The E-Commerce Logistics Race: US vs Canada: Which Country Performed Better in Q1 2021?
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We are kicking off the e-commerce logistics race by looking into the performances of the US and Canada in the first quarter of 2021.
While we covered these countries in 2020 reports such as COVID’s impact on Canada and the State of E-Commerce US, the growth of e-commerce shows no signs of stopping even in 2021. The US Department of Commerce reported that retail e-commerce sales in the first quarter of 2021 was $215 billion, a 7.7 percent increase from the last quarter of 2020. Forecasts also suggest that e-commerce sales will take an even larger share of total retail in 2021, expanding to 13.4% this year.
Here is a taste of the latest insights on e-commerce logistics in these countries:
Transit time to first attempt
Growth in volume and transit time during peak season in 2020
Usage of collection points
First attempt success ratio
Can you guess how these countries performed? Read on to find out!
#1 US and Canada’s Average Transit Time was 3.7 days
Both countries saw an average of 3.7 days transit time to first attempt in the first quarter of 2021.
For both Canada and the US, there was a dip in their logistics performance since last year. In September 2020, Canada saw a 3.5-day average for transit time. This increased delivery time in 2021 is likely due to the resurgence of the virus in March.
The US also saw an increase in transit time, from an average of 3.2 days last year.
#2 Growth was similar during peak season, but transit time was significantly longer in the US compared to Canada
Peak season refers to the holiday shopping season which consists of Black Friday, Cyber Monday, and Christmas. While the growth in parcel volume during this period was similar at 63% for the US and 65% for Canada, the US had a 24% increase in transit time compared to Canada’s slight 4% increase.
Both the US and Canada saw record-breaking parcel volumes during the peak season, explaining the rise in transit times for both countries.
However, the rise was exacerbated in the US because besides having to manage large parcel volumes that come from the surge in pandemic-driven online shopping that saw parcels coming in droves since March 2020, the US Postal Service dealt with extraordinary circumstances throughout the year.
One major reason for the huge increase in transit time was due to the funding crisis that the United States Postal Service (USPS) experienced, leading to cost-cutting measures such as reduced overtime hours and “late trips,” as well as removing 15% of their high-speed processing letter machines.
The USPS was also delivering mail-in ballots for the 2020 Presidential Elections, which saw tens of thousands of ballots missing the election deadline and 300,000 ballots untraceable.
As a result of these circumstances throughout 2020, the USPS was severely crippled in delivering parcels on time, to the point where essential parcels and mail were delayed even up till January 2021. This demonstrates how severely affected the USPS was, which explains the US’s almost sixfold longer transit time compared to Canada’s during the peak season.
#3 Canadian Consumers Used Collection Points Twice as Much as US Consumers in Q1 2021
The share of parcels delivered to collection points in Q1 2021 was 3.8% in the US and 8.5% in Canada, twice as much as that of the US!
Even though the use of collection points is lower in the US as compared to other countries, the use of collection points in the US has ticked up slightly from 3.7% in 2020 to 3.8% in Q1 2021.
It is still notable that despite the slow easing of restrictions, consumers in both countries were still opting for collection points, indicating a greater adoption of collection points as an alternative delivery method.
In the US, collection points have become more accessible and have become more widespread in last-mile delivery. The US Postal Service (USPS), FedEx, United Parcel Service (UPS), and Amazon offer consumers over 70,000 locations for parcel collection, for instance. Across the border, Snaile Lockers, one of Canada’s leading smart parcel locker companies, had established partnerships with leading carriers such as FedEx, DHL, and Intelcom, one of Amazon’s largest package delivery services in Canada. These smart lockers experienced rapid growth during the pandemic due to the demand for a touchless, safe alternative to home delivery and are available in 23 cities in Canada.
In Canada, companies like Canada Post, PUDOInc, and PUDOPoint have been rapidly growing their locker networks over the past year. We believe this points towards a broader trend of greater accessibility and widespread use of collection points in Canada.
This probably explains why Canada’s pickup ratio of 58.7% is also higher than the US’s 53.9% as collection points are increasingly becoming a norm in the country.
#4 US Delivery Success Rate (96.5%) was Higher Than Canada’s (85.9%) in Q1 2021
The US’s delivery success rate of 96.5% was higher than Canada’s which stood at 85.9%.
In the US, delivery success rates ticked up from its 96% figure last year. For Canada, this is almost identical to their 86% success rates seen in September last year, which is likely due to lockdown restrictions still in place in Q1 2021 as the vaccine rollout had not picked up yet.
Conclusion
Who do you think performed better from January to March 2021? Perhaps it is too early to determine a winner, especially with vaccine rollouts accelerating in both countries after March 2021.
Nonetheless, we look forward to seeing how e-commerce logistics play out in these two major economies as they reopen over the rest of the year. Keep a lookout for another quarterly review of these countries.
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