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More trucks, please! Parcel volumes remain on upward trajectory

Pitney Bowes Parcel Shipping Index predicts record numbers ahead

Excess parcel capacity a big issue this peak (Photo: Jim Allen/FreightWaves)

Americans love shopping, and as a result, 59 million parcels were generated each day in 2021, according to research from Pitney Bowes.

The global shipping and mailing company on Monday released its Pitney Bowes Parcel Shipping Index, finding that U.S. parcel volume grew 6% in 2021 over 2020, reaching 21.5 billion parcels shipped. That works out to 683 parcels per second.

“The Pitney Bowes Parcel Shipping Index has become an authoritative barometer for growth across the shipping and logistics industry over the past seven years,” said Jason Dies, EVP and president of Sending Technology Solutions for Pitney Bowes. “2021 saw the industry rocked by outside influences as carriers continued to manage the impact of the pandemic. Despite these challenges, carrier revenues and parcel volumes reached a record high, showcasing the resiliency of the U.S. consumer and the industry’s ability to absorb their growing appetite for internet retail.”

Pitney Bowes (NYSE: PBI) is forecasting parcel volume growth of between 5% and 10% annually from 2022 through 2027. Total volumes could reach as much as 40 billion parcels annually by 2027.

The Big 4 dominate

Not surprisingly, the major carriers — FedEx (NYSE: FDX), UPS (NYSE: UPS) and the U.S. Postal Service — dominate the market. Collectively, the three shipped 76.2% of all parcels in 2021. Adding in the 4.8 billion parcels delivered by Amazon Logistics and 98% of parcels were delivered by one of the four. UPS had the highest market share at 37%, followed by FedEx’s 33%, the Postal Service at 17% and Amazon Logistics at 12%.

Watch: E-commerce outlook

However, it is not just the big players that are benefiting, Pitney Bowes said. For instance, Amazon passed 3.6 billion parcels off to other carriers for delivery in 2020, up from 2.8 billion handed off in 2020. Overall, carriers outside the top four saw their volumes grow 94% in 2021.

“The Index reveals that the smaller carriers are gaining momentum. Nimble, innovative and laser-targeted on delivering a great customer experience with competitive pricing and delivery capabilities, these challenger firms collectively doubled parcel volume and revenue in 2021,” Dies said. “Their growing influence on the market will be exciting to watch.”

Delivering the dough

According to Pitney Bowes’ research, carrier revenues were $188 billion in 2021, an increase of 16% from 2020’s $163 billion. UPS saw the greatest revenue at $70 billion, followed by FedEx at $62 billion, the Postal Service at $31.5 billion and Amazon Logistics at $22 billion. All other carriers combined recorded $3 billion revenue, but that was up 95% over 2020 as retailers and shippers look for alternatives to the major players.

The Postal Service had the highest market share by volume at 32%, but that was down from 36% in 2020. UPS remained flat at 24% while both Amazon Logistics and FedEx saw 1% increases to 22% and 19%, respectively.

Consumers keep buying

Separately, Pitney Bowes conducted a BOXpoll to gauge consumer sentiment toward e-commerce. The April survey found that 23% of American shoppers say they are shopping more online now than they did earlier this year. It found that approximately 37% of all purchases were being made online.

That data corresponds to information obtained from delivery providers contacted by Modern Shipper in early May.

Overall retail sales rose 0.5% in March following a 0.8% increase from January to February. Online sales, though, dropped 6.4% in March. In first-quarter earnings reports, retailers are showing mixed results. Amazon (NASDAQ: AMZN) saw its e-commerce sales fall 3% in Q1. Best Buy’s online sales fell 12%. However, online marketplace BigCommerce reported Q1 revenue increased 42% year-over-year to $66.1 million, and UPS and DHL both reported business growth driven by parcel demand. Shopify (NYSE: SHOP) posted a quarterly loss, as did Wayfair.

Delivery firms, though, said business has remained brisk.

“Last-mile capacity still feels tight,” Jay Sackos, vice president of business development for Dolly, told Modern Shipper. Dolly specializes in big and bulky last-mile deliveries. “Good, safe drivers continue to be tough to find, whether that driver has a CDL or not. Given where automation sits today, the driving lifestyle in general and the competitive labor landscape, I don’t expect drivers to be easier to source anytime soon.”

Shipt said its Shipt Driven delivery-only last-mile offering for retailers continues to grow.

“Our Shipt Driven business is our fastest-growing product line and has grown by more than 100% over the past year alone, demonstrating the heightened need for quick and easy doorstep delivery,” Rina Hurst, chief business officer, told Modern Shipper. “Our business model also allows us to offer retailers something traditional parcel carriers can’t — faster speeds and high-quality, personalized service at an economical cost.”

Diversifying carrier base

Dies said shippers are continuing to diversify their carrier base. That is evident by the growth among the non-Big 4 carriers, especially the Postal Service, which saw a decline in 2021 volumes.

In an early May webinar hosted by project44, OneRail CEO Bill Catania said more retailers were looking to diversify their carrier base.

“The concept of carrier diversification is everything, and the ability to have interoperability … between modes is also very important,” he said. “We see more and more diversity not only in carriers but also in the drivers that handle [deliveries for us]. We have seen on-time rates improve, and I think that has to do with redundancy (plenty of carriers in the market) that is favoring carriers that get deliveries done on time.”

Sackos said brands and retailers continue to look for more last-mile delivery partners to broaden their carrier base, hoping to secure both capacity and flexibility. Jenny Bebout, vice president of product for the last mile for project44, noted that since May 2019, the average project44 shipper has seen a 20% increase in the average number of carriers per customer, from 4.14 to 4.9.

Click for more articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]