Studies show that 62% of online shoppers base customer experience on how quickly the order arrives at their doorstep. The result is careful planning and meticulous processes by logistics pros to put speed first. And yet! Every logistics company (and customer) has experienced a so-called delivery exception.
In this article, we’ll explore delivery exceptions, how they affect businesses, and how to handle them.
What Is A Delivery Exception?
A delivery exception is when a package is delayed in transit or requires some sort of urgent attention due to unforeseen circumstances like a weather event, holiday crush, missing paperwork, or border problems. It’s also called a shipping exception. Being prepared to react to events makes the difference between a trusted e-commerce company and one that loses customers.
Delivery exception rate is an important warehouse KPI because it directly impacts customer satisfaction, operational efficiency, and overall supply chain performance. This KPI reflects how well your warehouse or logistics business is performing. For example, if a pattern of delivery issues arises with specific routes or shipping partners, the warehouse can use the data to renegotiate contracts or switch providers.
What Qualifies As A Delivery Exception?
Not every delay in the delivery journey qualifies as a delivery exception. In fact, calling a delivery an “exception” has operational and contractual consequences, so there must be a clear threshold for what counts.
As we stated earlier, a delivery exception is a defined event that significantly disrupts the delivery process and meets pre-established criteria that justify additional handling, communication, and sometimes compensation.
Common scenarios that constitute a delivery exception include:
- Incorrect or incomplete address: The carrier is unable to deliver the item because the shipping label is missing critical information.
- Failed delivery attempts: The driver has tried to deliver the package multiple times (e.g. 3 attempts) with no success.
- Customs delays: The item is held at customs for inspection beyond a set Service Level Agreement (SLA) window.
- Damaged shipment: The parcel is visibly damaged and undeliverable.
- Weather or natural disasters: Severe weather events that halt transport routes or delivery networks.
- Lost in transit: The package hasn’t been scanned or updated for a period that exceeds tracking thresholds, often 48–72 hours depending on the carrier.
For example, if a package arrives at the local depot on time but the address label is unreadable, the carrier logs a “bad address” exception. This triggers a pause in the delivery process, customer notification, an investigation by the 3PL or warehouse team, and potentially a refund if the delay breaches the promised SLA.
On the other hand, a one-day delay due to high volume without breaching any SLA wouldn’t qualify as a delivery exception. Warehouse managers and 3PLs need clear definitions to avoid overusing the term “exception” for minor, expected disruptions.
How Delivery Exceptions Affect Your Business
Two-thirds of global shoppers expect to receive their packages in 24 hours, and grocery shoppers expect their deliveries in two hours. It is clear that shoppers’ expectations around delivery times continue to increase, and if you don’t meet this need, they will move to your competitors.
Here are other ways how delivery exceptions can affect your business.
Increased churn rate
While delivery exceptions are unintentional and often unpreventable, customers still can get frustrated by a poor delivery and may choose to patronize another business, driving up churn. Even if the delay was caused by Mother Nature herself.
Damaged brand reputation
Delivery exceptions (even those caused by the customers unknowingly providing an invalid delivery address) can trigger frustrated customers to say unflattering things about even brands that did no wrong, and the fallout on social media can be reputation-ruining.
Wasted resources
Delivery exceptions can result in a spike in ‘Where is my order?’ inquiries, which compels support teams to spend hours answering questions rather than on other productive tasks.
Decreased revenue
Delivery exceptions are expensive, causing returns and re-shipment of an order, which then adds to inventory, labelling, and packaging costs.
How Delivery Exceptions Affect Warehouse & 3PL Workflows
When a delivery exception is recorded, it automatically activates a chain of events:
- Customer notifications must be sent (often automated through WMS or order tracking platforms).
- Internal investigations are triggered to determine the root cause and resolution path.
- Refund eligibility is evaluated if timelines breach the SLA agreement with end customers.
- Service credits or penalties may be applied if your operation fails to meet agreed delivery KPIs.
For 3PL providers, this can directly impact revenue and client trust. For warehouse managers, delivery exceptions affect everything from staffing decisions to carrier selection and performance bonuses.
Major carriers like FedEx, UPS, and USPS do not randomly assign delivery exceptions. Instead, their systems follow strict logic:
- A delay must cross a threshold (e.g. 24+ hours) or fail certain criteria (e.g. undeliverable address) to be considered an exception.
- Once an exception is logged, carriers are expected to update tracking systems with exception codes, notify both the sender and recipient and initiate resolution workflows and update the estimated delivery date.
As a warehouse manager or 3PL, it’s your job to integrate with these carrier systems, define and set criteria for delivery exceptions, and respond appropriately when it happens. That might mean reshipping the item, adjusting carrier settings, or building rules into your WMS for how exceptions are handled and resolved.
Common Causes Of Delivery Exceptions
What can go wrong in fulfillment, will go wrong. Let’s explore some of these causes below.
Customs delays
International packages are often held up at customs checkpoints longer than expected, which can significantly affect delivery time. Have the proper tariff codes at the SKU level.
