Carrier reliability is a critical factor in supply chain success. Late deliveries, damaged goods, and unreliable carriers can lead to financial losses, customer dissatisfaction, and operational chaos.
Here’s what you need to know:
- Global on-time delivery rates dropped to 52.1% as of April 2024, down from over 75% pre-pandemic.
- Poor carrier performance increases costs, including detention fees ($50–$100/hour) and empty miles (up to 35% of total miles).
- 69% of consumers are less likely to shop again after late deliveries, showing how reliability directly impacts customer loyalty.
- Cross-border eCommerce, projected to hit $2.2 trillion by 2026, faces profit margin reductions of 10–15% due to shipping inefficiencies.
Key solutions include:
- Diversifying carrier partnerships to reduce risks.
- Using advanced tracking tools for real-time visibility and predictive analytics.
- Adopting AI-driven systems to optimize routes and reduce delays.
- Planning for disruptions with contingency strategies like the PPRR model (Prevention, Preparedness, Response, Recovery).
Reliable carriers are essential for minimizing risks and maintaining smooth operations in today’s fast-paced supply chains.
Webinar: Ocean Transportation Reliability: Myths, Realities, and Impacts
Measuring Carrier Performance
Keeping an eye on carrier metrics is essential for spotting supply chain risks early. Data highlights the importance of this: 13% of consumers say they wouldn’t order again from a retailer after experiencing a late delivery. That’s a clear sign that carrier reliability directly affects customer loyalty.
Top Carrier Performance Metrics
Key performance indicators (KPIs) provide insights that can help fine-tune supply chain operations. For example, during the 2022 holiday season, on-time delivery rates for major carriers were impressive: UPS achieved 97.5%, FedEx hit 95.2%, and USPS came in at 94.3%.
Businesses should focus on the following metrics:
| Metric Category | Key Performance Indicators | Impact on Supply Chain |
|---|---|---|
| Delivery Performance | On-time delivery rate, transit time averages | Drives customer satisfaction and helps with inventory planning |
| Quality Assurance | Damage rates, loss rates, claim resolution time | Reduces replacement costs and builds customer trust |
| Capacity Management | Equipment availability, pickup reliability | Keeps shipping schedules and warehouse operations on track |
| Cost Efficiency | Cost per shipment, fuel surcharges | Affects logistics budgets and pricing strategies |
"Direct feedback is emotional", says Markus Engel, VP of Sales Performance Management at DHL Supply Chain. "Emotion might sound intimidating, but often, it's within the comments that we discover valuable insights. That's where we find the starting point for a conversation with the customer."
These metrics offer a foundation for tackling the complexities of carrier performance management.
Current Market Challenges
Measuring and managing carrier performance isn’t without its hurdles. One significant issue is cost escalation; for instance, rejected truckload shipments can increase costs by 14.8%.
Challenges in Data Quality: Many companies face difficulties such as:
- Manual tracking methods that are prone to errors
- Inconsistent data across different transportation management systems
- Lack of standardized performance metrics
- Time-consuming data reconciliation processes
DHL Supply Chain provides an inspiring example of success. By enhancing its performance tracking, the company boosted its Net Promoter Score by more than 10 points across various countries. They also achieved a 100% closed-loop rate for resolving customer concerns within 48 hours.
"While transportation service providers vary in size and ability, having an overall strategy to track carrier performance can drive long-term operational and financial stability", says Steven Prince in Inbound Logistics.
Courtney Rickert McCaffrey from EY adds that AI-powered systems are being used to monitor global news, weather patterns, and economic trends. Meanwhile, machine learning analyzes historical data to pinpoint the most reliable transportation routes.
How Poor Carrier Performance Affects Supply Chains
When carriers underperform, the consequences ripple through supply chains, causing operational chaos and financial setbacks. For instance, over 76% of European shippers faced supply chain disruptions in 2024, with nearly a quarter reporting more than 20 disruptive incidents that year. These disruptions don't just result in missed deadlines; they also lead to financial penalties and broader operational headaches.
Business Impact and Extra Costs
Unreliable carriers can cost businesses much more than just late deliveries. The financial burden spreads across several areas, directly hitting profitability:
| Cost Category | Impact Details | Average Cost Increase |
|---|---|---|
| Detention Fees | Charges for exceeding free wait periods | $50–$100 per hour |
| Empty Miles | Inefficient routing and deadhead trips | Up to 35% of total miles |
| Labor Costs | Overtime and underutilized staff | 40% increase since 2018 |
| Production Delays | Interruptions in manufacturing operations | Varies by industry |
One example of success in tackling these challenges comes from Pallet Service Corporation. By implementing AI-driven scheduling tools, they eliminated detention fees and boosted warehouse efficiency by 75%.
Impact on Customer Relations
Delivery performance plays a critical role in maintaining customer trust and loyalty. Recent studies highlight just how much consumers value reliability:
- 69% of consumers are less likely to shop with a retailer if delivery takes more than two days past the promised date.
