Logistics leaders discuss growth, capacity and delivery challenges

Parcel and express companies are experiencing rapid changes in demand and are having to tackle diverse operational challenges resulting from the pandemic, according to various top managers.

Varying demand patterns, pricing issues, logistics challenges, capacity limitations and new delivery options as well as existing and future technology solutions were just some of the hot topics discussed by international executives at last week’s Leaders in Logistics multi-day online event.

Challenging times

Markus Reckling, head of DHL Express Germany, underlined that changing customer demands require new delivery solutions but also stressed that “consumers are only willing to pay a small amount for delivery”.

At the same time, logistics companies are facing numerous operational challenges, he continued. They are having to cope with high double-digit volume increases with “systems that were not designed for these volumes”, find new city centre locations for last-mile deliveries and also provide sustainable solutions to tackle and reduce CO2 emissions and traffic congestion.

“2025 levels”

On a similar note, Colin Kennedy, CIO of DPD Ireland, said “everyone is running at 2025 levels” after having to “flex up” their networks during the past year. DPD is aiming to “reduce friction” for consumers, such as with contactless deliveries and different delivery options, and is working on route optimisation solutions to improve efficiency and provide better visibility for shippers and customers, he said.

Responding to a CEP-Research question about potential price differentiation for consumer deliveries, Kennedy said that DPD is “a premium service” but the group “is coming to the realisation that different X2C markets are emerging with different expectations for service”, thus making different price points possible for different markets.

Changing delivery patterns

Mike Richmond, Doddle’s Chief Commercial Officer, also highlighted the trend to more consumer delivery options at different prices and predicted that retailers would start to settle on “profitable delivery options” once the current growth rates settled down to more normal levels.

He also pointed out how delivery patterns are changing with traditional home delivery markets such as the UK adding more ‘out of home’ (OOH) solutions such as parcel shops and parcel lockers, while other markets with higher OOH rates, such as the Nordics, are now adding more home delivery services.

More complex logistics

In a panel discussion on “personalising the last-mile delivery experience”, Alberto Pimenta, director of e-commerce at Portugal’s CTT, explained how the growth of new home delivery segments such as groceries had made e-fulfilment more important but also more complex for delivery companies. CTT planned to install 1,000 parcel lockers by the end of 2022, he said.

Royal Mail’s Head of Delivery Design, Matthew Lawlor, echoed this point, stressing that delivery flexibility for customers increased operational costs and complexity. He also underlined the postal operator’s “unique position” thanks to its trusted relationship with consumers.  

Natalie Frow, VP Operations Home Delivery for DHL Supply Chain UK (which delivers bulky shipments to consumers), warned that if logistics companies “personalised everything, then we could not move the volumes”. The challenge was to encourage customers to choose environmental deliveries that also helped the carrier in operational terms, she stressed.

Data and mobile technology

Escher Group CEO Brody Buhler highlighted the potential of mobile technology and data to provide flexible delivery options to optimise both the customer experience and carrier costs. For example, “delivery people know customers better than anyone else”, he said. The question was how to get that personalised information into systems in order to improve the product offering.

On PUDO options, Buhler said that parcel lockers are “good for reducing emissions but consumers prefer home deliveries”. Therefore, PUDO solutions needed to be within walking distance (or ‘slipper distance’, as he put it) in order to offer a real alternative to home delivery.

Balancing the 4Cs

In a separate ‘Episode’, Egil Møller Nielsen, PostNord Group’s chief of group technology, said the Nordic postal group is introducing various solutions, such as parcel lockers and possibly sorting robots, to improve operations and reduce costs while “balancing the Four Cs” – convenience, cost, capacity and climate.

Swiss Post’s head of ‘open innovation and ventures’, Thierry Golliard, explained how postal operators could benefit from investing in technology start-ups that help to digitalise the fragmented logistics sector

Fast and local

In a separate discussion, Damien Bon, CEO of La Poste-owned last-mile delivery specialist Stuart, explained how parcel carriers could learn from food delivery companies by providing “faster and more precise” deliveries and could offer cheaper and more sustainable same-day deliveries through local logistics partners.

Andreas Thöni, Austrian Post’s EVP Group Strategy, Digital and Innovation, stressed the need for sustainable delivery solutions alongside investments in capacity. He highlighted the company’s new zero emissions delivery operations in Graz but also noted the shortage of available logistics space in many city centres.

The Leaders In Logistics online event continues with more sessions this week.