiness.com undertook apple-to-apples comparisons of the three big package delivery firms, and found some startling differences.  For example, to ship a 3-lb. package overnight-delivery from New York City to Los Angeles, using FedEx would set the sender back $83.  UPS was even worse, at $84.

The USPS price?  Just $24.99.

Comparing short-haul rates as well as heavier 10-lb. packages found similar major discrepancies — all in favor of using the U.S. Postal Service. On top of that, the USPS provides free packaging materials, complimentary pick-up service, free insurance and tracking — not to mention flat-rate boxes for packages that weigh up to 70 lbs.

feSealing the deal further, while FedEx’s 50,000+ and UPS’s 63,000+ locations worldwide are certainly nice to rely on, the number of USPS locations dwarfs those figures by a country mile. Those myriad USPS locations also mean that packages can be shipped to P.O. boxes in addition to physical addresses – something that’s out of the reach of either FedEx or UPS.

People love to beat up on the United States Postal Service.  But say what you will about the USPS, its problems and its financial challenges, they’re still a major-league bargain for many consumers and businesses.