Online shoppers in the UK increasingly expect that they can click on “place order” late into the night and still take delivery of their purchases the next day. Not only are they demanding speed, but they want to get their hands on the goods at a convenient time and place.
“You can buy online later and later in the day for a next-day delivery,” says Mark McVicar, transport analyst at Barclays bank: “A lot of retailers can take orders up to midnight, so the time you’ve got to draw products from an etailer to local distribution centres and on to a dedicated parcel round is much shorter.”
The response by parcel companies is to invest tens of millions of pounds in technology, from physical machinery to software.
DPD, part of French state-owned group La Poste, is among the companies leading the innovations. Last year the express delivery group opened one of Europe’s biggest parcel hubs, a £100m facility in England, with the latest automated “sortation” technology. Inside the 470m-long building, workers load parcels from lorries on to chutes, which ascend to conveyor belts whirring overhead. Electronic scanners direct the parcels, which can reach one of 172 exits within 90 seconds of entering the hub.
Such equipment is becoming standard across the UK parcels sector, says Frank Proud, analyst at Apex Insight, involving “very significant investments”.
In another sign of the rapid changes under way in Britain’s £9bn parcel market, Amazon is trialling flying drones to drop off purchases. The US technology company’s programme is still in development, but it hopes the small, unmanned air vehicles will eventually deliver packages up to 10 miles from its warehouses within half an hour.
The fierce competition is spurring modernisation at Royal Mail, the UK’s dominant postal group, privatised in 2013. While it lags behind some smaller rivals on tech, the FTSE 100 group has introduced devices such as “finger scanners” that enable workers to pick up and scan parcels more efficiently. An increasing proportion of the packages it handles are sorted by machine, labelled and tracked electronically.
UK postal operator invests in small e-commerce and technology companies
Technological transitions do not always pass off smoothly, however. At UK Mail, another operator, automatic sorters fitted at a new hub turned out last year to be the wrong size for some parcels, which had to be manually sorted.
Software innovation is under way too. In parallel with efforts to narrow delivery times, companies are developing ways for consumers to track orders, as well as selecting a time slot or designating a collection point other than home.
DPD has been rolling out an app that gives recipients until 1am on the day of delivery to select a one-hour slot. Later, they can divert the item to a neighbour or “pick-up shop”, or change the date. “One of the biggest things we allow people to do is tell us if they want to try to avoid the school run,” says Dwain McDonald, UK chief executive.
The app sends a notification when a driver is 30 minutes away and displays the van’s location on a map in real time. Drawing inspiration from Uber, the car-hailing app, customers can rate the service, with the data used to create internal league tables for drivers.
Are ground machines more practical than flying drones?
Even so, Mr Proud suggests delivery apps in general have a way to go, as some consumers report disappointment.
Giving consumers flexibility on timing also creates challenges around planning routes for drivers. Larger companies use algorithmic software to determine the most efficient routes and how the vans should be packed.
Hermes, one of the UK’s biggest parcel companies after Royal Mail, is investing £18m in 21,000 handheld devices for couriers and parcel shops that will include route planning software as it moves towards a two-hour delivery window. The company, part of Germany-based Otto Group, already uses a system called “full-trailer telemetry” that tracks vehicles through geolocation technology and monitors driving styles.
Five or so years ago its couriers worked weekdays using paper documentation, and tracking data became available 48 hours later, says Hermes UK. Soon, it adds, its couriers will work any day of the week, “have the latest technology to do their job and real-time tracking will be available”.