- 16% of shoppers stop buying from a retailer after receiving an incorrect delivery.
- 14% switch to another provider after just one late delivery.
"Retailers cannot afford to deliver products later than their promised delivery date, or send incorrect items altogether - not even once. These results prove that any inaccuracies or slight delays customers experience will result in a loss of brand loyalty across all of a retailer's channels and therefore severely impact bottom lines."
- Keith Phillips, President and CEO, Voxware
Late or incorrect deliveries don’t just upset customers - they damage a brand's reputation and can signal deeper supply chain issues.
Supply Chain Failure Cases
Real-world examples illustrate how unreliable carriers can trigger widespread disruptions:
-
Dubai Airport Flooding (2024)
Flash flooding in Dubai submerged a major international airport, causing significant delays in the global supply chain. -
Canadian Wildfires Impact (2023)
Prolonged wildfires in Canada reduced visibility, leading to delivery delays of up to two days and a 75% drop in shipments in certain areas.
In another case, a global plastic manufacturer turned things around by using advanced carrier management systems. They achieved a 50% improvement in logistics efficiency and cut detention fees by 40%.
These examples highlight how proactive carrier management can mitigate risks and improve supply chain resilience.
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Steps to Reduce Carrier Risks
With global parcel volume expected to hit 266 billion shipments by 2026, it’s more important than ever to implement strategies that protect the reliability of your supply chain. To avoid the financial and operational challenges discussed earlier, businesses can take several steps, starting with diversifying carrier partnerships.
Using Multiple Carriers
Relying on a single carrier can leave your business vulnerable to disruptions, but a multi-carrier approach offers several advantages:
| Benefit | Impact | Business Value |
|---|---|---|
| Risk Distribution | Less reliance on one provider | Ensures operations continue during disruptions |
| Cost Optimization | Compare rates across carriers | Helps lower shipping expenses |
| Service Flexibility | Access to varied delivery options | Improves customer satisfaction |
| Geographic Coverage | Wider delivery network | Expands market opportunities |
"By diversifying your last mile delivery carriers, you can reduce your cost to ship, improve delivery speeds, drive revenue growth, and avoid carrier strikes and disruptions."
Tracking and Risk Management Tools
Advanced tracking systems have become essential for gaining real-time visibility into shipments, helping businesses anticipate and respond to delays. For example, Innovative Logistics Group doubled its carrier capacity and generated $1 million in new sales after adopting an advanced tracking system in early 2025.
Key features of these systems include:
- Real-time GPS and RFID tracking to monitor shipments.
- Automated alerts for potential delays or disruptions.
- Condition monitoring for temperature-sensitive goods.
- Predictive analytics to assess risks and prevent issues.
- Performance dashboards to analyze carrier reliability.
"Getting on board with LateShipment.com before the holiday season is going to be very essential. When you're shipping hundreds of thousands of packages, a few are bound to go missing or even get damaged." – Auzerais Bellamey, Founder
Backup Plans for Shipping Problems
Preparing for shipping disruptions requires a well-thought-out contingency plan. The PPRR model - Prevention, Preparedness, Response, and Recovery - serves as a strong foundation for creating effective backup strategies.
Here are some key elements:
- Regional Supplier Network: Build relationships with multiple carriers across different regions to ensure flexibility.
- Technology Integration: Use systems that allow for quick rerouting of shipments based on real-time data.
- Communication Protocols: Establish clear, multi-channel processes for coordinating during emergencies.
"Making contingency plans for your supply chain to source from different regions as new regulations or closures occur are an essential part of any backup plan." – Brady Maller, EVP of strategy and sales, POLYWOOD
For businesses handling large shipping volumes, maintaining cash flow during carrier disruptions is critical. Onramp Funds offers revenue-based financing options tailored to help eCommerce businesses manage inventory and cover unexpected shipping costs when delays occur.
Money Management During Shipping Delays
Planning Extra Inventory Costs
Supply chain disruptions hit businesses hard, costing an average of $1.75 million every year. Because of this, smart inventory planning has become more important than ever. Many companies are moving away from the just-in-time (JIT) model and adopting a just-in-case (JIC) approach. This shift prioritizes preparedness by maintaining higher safety stock levels.
To figure out the right amount of safety stock, use this formula:
(Maximum daily usage × Maximum lead time) – (Average daily usage × Average lead time)
| Inventory Cost Factor | Impact on Cash Flow | Mitigation Strategy |
|---|---|---|
| Safety Stock | Higher holding costs | Adjust for lead time variability |
| Warehouse Space | Increased overhead | Use multiple warehouses |
| Stock Monitoring | Technology investment | Automate inventory tracking |
| Supply Chain Risk | Insurance premiums | Get coverage for carrier delays |
These added costs make it essential to have flexible funding options to manage the financial strain of extra inventory.
Sales-Based Funding Options
Cash flow problems are a major reason why 82% of businesses fail. That’s why having access to flexible funding is critical, especially during shipping delays. Revenue-based financing is one solution that helps eCommerce businesses cover unexpected expenses caused by carrier disruptions.
