Logistics of the future: underground distribution

What logistics of the future could look like: cargo in containers moving through underground tunnels. (Image by Cargo sous terrain).

Imagine a futuristic world where cargo moves through an underground network of tunnels – automatically, quietly and intelligently enabling just-in-time deliveries.
Cargo sous terrain (CST) is a Swiss-led consortium set to transform logistics and propel the industry into digitalisation.
CST envisions an automated, digitally controlled comprehensive logistics system in Switzerland by 2045, aimed at promoting economic competitiveness and improving quality of life. CST will ensure the safe, secure and punctual delivery of containers, pallets and parcels. At its backbone is an underground system of transport tunnels linking the business centres north of the Alps with environmentally friendly distribution in cities and industrial areas.
The first section of the tunnel system is expected to be ready in 2030 and will connect the logistics hub Härkingen-Niederbipp (near the capital Bern) with Zurich. When completed, the fully automated network will extend from Geneva to St Gallen and from Basel to Luzern, with an additional branch from Bern to Thun. The full network will have 500 km of tunnels, serving more than 80 hubs for the loading and unloading of industrial and commercial goods for about 10 million people. With 1 million square meters of surface underground, CST will be the largest warehouse in Switzerland.

The full underground network connecting Swiss business centres with cities and industrial areas will have 500 km of tunnels when completed. (Image by Cargo sous terrain).

“CST is the most ambitious and advanced logistics project for Switzerland in the next decades and could potentially serve as a role model for the rest of the world,” said Stefan Karlen, CEO of Panalpina, which has just become a shareholder.
CST will reduce the number of trucks on existing roads, in particular at traffic bottlenecks, by 40 per cent. Freight traffic in cities will be reduced by up to 30 per cent, thanks to the systematic and efficient delivery by electric vehicles that meet urban requirements. The system will run entirely on renewable energy. With end-to-end digitalisation, the system will operate in an extremely flexible environment, with dynamic deliveries in small units and guaranteed arrival times for goods.
End-to-end digitalisation from source to destination will make cargo transport smarter, more efficient and sustainable in the long run. (Image by Cargo sous terrain).

The building permit and planning phase of CST will start with the passing of the CST law, expected in late 2020. As a first step, the Swiss Federal Council will open consultation on the new legislation that will allow CST to become reality.

Australia Post to operate largest electric vehicle fleet

A new order for an additional 1,000 three-wheeled electric delivery vehicles (eDV) by Australia Post is set to make it the nation’s largest electric vehicle fleet operator.
Australia Post group chief operating officer Bob Black said the 1,000 eDV boost its existing fleet of electric postie vehicles – including electric pushbikes – and creates a range of benefits for posties, customers and the environment.
“We are proud to soon be operating Australia’s largest fleet of electric vehicles, and hope this will set the standard across Australia,” Mr Black said.
“With parcel volumes growing – on average, close to 10 per cent each year for the last three years – and letter volumes declining, we’re always looking for ways to ensure our posties continue to play an important and sustainable role in the community.
“These vehicles offer additional carrying capacity, so our posties can deliver more parcels than ever before directly to the customer’s door – and can perform additional functions, such as collecting mail from street posting boxes.”
Along with delivery benefits, Mr Black said the electric vehicles also offer added safety and environmental protections.
“The eDV are safer than the traditional motorcycle. They are easier to see on the road, more stable, have increased rider protection and lower on-road speeds, all of which reduce a postie’s exposure to incidents and serious accidents.
“We started trialling eDV in 2017 and we’ve since deployed them in all states. We have worked closely with our posties to make improvements along the way.
“Our posties love the eDV because they demonstrate our commitment to providing safer and more sustainable employment into the future, given consumers are sending fewer letters and relying more and more on their postie to deliver their parcels.
“They will also help us achieve our commitment of reducing our carbon emissions by 25 per cent by 2020.”
Deployment of the additional 1,000 vehicles is expected to start from June across all states.
Along with the additional 1,000 eDV Australia Post will also roll out an additional 4,000 electric pushbikes, bringing its total to 5,980 over the next three years.
 

Online returns piling up in a warehouse.

Online returns: make it free or else

  • 53% of shoppers would not be willing to spend on postage or courier to return an item.
  • Only 13% are willing to pay more than $10 on postage or courier.
  • 37% prefer to return an item in store.

Consumers believe returns are an inevitable part of online shopping – so much so that a survey has indicated that more than half (53 per cent) don’t want to pay for it. The findings have implications for a number of online retailers who only offer returns by consumer-paid postage.
Parcel delivery service CouriersPlease commissioned a survey of an independent nationally representative panel of 1021 Australians who shop online.[1] Respondents were asked how much they were willing to spend for returns and what returns method would motivate them to return an online-purchased product.
After 53 per cent of respondents said they would not be willing to spend a cent returning an item they bought online, one-in-three (33 per cent) said they would spend a maximum of $10 an a return. Only 13 per cent are willing to pay any more than $10 to return their items.
Respondents were asked which returns method they preferred. 37% most preferred to return items in store. This was highest among millennials (47% of this age group chose this returns option) and lowest (23%) among 50-something shoppers.
29% preferred returns by courier. 27% per cent liked returning items to a post office or parcel drop off point such as a newsagent or petrol station. This was lowest (9%) among of 19-29-year-olds, and highest among over-60s (40%).
Head of commercial and transformation at CP Jessica Ip said: “The high return rate in the online shopping sector is here to stay. As consumers lose the touch-and-feel aspect when buying online, they can erroneously purchase the wrong size or colour, their expectations for texture or quality might not be met, or they might simply change their mind altogether once the product is in their hands.
“CP aims to make the returns process easier. We encourage online shoppers to take advantage of our network of POPPoints, where customers can post their returns in any one of our POPStation lockers or POPShop locations for free. This service enables Australians to conveniently return their parcels at any time and save them a trip to return the item in store during business hours.”
How much are you willing to spend returning an item you bought online?

