While the parcel delivery industry has been on the rise for years, the global pandemic has further catapulted the market to a new level. Consumers’ purchasing habits and shopping methods have shifted toward online retailers, thanks in part to mandated lockdowns, pandemic-prompted stimulus checks, and personal preferences to spend more time at home. As a result, $870.78 billion was spent online with U.S. merchants in 2021. As expected, the rise of e-commerce brings an increased demand for delivery.
The rise of last-mile delivery
The delivery sector has seen steady growth throughout the years; however, the pandemic led to a chaotic increase. Over the last two years, customers have grown increasingly accustomed to the instant gratification of same-day or next-day delivery. Profits for delivery companies like Amazon, UPS, and FedEx soared, while online retailers work to keep up with demand by optimizing their “last-mile,” the final leg of a delivery’s journey from a warehouse to the customer.
The growth of last-mile delivery has spurred rapid development in the gig economy. To keep up with the increased demand, parcel delivery companies contract out the last mile of delivery to third parties. Companies like Amazon Flex and Roadie, for example, provide crowdsourced delivery services, enabling faster mobilization of delivery drivers.
A hard-to-insure sector
Many of the drivers delivering these packages are independent contractors, and are likely not required to have the same insurance, such as Workers’ Compensation, as those employed directly by a parcel delivery company. They may have to secure insurance coverage independently, such as Auto Liability, Physical Damage, Cargo, Non-Trucking Liability, and Workers’ Compensation, which can be a difficult task because of the risk associated with the relatively new sector.
There are many risks present from the stop-and-go traffic, driving through neighborhoods, and, most importantly, the risk of injury from lifting and carrying heavy packages, or even a slip and fall. In addition, some parcel delivery companies don’t currently require or offer safety training, and almost anyone with a license, vehicle, and clean driving record can get hired for the role. These factors leave the door open to more accidents, leaving insurers leery of extending Workers’ Compensation coverage to parcel delivery companies and their employees.
Risk Innovations has you covered
Risk Innovations specializes in Workers’ Compensation for parcel services and delivery companies. Our brokers have extensive knowledge of this industry and have a robust number of carrier partners that specialize in these risks as well. Contact us today to learn more and to get started.