Interview - Brody Buhler, CEO of Escher, talks AI and its impact on posts
Artificial intelligence (AI) has the potential to transform the parcel and postal industry, supporting the sector in its transition from a mail-led to a parcels-led business and helping it meet increasingly stricter environmental regulations, according to Brody Buhler, CEO of Escher Group.
Buhler spoke exclusively to CEP-Research about AI and its use in the postal sector at Parcel+Post Expo, which is taking place this week (October 22-24) in Amsterdam, the Netherlands.
Escher is exhibiting at the event, showcasing its purpose-built Control Tower solution, which provides posts with a “total and unobstructed view of mail items flowing through their network.”
Future of Posts 2024
Buhler’s thoughts on AI follow the release of Escher’s Future of Posts 2024 report, which provides deep insights into the key trends shaping the postal industry, based on feedback from 179 respondents representing 78 postal operators worldwide.
The 2024 report highlighted several key trends including postal operators’ increasing focus on digital transformation and environmental sustainability, a renewed confidence in network expansion strategies, and the importance of improving customer experience.
CEP-Research: According to the report, what are some of the key growth areas for posts currently?
Buhler: The report is now in its eighth year and previously when we have asked respondents what they believe will have the biggest impact on the postal industry over the next three years, the answer was always e-commerce – and by a long way. This was still the case this year, but the number two answer – artificial intelligence – was different this year.
There has been a lot of attention around AI recently, but very little actual implementation. I think the industry is starting to become aware that AI has the potential to be transformative, and with this in mind we have started to spend more time understanding why and how.
CEP-Research: Does AI actually have real-life applications in the delivery world?
Buhler: One real world application we are using is around automation solutions in the sorting centre. We have seven proprietary OCR solutions, which use AI fuzzy logic on the address data read to improve accuracy, and we have some video coding solutions which also use artificial intelligence. The whole purpose of these solutions is to increase the automation rate for first time delivery.
Two posts are now using these solutions, and we have found that they can help lift the automation rate to somewhere between 1,000 and 1,5000 basis points. Basically, if you are sorting shipments now and you have a read rate of around 82%, we can take it to 95%. All of this is AI-driven.
CEP-Research: What advice would you give to posts looking to start on their AI journey?
Buhler: When you read the headlines about AI they tend to be focused on things that are very specific to our industry, such as how it can be used for route optimisation or for automation, but I actually think the most practical applications of the technology in this industry today are what are being applied in every other industry.
If you look at call centres, for example, we are seeing a lot of advancements in AI capabilities. The number one question every post receives around the world via their call centres is, “Where is my parcel?” Here, AI bot capabilities could be used to handle these calls – in a human centric way.
It is in applications like this – the back-office functions – where there is real value today that can be achieved using AI. It doesn’t always have to be about applications at the bleeding edge, although more innovative AI-driven applications will come, they are just not mature enough yet.
CEP-Research: What role does data and AI play in trying to meet sustainability goals?
Buhler: Looking back at the use of AI-driven OCR and video coding, if 15% more parcels are running on automation then they are not being manually sorted and not going on extra trips due to incorrect address data – this is therefore taking cost and emissions out of the delivery.
Furthermore, our analysis of AI-based route optimisation technologies, which are still emerging at the moment, has shown that if you develop a greenfield delivery unit and take away all the legacy fixed routes, which can’t be changed due to regulatory requirements, then round 15-30% fewer miles will be driven. This could have a big impact on the environment.
The other thing that is radically changing in the world right now is what retailers are doing with inventory and where they are staging it. AI has driven a lot of the improvements in getting the right inventory in the right places, with inventory now being far more local. If you look at local to local delivery, postal organisations are best suited to provide a service and one that is far less damaging to the environment.
CEP-Research: How do you see posts coping with the twin pressures of wanting to be a parcels company but being regulatory obliged to still be a letters company?
Buhler: The best postal operators are bringing together their mail and parcel network capabilities. They are running a single network. Furthermore, the best operators are moving sortation to their sort centres and getting it out of the depots, allowing for consolidation and better productivity in the last mile, which is the most expensive part of the delivery.
They also have an incessant focus on productivity. They are constantly looking at the metrics and finding ways to do things more efficiently. Those sound like pretty straightforward answers, but they are hard to implement.
Overall, I believe the key to the future is to develop a competitive parcel network that can also handle mail alongside any legacy constraints. These legacy constraints also need to be loosened by regulators. That is the only way to survive. A single network is needed that is very parcel centric and is built to compete in a very competitive market.
