What is the True Cost for Missed Deliveries? | Red Arrow Logistics
What is the true cost for missed deliveries? | Red Arrow Logistics

As consumers continue to turn to e-commerce for their shopping needs, the need to deliver on time, every time has become imperative for both retailers and carriers. Yet missed deliveries happen often. The cost of late shipments has both financial and non-financial implications. And the impacts are wide-reaching as the cost of a missed delivery affects the carrier, retailer, and consumer.

Why Do Missed Deliveries Happen?

Deliveries can be delayed for a variety of reasons. For international shipments, the container capacity issues, as well as delays at U.S. ports, are causing major delays of some goods.  Customs are another variable that companies that import or ship internationally have to contend with. A reliable 3PL can help ensure that documentation is correct so there are no delays with goods being held for inspections.

Domestically, there are another set of issues that can occur:

Incorrect delivery date: Traffic congestion, road construction, and inclement weather along a delivery route can all contribute to a missed delivery date.

Missed Load:  When a load (or part of a load) is missed at the beginning of a route, delivery might be delayed a day or even two.

Customer is Not Present:  If the customer is not there to receive a package that requires it, the delivery is missed.

Wrong Address:  Sometimes the customer’s address is incomplete or incorrect. This counts as a missed delivery if it ends up on the neighbor’s porch.

These variables can cause a shipment to be delayed to its final destination, which can result in a domino effect along the supply chain. Many companies do not have flexibility in their shipping budget and as a result products, supplies, or raw materials (for other products) do not get delivered on time.

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Financial Losses

Delivery costs have continued to rise particularly in the last few years as the need to deliver reliably and quickly has become an important e-commerce customer factor. However, the last mile of delivery presents a huge challenge to carriers and logistics providers. The last mile of the delivery process accounts for about 53% of the total costs of shipping yet the inefficiencies in getting products delivered have been compounded by higher e-commerce sales in the U.S., which of course means more parcels that need to be delivered every day. 

Some retailers might be tempted to replace a product for a missed delivery but that is not always the best solution because it is not a cost-effective decision. Having to ship an item with a premium service like express just to get a replacement package there on time is a huge financial loss. The average re-delivery cost at $15 per parcel will add up quickly if this becomes common practice for solving the issue of missed deliveries.

The customer acquisition cost (CAC) also plays a part in the equation. The CAC is simply the total marketing and sales costs divided by the total number of customers acquired for a given period. The higher the cost to acquire a new customer, the more likely a business is to charge customers for their product. Delayed deliveries will result in more lost customers causing the CAC to increase.

Non-financial Losses

The cost of late deliveries is not just a financial issue. In fact, non-financial losses can be just as detrimental to a business. For example, late shipments that are time-sensitive, for example, medicines or medical supplies, can pose a huge issue from a customer service standpoint. If a package is not delivered on time, there is a chance that the customer is lost forever. This is not only a loss of revenue from the customer but a loss in reputation. 

Some customers do not differentiate between a brand and a retailer, so their perception is built around the package delivery experience. Even when a delayed delivery cannot be helped, a business’s image is at stake. An irate customer might also write a negative online review or post about a negative experience on social media, which further hurts a business’s brand image.

Given today’s shipment costs and port delays, a 3PL like Red Arrow Logistics can help ensure shipments get to their destination on time, every time. With over 10,000 partners, and multiple modes and routes, the rate of missed deliveries will decrease. 

Your Trusted Partner

At Red Arrow Logistics, we provide expertise and white glove customer service with fast-growing, complex, and high-value supply chains. As the next-generation model of logistics companies, we offer tailored transportation and logistics solutions — from single shipments to complex over-dimensional and international orders.

Red Arrow offers the scale and scope of services including air, ocean, and ground transportation to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email us at info@redarrowlogistics.com or give us a call at 425-747-7914.