Hermes imposes peak surcharge in Germany as volumes and costs rise

B2C parcel specialist Hermes will impose a peak season surcharge on all shipments, including returns, in Germany during November and December to help offset rising labour and operational costs as it heads for a record 80 million items during the two months.

Hermes has negotiated the level of surcharges individually with business customers rather than impose a single level for all shipments. The additional income will mainly be invested in the remuneration of service partners and employees, as was the case with the price adjustments introduced on March 1, 2018. However, the surcharge, which the company already announced this spring, will not apply to private parcels sent by consumers.

Outlining its preparations for the forthcoming 2018 peak season, Hermes said it expects up to 2.2 million items a day nationwide during the Christmas season, with over 80 million shipments in total forecast for the months of November and December. In order to cope with the high parcel volumes, it will take on numerous additional workers and vehicles.

"The Christmas season presents the parcel industry with ever greater challenges. A trend that will continue to intensify in the foreseeable future as a result of the continuous increase in shipment volumes,” said Olaf Schabirosky, CEO of Hermes Germany since June.

“This makes it all the more important to work closely with retailers, especially when it comes to volume planning. I believe we are well positioned in this respect: Thanks to precise forecasts, we were able to plan additional capacities at Hermes at an early stage so that we can dispense with volume restrictions as things stand at present,” he said.

“In addition, we have significantly increased our handling capacities in the distribution centres this year. This enables us to handle larger volumes, which is a relief, especially on peak days." Last year, Hermes was forced to restrict volumes due to a shortage of available sorting and delivery capacity.

For this year, Hermes Germany will expand its fleet with up to 3,600 extra vans for additional final-mile routes through to mid-January 2019 while some 400 additional articulated lorries and swap bodies will support long-haul and linehaul transportation between logistics centres.

Moreover, compared to last year, Hermes Germany is benefiting from increased handling capacity in its distribution centres, including at the Logistics Center (LC) in Graben near Augsburg which went into operation in February. The LCs in Mainz and Berlin-Brandenburg, which went into trial operation at the end of 2017, can also run at full load for the first time if required. Hermes will open more facilities next year, including in Hamburg and the Leipzig/Halle area.

This year, Hermes will employ up to 6,300 additional employees nationwide until mid-January. In addition to its own employees with fixed-term contracts, employees from temporary employment agencies will also be deployed on a regional basis. These temporary workers will support delivery and handling in the logistics centres, such as loading and unloading containers and manual sorting.

At peak times around Christmas, up to 13,000 delivery staff will be working for Hermes. The delivery staff will be supported by a new route planning software whose nationwide rollout has almost been completed. Among other things, the new software optimizes routes and enables even more efficient parcel delivery, according to the company.

Nevertheless, Schabirosky emphasised: "Even though we have succeeded in building up sufficient capacities for the Christmas season, the bottlenecks in recruiting delivery staff are increasing across the industry.

“In the medium term, the booming online trade is threatened by analogue limitations. Of course, there will continue to be door-to-door delivery. Nevertheless, we must increasingly think about more efficient, alternative delivery options, such as direct delivery to parcel shops or delivery to ParcelLock parcel stations."

With the "DesiredDelivery" option, parcel recipients can use the Hermes app or online at myhermes.de to redirect their parcels free of charge to a ParcelShop or desired storage location - even at short notice. All around 15,000 Hermes ParcelShops can be used free of charge as pick-up addresses, e.g. for online orders.

Hermes said it is continuing to push ahead with the expansion of its own ParcelShop network. Most recently, a cooperation project with ParcelShops in branches of Sparda-Bank was launched on a trial basis.