It is important to keep track of your shipping carrier’s performance for a few reasons: make sure they are keeping up with the benchmarks they promise, make sure your business needs are met, and make sure your customers are satisfied with their service.
To keep tabs on your carrier’s performance, you’ll need to track a few key metrics. Data can be pulled from different places, some from your warehouse or your 3PL’s fulfillment center, and some from the carrier themselves.
Here are the most important areas to analyze when tracking your shipping carrier’s performance.
Tracking Carrier Transit Time
Package delays are a big customer complaint. Delivery speed is one of the most common ways customers evaluate their satisfaction with a brand. Thanks to the Amazon effect, everyone expects fast shipping to anywhere, from anywhere.
Even though an ecommerce company has no control over delivery time once the product is in the shipping carrier’s hands, if a customer receives a package late or damaged, they will see it as the brand’s fault.
Every carrier service has an estimated shipping time, and some have guarantees. Priority service might guarantee packages arrive within 2-3 days while Ground service might estimate 5-7. These are the carrier’s transit times and at any given time, your carrier might meet them exactly, they might come in much below or above their stated service level.
By tracking your carrier’s actual transit times, you will have important insights. You can:
- Measure your carrier’s performance against previous months.
- See trends in specific services transit times.
- Communicate any major trends in delays to your customers.
- Set more accurate shipping expectations with customers in your checkout area.
During 2021 many of the major carriers had wild fluctuations in their transit delivery times. When package volume spikes, carrier sometimes have a hard time adjusting.
How On-Time Performance is Calculated
OTP (on time performance) is often used as a metric to measure shipping carrier performance, but many ecommerce brands may not know exactly how OTP is calculated or used.
Everyone wants their packages delivered on time, that’s a fact. But what does “on time” mean? It can mean something different depending on which part of the supply chain you ask.
Here are a few ways OTP is calculated and how it’s tracked:
- Your logistics provider may track carrier pickups as it relates to their service level agreement (SLA) with the brands they serve. An “on time” delivery will mean that the carrier picked up the package from the logistics provider when designated. Any packages left at the logistics provider after hours means that provider didn’t fulfill orders as soon as they could, which is sometimes penalized against them in their contract with brands.
- A shopping carrier will report on transit times, as noted above. They have both their commitment for each service, and then the actual times they take to deliver from pickup to destination. A package will be noted as “on time” when it falls within this service level estimate or guarantee.
- Retail outlets will keep tabs on delivery times and how they pair against estimated delivery. This is often referred to as the EDD or estimated delivery date. The EDD might come from the brand (in the case of direct-to-consumer shipping) or the logistics provider (in the case of retail shipping).
Sometimes a 3PL or logistics provider will track OTD or on time delivery. This is usually the same as OTP.
OTP is not to be confused with ONIF (on-time, in-full). Both are similar metrics but calculated and used very differently. Most used for retail fulfillment, ONIF measures how many orders are delivered in the time that’s expected and in the quantity that is expected. Technically OTP is a building block to ONIF, but the two get confused often.
Understanding the Different Freight Carrier Types
Not all carriers are created equal. Before you can appropriately track your carrier’s performance you need to make sure you’ve chosen the right type for your brand.
It’s good practice to regularly audit your carrier and the services you use to make sure they are still meeting your brand’s needs.
First do an evaluation of what your products and your customers need. Price consistency? Wide variety of services? Scalability?
Next decide which services meet these needs. That will lead you to which freight carrier type is best for you.
Here are some carrier attributes and how they relate to overall performance metrics:
- More visibility in tracking. Asset-based carriers like UPS and FedEx own their shipping infrastructure. This means they handle your packages from the point of origin to the destination, and they can monitor exactly where your packages are every step of the way. This also means fewer lost packages.
- Longer transit times. Consolidators like DHL and Pitney Bowes aggregate other shipping partners to complete part of the shipping journey. For example, they often use USPS for last mile delivery, which means there may be a lag when handing packages off to another carrier.
- Limited scope of shipping. Regional carriers only serve a specific area. This might feel limiting to some brands, but it can give a beneficial boost to faster transit times.
- Service is out of your hands. An independent shipping carrier, like Amazon or Postmates, will have their own version of customer service. When you send your products to customers through these independent operators, the customer-facing aspect of deliveries is completely out of your control.
Another consideration when choosing shipping carrier and service is the last mile delivery. Some larger carriers use USPS to move their packages from transportation hubs to the final destination (particularly for B2C shipping). The use of USPS can drastically affect your carrier’s overall performance, sometimes for the better (the service literally has the best infrastructure to delivery to any address in the US) and sometimes for the worst (with particularly high package volume, the USPS can have slower delivery times due to capacity constraints).
If you are wondering whether your shipping carrier is up to the performance quality that you need, look at these important metrics. If you outsource your fulfillment or logistics to a 3PL, make sure they are tracking these for you. You’ll want to ask them for a review on a quarterly basis.
At DCL Logistics our team of transportation experts provides our customers with a thorough shipping analysis every quarter. We help brands optimize their shipping mix and ensure they are working with the right carrier for their product and customer needs. Sometimes we help brands lower their overall shipping costs, or switch from one carrier to another to save money.
Get in touch with our team if you want to lear more about our services.