Summary:
- Winter storms in early 2025 led to an average 13.8% decrease in on-time performance during the first storm, with a 7.2% drop in the second storm, particularly in the Southeast and Southwest regions.
- Kentucky, Louisiana, Alabama, West Virginia, and Georgia saw the steepest declines in service levels, with Kentucky dropping by more than 30% to a below 50% on-time performance rate.
- Warehouse shutdowns, delayed outbound shipments, and inbound shipment delays due to hazardous road conditions contributed to widespread logistical issues, with recovery expected over the coming weeks.
Overview
Recent unprecedented winter storms swept across the United States last week, bringing unheard-of snowfall to regions not accustomed to such weather, particularly in the southeast and southwest. The lack of infrastructure and efficient snow-clearing measures significantly impacted last-mile deliveries.
Last mile on-time performance
Snow and ice storms can severely disrupt delivery schedules, often taking weeks to fully restore service levels as demonstrated by the chart below showing regional on-time performance for parcel deliveries.
Here, we can see how much inclement weather can disrupt deliveries. During the week of January 6th, the first major snowstorm of the season impacted many areas throughout the Midwest, Southwest, and Southeast, which can be clearly observed by the drop in performance for all three regions. Overall, there was an average decrease of 13.8% across all regions. Then, just two weeks later, a similar fall can be observed among the Southeast and Southwest. While the impact was more concentrated, there was still an average overall decrease of 7.2% across all regions during the second storm.
Taking a closer look, we see that the most impacted states include Kentucky, Louisiana, Alabama, Georgia, and West Virginia.
Here are the declines observed by state:
- Kentucky (KY): -30.7%
- Louisiana (LA): -24.4%
- Alabama (AL): -15.9%
- West Virginia (WV): -12.5%
- Georgia (GA): -12.2%
The higher impact in these areas is likely driven by the rarity of cumulating snow and ice, making it difficult for roads to be cleared as quickly as places like the Midwest, who see snow and ice multiple times per year regularly.
Impact of snow and ice storms
It is clear that these storms cause major disruptions. Here are some of the key reasons why:
- Shutdown of Warehouses/Fulfillment Centers: During statewide emergencies, businesses close to ensure employee safety, resulting in a backlog of orders awaiting processing. Inbound and outbound shipments are halted until conditions improve, exacerbating delays.
- Delayed Outbound Shipments: Poor road conditions lead to slower transport speeds or rescheduled deliveries, further complicating logistics.
- Inbound Shipment Delays: Similarly, delays in inbound shipments due to hazardous conditions can cause inventory shortages and congestion at receiving docks.
Performance levels have not yet returned to typical levels, but will likely recover this week.
Implications for retailers
The severe impact of winter storms on last-mile delivery performance carries significant consequences for retailers, especially in regions unaccustomed to such weather conditions. Here are some key implications for retailers:
- Customer Experience and Loyalty: Delayed deliveries can lead to customer dissatisfaction and erosion of trust. Retailers may face increased pressure to manage customer expectations more proactively during adverse conditions. Implementing transparent communication policies about potential delays and offering compensation or alternative solutions can help mitigate negative impacts on customer loyalty.
- Inventory Management: As inbound shipments are delayed, retailers might experience inventory shortages that complicate their ability to fulfill orders promptly. This necessitates more robust inventory management strategies, such as increasing safety stock levels or diversifying supplier locations to ensure availability of high-demand products during peak times.
- Increased Operational Costs: The disruption of normal delivery schedules may require retailers to invest in alternative logistic solutions, such as sourcing local delivery services that can navigate adverse conditions more effectively or increasing the workforce to manage the surge in order backlogs once normal operations resume.
- Sales and Promotions Strategy: Retailers may need to adjust their sales strategies, potentially delaying promotions or extending sales periods to accommodate slowed online order fulfillment. This can help maintain sales volumes but might affect profit margins.
- Long-term Adaptations: Repeated disruptions due to unusual weather patterns may prompt retailers to rethink their logistics and fulfillment strategies fundamentally. Investments in partnerships with more diverse logistics providers and technology solutions that enhance real-time visibility for proactive customer notification of delays can become increasingly crucial.
Summary
The winter storms in early 2025 caused significant disruptions to last-mile delivery performance, particularly in regions not accustomed to such extreme weather. On-time performance dropped by an average of 13.8% following the first storm, with Kentucky, Louisiana, and Alabama seeing the largest declines. A second storm two weeks later further impacted delivery times, though the overall decrease was slightly less severe at 7.2%. These disruptions were mainly driven by road conditions, warehouse shutdowns, and delays in both inbound and outbound shipments. While recovery is underway, performance levels are expected to stabilize over the coming weeks, with full service restoration still a work in progress.