Leading European posts address changing OOH delivery models

Investment in out-of-home (OOH) delivery solutions by leading European postal operators is set to ramp up in the coming years, according to speakers at this week’s Leaders in Logistics Last Mile event in London, but executives stressed that posts must take a hybrid approach to the last mile to ensure they meet changing consumer demands.

Diverse postal companies, including bpost, Royal Mail, PostNord and Posten Norge (Norway Post), and other last mile delivery firms gathered in Twickenham, London, on Monday (October 3) to discuss the current trends and challenges shaping last mile delivery.

One overriding theme was the increasing importance of OOH delivery options for customers in the post-Covid world.

Speakers also addressed the need for more collaboration in the last mile, a shortage in both drivers and vehicles for delivery and a requirement for standardisation when it comes to how CEP firms measure their emissions.

CEP-Research was a media partner for the event, organised by Marketforce, and will be publishing several articles from the conference.

Bpost's OOH strategy

At the event, Belgian postal operator bpost revealed how it plans to continue investing in its OOH delivery strategy and soon will be adding drop off boxes for returns to reduce the number of return parcels sitting in delivery lockers.

Earlier this week, bpost also launched a new service across Belgium enabling residential customers to send their parcels by handing them over to the person delivering another parcel to them, which results in fewer journeys.

Speaking at the Leaders in Logistics event, Nick Bond, Director of OOH delivery at bpost said: “bpost is the largest provider of parcel home delivery and OOH delivery in Belgium. We have a clear ambition – to maintain this leadership. Across the country we have about 2,800 OOH delivery points – double the number of our closest competitor, but we are still adding more every day.

“We believe a hybrid strategy works best for OOH,” he continued. “And that is why we have several different OOH solutions, including lockers, Parcel Points and post offices, each with their own USP. Looking at the first mile, I also believe we need to make this more convenient by offering things like label-less returns. At bpost we are looking at drop-off boxes for returns. Currently around 50% of volumes in lockers is first mile, which is a lot of capacity, so we need to come up with a solution to fix this.”

PostNord’s locker network

Meanwhile, Christian Østergaard, Lead Visionary, Senior Group Strategist at PostNord, revealed that the Nordic delivery firm is “pushing OOH delivery widely” moving from around 12,000 lockers to around 30,000 lockers and PUDO points in total over the next few years.

“You need to be where the customer wants you to be,” he said. “And OOH delivery is more sustainable. The more parcels you have per drop, the cheaper it will be and the lower the environmental impact will be. There is enormous movement right now on different delivery options.” 

Østergaard also provided some insight into PostNord’s Nærboks carrier-neutral parcel locker network, which has been operating in Denmark since 2019. He revealed that although the solution has been rolled out it has proven challenging due to “carrier trust.”

“This is not something that is picking up speed,” he said. “Carriers are reluctant to hand over their last mile to other delivery firms as it is a very important part of their business. But I do see a future for collaboration in the last mile. We already have DHL and Bring using the Nærboks lockers in Denmark, and I think from a cost perspective there is no need for delivery companies to be everywhere. It makes good business sense to share networks. I believe we will see more collaboration in last mile delivery in city areas, but the challenge of trust will need to be overcome.”

Driver and vehicle shortages

Østergaard also highlighted a possible problem in finding drivers and the right delivery vehicles in the future. “We are starting to address this now as we know it will be a problem in the future,” he said. “Post Covid, people don’t want to be drivers, working shifts and carrying out heavy manual labour anymore. If we look at this from an infrastructure point of view, home deliveries take the most time for drivers, therefore it is in our interest to find consolidations in the last mile.”

Matthew Lawlor, Head of Delivery Design at Royal Mail Group agreed with Østergaard regarding a possible shortage of resources in the future, highlighting that “there are issues with vehicle supply chains, which is meaning that we are having to retain some vehicles for longer than we would like because the industry can’t supply all the vans that we would like to buy.”

Lawlor also highlighted the need for more standardisation in how the postal sector measures emissions on an end-to-end basis. “We’re looking at how you measure the number of grams per parcel to make it really tangible for the end consumer – I think this is one area we should definitely push on.”

Norway Post approach

Norway Post, meanwhile, took a different view to last mile delivery, revealing that it is focused on improving its home delivery solutions following a drop in OOH delivery demand. “In 2017, 85% of our e-commerce deliveries were OOH and only 2% were attended home deliveries,” said Fredrik Lindqvist, Head of System and Network Development, Posten Norge.

“Market research in 2018 revealed, however, that 46% of consumers wanted OOH and 45% wanted unattended at home. In other words, the consumers wanted something different than what we delivered. Covid also accelerated the demand for home delivery – letterbox parcels, for example, grew by 190%. This part of our business hadn’t seen growth for 20 years! Meanwhile, home deliveries saw growth of 460%. In 2021, the number of OOH deliveries dropped from an 85% share to 52%.

“You can imagine what happens to an organisation which is set up to run to 17,200 PUDOs, but 50% of volumes are going to home deliveries,” he added.

Norway Post is still investing in more PUDO solutions (it plans to expand its parcel delivery point network in Norway to 4,000 by the end of 2022), but it has also been focused on developing the next-generation digital supply chain for home deliveries.

New apps

“We carried out a lot of work to digitalise and improve our service levels,” said Lindqvist. “We wanted a delivery service which offered speed, flexibility, live tracking and sustainability. As a result of this work, three new apps were developed in-house. One of which is being launched this week to workers.”

The three apps are SortApp, Glow, and Motivero. The SortApp is where Norway Post “built its whole production sorting logic,” while the Glow app covers the first and last mile and provides a tracking view for drivers and customers. “We found that this tool is actually that good that we can sell it, so we have now developed our company called Glow Technology, which makes Posten one of the few postal companies that also sells software,” added Lindqvist.

Finally, the Motivero app, which has a slogan of “by drivers, for drivers,” is launching across Norway Post this week. The app aims to help improve the delivery experience by giving feedback to drivers on their performance.

Lindqvist concluded: “Through this app, drivers have access to statistics on quality, precision and productivity and they also receive anonymous feedback from consumers about their delivery experience. This data should help improve their everyday performance.”