Convey Data: Impact of FedEx Shift from SmartPost to Ground Economy

Since the COVID-19 pandemic started more than a year ago, the data team at Convey has been called on again and again to provide data, trends and insights into how COVID-19 is impacting retail based on tens of millions of packages shipped from more than 500,000 locations in North America.  We were among the first to quantify the pandemic’s impact on parcel and freight fulfillment times and on-time performance, and we’ve continued to provide the market with data to understand and act on the trends shaping the delivery experience through holiday 2020 and into 2021.

In this post, we’ll share the most recent findings from our monthly Performance Index that shine a light on carrier on-time performance and market share, and take a closer look at how FedEx’s shift away from SmartPost (USPS) is going so far with commentary from Nate Skiver, Founder of LPF Spend Management. It’s about a six-minute read and let’s dive in.

Key findings for March 2021 include:

Parcel on-time performance (OTP) returns to pre-COVID levels 

Across all carriers, 82% of parcel shipments were delivered on time in March 2021 (compared to 85% in March 2020). FedEx performed significantly lower than other carriers last month (75% OTP compared to 86% for UPS and 90% for USPS) with its cheapest service levels hit hardest.

Carrier market share has stabilized with FedEx and UPS dominant

So far in 2021, UPS and DHL have held steady in Convey network market share. FedEx has steadily gained at the expense of the USPS who has seen a gradual decline in market share since the peak season of December 2020. 

Setting aside this unprecedented peak season (which featured all-time high volumes coupled with volume caps enforced by FedEx and UPS), market share has stabilized.The big 2 are securely dominant again…for now.

2021 Month to Month Carrier Market Share

January
FedEx 33%
UPS 26%
USPS 12%
DHL 13%
Regional Carriers 17%
Feb
FedEx 36%
UPS 27%
USPS 9%
DHL 12%
Regional Carriers 15%
Mar
FedEx 38%
UPS 26%
USPS 9%
DHL 11%
Regional Carriers 16%

Monthly Deep Dive: OTP dips as FedEx SmartPost moves away from USPS, rebrands to FedEx Ground Economy

In March, FedEx announced that their SmartPost business was being rebranded as FedEx Ground Economy and that last mile delivery operations formerly handled by the USPS had been fully integrated into the Ground network. More than a rebrand, this announcement marked a shift in strategy aimed at making the service more profitable and more competitive in transit by moving to 7 days/week delivery. 

Convey analyzed nearly 14 million SmartPost/Ground Economy shipments from January 2020 through March 2021 to quantify the transition and understand its impact on transit time and on-time percentages. The data shows a precipitous drop in USPS handoffs starting after May 2020 where 69% of SmartPost shipments were delivered by USPS in the final mile vs. 3% delivered by USPS in March 2021. In other words, with  the FedEx Ground Economy transition is nearly complete FedEx has successfully moved  97% of Economy shipments fully within its own Ground network

However, there are growing pains associated with the transition. FedEx’s OTP for SmartPost/Ground Economy dropped to 66% in March 2021 compared to 85% in March 2020 even though transit times have remained stable. A factor in the decline: FedEx has assigned more aggressive estimated delivery dates (EDDs) as it moves SmartPost/Ground Economy packages to a 7-day delivery schedule. 

We’ll keep an eye on performance to see how things shake out when FedEx fully adjusts to the change in operations.

Year/Mo

Avg Transit Days

% USPS Delivered

OnTime %

2020 4.8 37.7% 74.5%
Jan 5.1 63.1% 81.6%
Feb 3.9 50.2% 86.7%
Mar 4.2 56.0% 85.9%
Apr 4.5 54.6% 77.6%
May 5.3 69.3% 70.0%
Jun 4.9 53.7% 74.9%
Jul 4.7 41.0% 74.4%
Aug 5.3 22.9% 70.3%
Sep 5.6 16.1% 67.6%
Oct 4.8 9.9% 70.1%
Nov 4.8 6.5% 67.3%
Dec 4.9 8.9% 68.0%
2021 4.8 3.9% 64.1%
Jan 4.7 4.4% 67.7%
Feb 5.0 4.2% 60.1%
Mar 4.6 3.1% 64.4%
Grand Total 4.8 30.9% 72.4%

 

“The trends in the FedEx Ground Economy data set both confirm some assumptions about the service and surface items worth monitoring,” said Nate Skiver, Founder of LPF Management. “The steady decline of the percent of packages delivered by the USPS aligns closely with FedEx’s statements about their insourcing efforts, as well as the termination of their USPS Parcel Select contract in late September.”

“But it looks like FedEx has work to do to align Ground Economy service standards to actual transit times,” Skiver continued. “FedEx has alluded to slowing down Ground Economy to differentiate it from Home Delivery, but if EDD’s aren’t also adjusted, this will lead to an inconsistent customer experience.”

Come back next month for more insights on carrier performance and sign up for our newsletter. Until then!

About the Author

Convey

Convey is an agile team of supply chain and technology professionals. Bringing entirely new data intelligence and real-time visibility, Convey helps companies maintain a strong brand with their customers and unlocks true growth potential. Convey on LinkedIn