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82% of Packages Delivered on Time in May, Though FedEx Lags UPS

Despite some retail reports and consumer complaints of slow arrival times, delivery experience management specialist Convey Inc.’s May parcel performance for major and regional carriers showed on-time performance (OTP) was holding steady.

Convey analyzed data derived from tens of millions of packages shipped from more than 500,000 locations in North America last month. Convey found that 82 percent of parcel shipments were delivered on time in May, which matches overall OTP performance in April. In comparison, a year ago in May 2020, overall OTP had sunk to 73 percent due to volume-related network stress of the COVID-19 pandemic.

Convey said OTP for the Big 3 carriers was also stable month-over-month, with FedEx continuing to lag behind the competition. FedEx continued to perform significantly lower than other carriers in May, with 71 percent OTP compared to 89 percent for UPS and 91 percent for the United States Parcel Service (USPS).

“So, while UPS has returned to pre-pandemic performance and actually posted its highest OTP in 2021 to date, FedEx’s OTP performance remains significantly lower than both pre-pandemic levels and the competition,” Convey said.

However, FedEx continued to dominate market share in the sector. May 2021 market share for the carriers showed FedEx with 36 percent, UPS at 28 percent, USPS with 9 percent, DHL at 10 percent and regional carriers combining for a 17 percent market share. Convey noted that FedEx’s market share has held steady for the past three months despite on-time performance challenges.

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Speaking at an investor day event on June 9, UPS CEO Carol Tomé said over the next three years, the company expects strong growth across all delivery zones.

“We believe the market will grow fastest in shorter zones because more retailers will leverage their physical locations to serve both in-store and online demand,” Tomé said. “The mid- to long- zone portions of the market are also expected to grow above pre-pandemic norms…we estimate average daily volume here to grow nearly 20 percent between 2020 and 2023.”

As the number of e-commerce SKUs and online consumers continues to grow, the complexity of supply chains will increase even further, she noted.

“As a result, we expect demand for end-to-end delivery services to remain high,” Tomé said. “It means that in the U.S., UPS intends to grow in the parts of the market that value our network, like B2B, healthcare and SMBs.”

She said the global small package market is projected to reach about $600 billion by 2023, driven in large part by expected strong growth in cross-border e-commerce.

“The global small package market reached an inflection point in 2020 due to the onset of the pandemic,” Tomé said. “Prior to 2020, revenue in the market was growing around 10 percent per year…then in 2020 the annual growth rate jumped to 13 percent. This pull forward of demand outpaced supply. The market is expected to continue with a double-digit growth rate through 2023, so we anticipate global demand for small package services to outpace capacity in the industry for the next several years.”

In the U.S., she said UPS expects the market will more than double over a six-year time frame, going from $91 billion in 2017 to $195 billion in 2023, “providing plenty of growth opportunity for UPS.”

FedEx is set to report its fiscal year 2021 fourth quarter results on Thursday.