For instance, Onramp Funds offers financing that aligns with your sales performance. This type of funding can help cover:
- Unplanned inventory purchases
- Extended payment terms with suppliers
- Emergency shipping costs
- Expansion of warehouse space
"Revenue-based financing just made sense for us. We are a business that is experiencing growth year on year, and our biggest challenge was purchasing stock without impacting our cash flow."
- Daniel Richards, Founder and Managing Director of D-STILL
Carrier Payment Terms
Beyond funding, refining your carrier payment terms is another way to protect your cash flow. Experts recommend keeping a cash reserve equal to ten weeks of operating expenses to cushion the impact of shipping delays.
Here are some ways to optimize carrier payments:
- Payment Term Optimization: Renegotiate terms to make them more flexible and performance-based. Incorporate seasonal trends and potential delays into your cash flow forecasts.
- Cash Flow Forecasting: Conduct regular audits to identify cost-saving opportunities and ensure you have enough reserves.
- Risk Management: Invest in insurance to safeguard against supply chain disruptions.
"It allowed me to order more stock in advance; this is especially useful considering many of our products have long lead times from international suppliers. It's also great for cash flow."
- Brendan Copp, Director at Slime Pop
Conclusion: Building a More Reliable Supply Chain
Recent data from January 2024 reveals that global schedule reliability stands at 51.6%, with 31% of disruptions originating from Tier 2 suppliers and beyond. This highlights a critical need to extend risk management efforts beyond direct partnerships to safeguard supply chain operations.
Leveraging technology to spot vulnerabilities early allows businesses to address potential issues before they escalate. Amy David, PhD, a clinical professor of management at Purdue University, emphasizes the role of technology in this transformation:
"Technology has improved tracking, forecasting and security across supply chains", David says. "Supply chain mapping has provided companies with a clear view of their supply chain, allowing for the identification of critical nodes and potential points of failure."
This approach lays the foundation for a structured plan to enhance carrier reliability:
| Component | Strategy | Implementation |
|---|---|---|
| Risk Assessment | Use AI-driven analytics | Monitor supplier health and performance metrics |
| Technology Integration | Deploy real-time tracking | Implement automated dashboards with alerts |
| Partner Diversification | Multiple carrier relationships | Spread shipments across various providers |
This framework builds on earlier strategies aimed at mitigating risks and fortifying supply chains. For instance, Toyota's 2022 decision to expand manufacturing operations in Alabama and Kentucky serves as a powerful example. By reducing reliance on long-distance shipping, the company not only enhanced its supply chain resilience but also spurred strategic investments across the industry.
"Risk management is no longer a back-office function – it's now central to business strategy, with more than 70% of companies prioritizing risk resilience as a top investment."
– KPMG
FAQs
How can businesses measure and improve carrier reliability to reduce supply chain risks?
To keep carrier reliability in check and make improvements where needed, businesses should focus on key metrics like On-Time Performance (OTP) and schedule reliability. OTP measures the percentage of shipments that arrive on time - a critical factor for keeping customers happy and ensuring smooth operations. By regularly reviewing these metrics, companies can spot trends or recurring problems and tackle the root causes of delays.
Improving reliability often requires a proactive approach. Businesses can strengthen partnerships with carriers, fine-tune delivery routes, and use technology to track performance in real time. These efforts help reduce supply chain risks, limit disruptions, and keep operations running more smoothly.
How can advanced tracking and AI systems improve carrier reliability and reduce supply chain risks?
Advanced tracking systems and AI-powered tools are transforming how businesses manage carrier reliability and supply chain risks. By boosting efficiency, improving visibility, and enabling smarter decision-making, these technologies are reshaping logistics operations.
AI plays a key role in optimizing route planning and scheduling. By analyzing both real-time and historical data, it helps cut fuel costs and minimize delays. Real-time tracking, on the other hand, allows companies to spot potential disruptions early and take action to keep operations running smoothly.
Cost savings are another major benefit. AI can streamline logistics workflows, reduce maintenance expenses, and improve demand forecasting. With more accurate predictions, businesses can manage inventory more effectively and steer clear of expensive mistakes. On top of that, these tools enhance shipment security by reducing risks like cargo theft and ensuring consistent delivery performance.
Why is it important to work with multiple carriers to reduce supply chain risks?
Partnering with multiple carriers plays a key role in reducing supply chain risks and boosting resilience. When you depend on just one carrier, your business becomes more susceptible to disruptions like strikes, capacity shortages, or unexpected delays. Expanding your carrier network provides the flexibility needed to tackle these challenges head-on, ensuring your operations stay on track.
Having a variety of carriers in your strategy also makes your supply chain more adaptable. It allows you to pivot quickly in response to market shifts or unforeseen events. This not only helps maintain reliable delivery performance but also keeps your customers happy. Plus, it can lead to savings by giving you more options to optimize shipping costs. Building a strong and flexible carrier network is a smart way to protect your business from potential setbacks.