Missing or inaccurate documentation
Documents requiring certain details, permits and signatures are necessary before packages can cross checkpoints or enter a country or certain jurisdictions.
Bad weather
Flood, hurricane, wildfire, or snowstorm can seriously disrupt a delivery route and delay the package. This is one of the main causes of delivery exceptions—an act of God. It is possible to ship the package from a different fulfilment center as long as it avoids the affected path.
Damaged or missing labels
If the shipping label on a package is damaged or cannot be read, it can result in a delivery exception. When important details are not visible or scannable, an exception will be generated. If the label also contains an inaccurate address, it can get stuck in a delivery exception until the correct address is determined.
No one was home to receive the package
Packages may be delayed if they need a signature upon receipt and no one is home. When a recipient is unavailable, the delivery may be re-attempted the following day. Customers can use delivery management platforms to let the carriers know how, where and when home delivery can happen without such a factor affecting it.
Examples of Delivery Exceptions
Here are some real-life examples of delivery exceptions.
- Case 1: Additional documentation
An e-commerce retailer shipping orders to Europe experienced a customs delay due to missing documentation. The package was kept at the border until all necessary forms were provided, and this delayed the process and qualified as a delivery exception. Clear guidelines and expectations on required documentation could have prevented the exception.
- Case 2: Delivery delayed due to weather
Due to an intense snowstorm, delivery routes across the Midwest were disrupted, resulting in a FedEx delivery exception for thousands of packages. Customers were updated on the state of their packages and the potential delay and intimated on the estimated delivery time once the weather was clear.
- Case 3: Incorrect Address
A customer may mistakenly input the wrong address, apartment number, or postal code while placing an order. This leads to a failed delivery attempt, and the package may be returned to the warehouse after multiple attempts. The warehouse may also be unable to receive an updated address from the customer, leading to delivery exceptions.
How To Handle Delivery Exceptions Effectively
Managing delivery exceptions effectively can significantly impact your customers’ experiences and, ultimately, your business. Here are some best practices for employees when dealing with delivery exceptions:
Identify and resolve the exceptions in real-time
Real-time monitoring and tracking through WMS integration can help businesses easily identify delivery exceptions as they happen. This way, warehouse managers, logistics teams or 3PL providers can take fast action to resolve the issues. This reduces the impact it might have on the customer, thereby reducing the churn rate.
Communicate with customers
Communicating with customers clearly and on time is a way to manage the situation more effectively. Maintain an open communication channel with customers, especially when you know they are experiencing a delivery exception. During this period, inform them of the issue and provide timely updates on the status of their order. Staying in communication with customers during a delivery exception helps reduce their frustration significantly.
Resolve issues quickly
Try to resolve delivery exceptions by reshipping packages using other delivery options or issuing immediate refunds. Being proactive with solutions can help maintain a good level of trust and satisfaction with your customers and reduce churn.
Document and analyze exceptions to improve future incidents
Tracking and documenting the nature of delivery exceptions can help you take proactive steps to prevent future occurrences. For example, let’s say you constantly experience delivery exceptions during the holiday rush season due to wrong shipping addresses or missing documentation. To avoid more exceptions in future, you can have customers confirm their shipping addresses and double-check that all documentation is accurate and provided before shipping begins.
How Major Shipping Carriers Handle Delivery Exceptions
How do major shipping carriers who experience multiple delivery exceptions handle it? Let’s find out.
- FedEx Delivery Exception
FedEx typically uses a comprehensive tracking system to alert customers when a delivery exception occurs. Whatever the factor causing the delivery exception, the system will provide real-time updates. All customers have to do is use their tracking number to view updates and notifications on their packages. Such notifications would contain the status of the exception and the revised delivery date.
- UPS Delivery Exception
UPS provides clear exception notices, explaining the issue and the factors affecting the customer’s package delivery, such as missed delivery attempts, incorrect address or weather conditions. Just like FedEx, UPS helps customers monitor changes in the delivery time and route through the tracking number.
- USPS Delivery exception
USPS typically has a high volume of shipments and encounters delivery exceptions like ‘held at customs’ or weather delays. These factors are more common with international shipping. Another common reason for USPS delivery exceptions is federal holidays, as it is run by the US government. USPS also offers real-time tracking and notices using Text Tracking and Informed Delivery to update recipients of new delivery dates.
Stay in Control With Da Vinci, Even When Shipments Go Off Track
Proper warehouse management software like Da Vinci allows you to remain in control regardless of delivery exceptions. With this software, warehouse managers, 3PL providers, and logistics teams can easily track orders and manage delivery exceptions whenever they occur.
With relevant features like automated labelling technology and order tracking, you can keep track of packages and even communicate directly with customers about the status of their orders.
Order tracking provides customers with real-time updates of their package location and estimated delivery times, which helps them feel at ease and have more faith in the e-commerce platform.
With integrable features like ERP and CRM software, customers can get updates as long as you have their details.
Ready to prevent and manage delivery exceptions? Book a demo today and stay in control in all situations, even the exceptions.