The UK and Ireland markets are now ripe for major investments in parcel consolidation points,according to speakers at yesterday’s Mail & Express Delivery Show in London, including the
logistics director of retailer Mothercare and the CEO of Nightline, which is investing €5 millionin 100 automated ‘Parcel Motels’ that are set to begin operating in Ireland from next month.Mothercare’s Walter Blackwood, a former CEO and chairman of B2C parcels firm Home DeliveryNetwork (now Yodel) who later joined the leading UK children’s clothing and accessories retailer,told the conference that parcel consolidation stations were one of several things needed in orderto deal with peak demand, particularly in the pre-Christmas period, which he believed wouldcontinue to intensify in the coming years and exceed the number of delivery drivers and vehiclesavailable, even after delivery companies have extended their normal delivery hours.
“We have seen in recent years the growth of things like Click & Collect and Collect Plus,which enables delivery companies to make multiple deliveries to a single point, and which are verycost-effective because the consumer is doing the thing that costs the most to delivery companies:the final delivery,” he said.
“The traditional B2C network models are fundamentally constrained by vehicle and labourcapacity, and we can’t cap demand, and therefore consolidation points within the High Street andthe local community will provide the delivery channels to support the growth in overall capacity.And so the peak delivery challenge will drive us all to make use of consolidation points,” hepredicted.
John Tuohy, CEO of Nightline, predicted that automated parcel consolidation points, similarto the Packstations that Deutsche Post has operated for several years in Germany, would soon becomethe norm and that people in the future would not contemplate queuing up in post offices to send orreceive parcels, much as they now use ATMs to withdraw cash rather than queuing to withdraw moneyfrom inside banks during business hours.
“We are going to see a big demand for these kinds of solutions, particularly in Ireland,where we are hoping to lead the market,” Tuohy said. “We are commencing a rollout of 100 automated ‘ Parcel Motels’ this week, with the official launch to consumers in July.”
He said Nightline was putting them in places that it believed were convenient, such as petrolstations, supermarket car parks and trains stations, “supplementing activities that people areengaged in anyway”. These would be “carrier-neutral”, in the sense that other carriers coulddeliver or collect parcels to or from a nearby Nightline hub, for Nightline to deliver to thecustomer’s chosen Parcel Motel.
Tuohy added: “I think this is going to be a market changer in the future, like the ATM. Onekey thing is that it is scalable for different times of the year – during peak times, the stationscan be refilled and emptied several times per day. It is a sustainable way to deliver parcels, andit is going to be a cheaper way of making final-mile deliveries.”
Tuohy told CEP-Research that the system would be funded by end customers, who would pay €3.50to collect or receive a parcel. “We have done a lot of market research and 90 per cent of customerssaid they would like to use the Parcel Motels,” he said. Although he believed the automatedterminals were ideal for Ireland’s low-density rural communities, Tuohy said the positive responserates were higher among urban consumers, with rural consumers apparently reluctant to make specialjourneys to pick up parcels.
Andrew Starkey, head of e-logistics at online retail association IMRG, agreed that there wasa high level of interest among consumers in using local consolidation points as a delivery option,but he told CEP-Research that his research with UK customers indicated that they were unwilling topay more than £1 for such a service, given that they are used to receiving free parcels deliveriesfrom a lot of e-commerce transactions.
Tuohy told CEP-Research that the Parcel Motels were intended, initially, to be mainly used bypeople in urban areas who were “time-poor and cash-rich”, and that he expected that, to begin with,the terminals would be mainly used for activities such as returns. “I have no doubt about theinitial challenge of changing behaviour patterns,” he added. But he was confident that the conceptwith soon take off in Ireland and the UK, where the company supplying the Parcel Motel units, thePolish company InPost, had major plans for a network of terminals.
Wojciech Foroncewicz, business development director at InPost, told CEP-Research that the UKbusiness model would be to charge the delivery company rather than the end consumer for the use ofits ‘EasyPack’ parcel consolidation points, with the charge expected to be around £2 per parcel.
In Poland, where InPost also operates as a national delivery company, InPost now deliversaround 10,000 parcels a day to its 420 EasyPack terminals across the country and aims to install atotal of 1,000 terminals in Poland by the end of this year. However, outside of Poland, the modelwould be to use a carrier-neutral system, with courier companies delivering to nearby hubs of athird-party delivery firm, which would feed parcels to and from the automated consolidation points.
The EasyPack concept is also already successfully operating in Russia and Estonia, andInPost’s parent company Integer recently completed a €108 million deal with private equity firmPineBridge Investments to finance the first phase of an ambitious plan to roll out 16,000 parcelterminals across 12 countries in Europe and the CIS region in the next four years, including plansto install machines in the UK, Spain, the Czech Republic, Slovakia and Ukraine this year.
Foroncewicz observed that the lack of automated parcels terminals so far in other countries,apart from Germany and the InPost examples, was because the trials had only taken place with asmall number of machines. He said broad geographical coverage was essential right from the startfor the concept to be successful. He told CEP-Research that a total of around €300 million would beneeded to fund the full rollout of InPost’s automated parcel terminals over the next four years.
In comparison, parcel terminal operator ByBox operates a drop-box network in the UK with18,000 lockers at 1,400 locations such as supermarkets, petrol stations and train stations,although these are primarily used by field service staff, engineers and other clients. However, ithas recently developed a consumer solution enabling home shoppers to collect their internet ordersat a locker if they are unable to receive deliveries at home or at work.
Hermes this week launched 500 ‘ParcelShops’ across the UK in a move designed to enable itsretail clients to offer customers an alternative to home delivery, and plans to double the networkto 1,000 locations by the end of the year. The ‘myHermes ParcelShop’ outlets are located in localconvenience stores such as Spar, Nisa, Premier and Co-op as well as local independents, in majorurban locations that have been specially selected based on population density and home deliverydemand. Hermes already has ParcelShop outlets in 14,000 shops in Germany, and recently introducedthem in Austria and Russia.
