B2C parcel carriers in the UK are bullish about the outlook for this year after successfully handling high volume growth in the 2015 peak season, including the dramatic Black Friday surge.
Detailed advance planning, capacity investments and close collaboration with retail customers were key factors in the good peak performance last year, top executives of Royal Mail, Hermes and Yodel agreed at MetaPack’s The Delivery Conference in London yesterday.
MetaPack CEO Patrick Wall told a packed conference with some 1,400 visitors that most carriers in the UK and also Continental Europe had seen volume growth of 35-40% during the spike generated by Black Friday and Cyber Monday online sales at the end of November. Volumes then dipped slightly before picking up before Christmas and continuing to rise afterwards, he pointed out.
MetaPack itself processed over 50 million parcels between Cyber Monday and Christmas through its multi-carrier shipping platform, including three million on the single busiest day.
“This year (2015) was an outstanding success in terms of service quality due to better planning, better collaboration and investments by carriers in operations and facilities,” Wall declared. The successful 2015 performance contrasted with 2014 when the industry had difficulties to cope with an unexpected surge in volumes generated by the cyber sales events, he noted. As a result, consumer confidence in the ability of parcel carriers to deliver on time has now improved.
Outlining peak season trends, Wall pointed out: “There were more deliveries on Sundays. Sundays are starting to become a normal delivery day in terms of volumes.” In addition, there were switches between express and standard deliveries as consumers actively decided when they wanted to have their online orders delivered, he said.
International shipments have continued to rise to about 20% of overall volumes, increasing to about 25% after Christmas, Wall said. “People are increasingly shopping regionally and around the world to take advantage of the best offerings.”
Looking ahead, the MetaPack chief said consumers wanted even more convenience in terms of being able to plan their delivery time and place. “There’s an increasing need for ‘individualisation’ and for a personal experience,” he commented. He also predicted that cross-border volumes would continue to rise above the current 20-25% level. “We believe there’s an extraordinary opportunity for all of Europe to trade within the common market but also around the world.”
The peak season trend analysis was shared by parcel carrier chiefs in a ‘Benchmarking Peak’ panel discussion. “Everybody learned from 2014 for 2015,” confirmed Carole Woodhead, Hermes UK CEO. Retailers managed customer expectations while carriers invested in capacity, above all. Roger Morris, Royal Mail’s head of parcels, highlighted “better communications with customers” as a key factor.
Yodel chairman Dick Stead explained that the industry “realised there is finite capacity in the parcel networks”, that retailers had held regular discussions with carriers, and customers were satisfied as a result. “It has been one of the best Christmases so far,” he commented.
Yodel deliberately restricted capacity levels to ensure performance quality during peak season. But Stead stressed: “It was not about saying no to volumes but saying when we can take volumes.”
Andy Harding, Chief Customer Officer at department store group House of Fraser, told the conference: “We introduced new delivery services allowing more precise delivery times – pre 9 am, morning and afternoon – across a spread of carriers.” In addition, the group promoted in-store click & collect options, which accounted for about 40% of orders, he said.
However, while peak season resulted in additional operational costs, it was not necessarily highly profitable, parcel executives admitted.
Stead explained that lower than expected pre-Black Friday volumes meant many staff had little work to do during that period. “Overall, we did little better than breakeven in that week, excluding investment costs,” he said. He urged retailers to try to “spread out peaks” to make volume flows more stable. “We’re in this together. We have to spread it out more.”
Hermes’ Woodhead added: “It cost more because of the shape of the peak but it was still profitable overall.” She underlined: “There’s a requirement for us to make a level of profit in order to be able to reinvest. We have to be able to invest for future peaks.”
Looking ahead to this year, Royal Mail’s Morris said: “I think peak will be bigger this year. As far as delivery goes, I hope that we have learned we have to continue working together. We need to continue the dialogue so we can have another successful peak season.”
Stead commented: “This year will be bigger. It’s difficult to tell what that means in terms of volumes for carriers as it depends on Click & Collect. If stores start to peak out, that volume will come to the carriers.”
Hermes’ Woodhead predicted: “Online sales could go towards 30-35% (of total retail sales) this year.”
