Summary:
- August 2023 on-time performance is the highest on-time performance has been since pre-covid.
- Carrier diversification remains high, which is expected to continue through peak season.
- The last mile market is healthy going into peak season. While service levels are anticipated to drop-off, there are not current concerns of packages being able to be delivered in time for the holidays.
Last Mile State of Transportation
Last mile transportation is in the process of gearing up for peak season. The peak season for last mile transportation, coinciding with the holiday season in the United States, spans from November to January. Deals like Black Friday and Cyber Monday kickstart the season.
On-Time Performance
Past reports have highlighted the challenges of maintaining service levels in 2023 compared to the preceding year, 2022. Hiccups such as potential strikes and inclement weather across the US have consistently kept on-time performance lower. Nevertheless, August has shown significant improvement, with a 5% increase compared to July. This suggests that the last mile market is entering the peak season in optimal conditions.
August 2023 not only witnessed a continued increase in on-time performance month-over-month but also marked the highest level since the onset of the Covid-19 pandemic in 2020. This promising development suggests that the market may have finally stabilized after years of grappling with unprecedented volumes, hinting at a return to normalcy.
Carrier Diversification
The threat of a UPS strike prompted last-mile shippers to diversify their carrier options, coinciding with the usual pre-peak season preparations. Consequently, this trend has remained consistent and is anticipated to persist throughout the peak season. UPS has also experienced a decline in the volume it previously handled, a result of shippers reconfiguring their networks to absorb the volume that would have been affected by a potential strike. The fate of this diverted volume returning to UPS remains uncertain.
Historical Peak Seasons
Historically, consumers can anticipate a decline in service levels during peak seasons, based on past years’ trends. Expect a decrease in on-time performance, especially during December. Although the peak season spans from November to January, the volume surge typically begins with Black Friday and reaches its peak in December as holiday shoppers order gifts and decorations. January witnesses a decrease in volume, but ongoing post-holiday sales and an influx of returns tend to keep on-time performance below the levels seen during the rest of the year.
Outlook
Despite the recent threat of a UPS strike, the last-mile market is currently experiencing its highest level of strength since the pre-Covid era. This bodes well for the upcoming holiday season. The capacity required to accommodate peak volume is readily available, and shippers have diligently diversified their carrier portfolios, ensuring ample options for delivering packages to customers’ doorsteps.
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Disclaimer: The information conveyed herein, shared solely for summary and not contractual purposes, comes from both project44 and third-party reporting. The project44 data does not include all available market information, and project44 has not undertaken to independently verify the third-party reporting. Similarly, this type of data changes from day-to-day. Accordingly, the reader should not rely on this reporting to make any business decisions, and project44 expressly disavows any liability arising from any such reliance.