I only return an item if it is free to return53%
Under $1033%
Up to $156%
Up to $203%
Up to $301%
More than $303%

 

Returns method that would most motivate consumers to return a product they bought onlinePercentage of respondents
Being able to return the item instore37%
A courier picking up and returning the item29%
Returning the item to a post office or parcel drop off or collection point such as a newsagent, petrol station or retail27%
Being able to return the item to a parcel locker7%

 

Online returns piling up in a warehouse.

That’s a lot of parcels: Australians sent 841 million

The Pitney Bowes Parcel Shipping Index reports Australia’s annual parcel shipping volume grew by 63 million in 2017, and is expected to surpass one billion parcels in 2020.
The index reports that parcel shipping generated $9.2 billion in revenue last year, an increase of 6.2 per cent over 2016. Parcel volume in Australia grew eight per cent last year to 841 million parcels, up from 778 million in 2016.
The annual report, which measures both volume and spending for business-to-business, business-to-consumer, consumer-to-business and consumer-consigned shipments, shows Australians receive an average of 34 parcels each year, driven by fast growth in e-commerce sales this past year.
The e-commerce revolution in Australia has contributed significantly to the strength of the parcel shipping market. The seamless service provided by many online marketplaces has driven consumers’ expectations for convenience, price and availability of products from around the world, made possible through global e-commerce.
The omnipresence of e-commerce has spurred a global boom industry, with parcel shipping generating $279 billion in global revenue last year, increasing 11 per cent from 2016. In the 13 markets reviewed, the Shipping Index expects global shipping volume to surpass 100 billion parcels by the year 2020.
Pitney Bowes ANZ country manager and director Stephen Darracott said: “The parcel shipping market remains strong, with growth across all regions. Global e-commerce giants continue to raise the bar, resetting customer expectations when it comes to shipping. As retailers and marketplaces look to cross-border commerce to drive growth, carriers must create efficient, seamless routes to market. They’re doing this by turning to technology, investing in commerce platforms, logistics hubs and distribution centres. Over the next year, we expect businesses will be undergoing a digital transformation in their mailing and shipping workflow, improving their efficiency and inbound and outbound tracking capabilities.”
Australia’s parcel market is expected to grow to more than 1 billion parcels a year by 2021. The parcel delivery market is seeing an exponential growth backed by ease of shipping, delivery and tracking parcels domestic and internationally.
“The Australian and New Zealand market is gearing for an exponential growth as we’re also seeing more and more e-commerce companies looking to the shipping industry with a value proposition. Pitney Bowes accelerated its entry into the shipping market by introducing SendPro to Australian SMB retailers. As the competition heats up, simplified and reliable service, accelerated delivery times, and transparent and accurate tracking will be the key to success,” Mr Darracott continued.
Topline trends Across the globe

  • China’s Parcel Volume Triples United States’: China (40.1 billion), the United States (11.9 billion), and Japan (9.6 billion) represented the top three countries for parcel shipping volume in 2017. China’s parcel shipments represent 53 per cent of the total shipments in the Pitney Bowes Parcel Shipping Index.
  • United States Tops Shipping Revenue: The United States ranks highest in parcel shipping revenue at $107 billion, generating 38 per cent of the total revenue of the 13 countries. China ($73 billion) and Japan ($25 billion) follow. The average shipping price of a parcel is $8.95 in the US, compared to $1.83 in China and $2.64 in Japan.
  • China’s Parcel Growth Continued to Soar: Despite slower parcel volume growth from the previous four years, China represents the largest market in parcel volume growth at 28 per cent YOY. India (11 per cent) and Sweden (9 per cent) followed.
  • Japanese Residents Receive the Most Packages: Japan tops per capita shipping with 76 parcels shipped per person in 2017. The UK follows at 48 parcels shipped per person, and then Germany at 41 parcels.

Methodology
The Pitney Bowes Parcel Shipping Index measures parcel volume and spending for business-to-business, business-to-consumer, consumer-to-business and consumer-consigned shipments with weight up to 31.5kg (70 pounds) across Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom and the United States. Population data points were sourced from the International Monetary Fund, World Economic Outlook Database published in October 2017. The Pitney Bowes Parcel Shipping Index spans 13 countries and represents the parcel shipping activity of 3.7 billion people.
 
 

Australia Post pays $593m in taxes

An Australia Post electric tricycle.

Australia Post has announced a full-year profit after tax of $134 million, up 41 per cent on FY17. This result was largely driven by substantial growth in parcel revenues and a continued focus on efficiency gains, the company said.
This result was underpinned by strong parcel volume growth, both domestically (B2C up 10 per cent) and internationally (up 19 per cent), and a range of efficiency measures across operational and support functions. Together this helped offset the impact of an 11 per cent volume decline in the important domestic letter business.
Once again, this year Australia Post said it has either met or exceeded all of the prescribed performance standards that underpin the community service obligations. Importantly, the organisation maintained broad community access to the network via 4,356 post offices (in excess of target of 4,000), and delivered 98.5 per cent of letters on time or early (ahead of target of 94 per cent).
Australia Post’s Group chief executive officer and managing director Christine Holgate said: “While this result was pleasing, it demonstrates the business has a significant challenge ahead as it continues to transform. Although we continue to optimise our delivery network, we require $2 of parcel revenue to mitigate the impact of every $1 decline in letters.
“In parallel with letter volume decline, many of us are paying our bills online and large organisations are withdrawing from regional towns. This puts further pressure on our local post offices to serve these communities with important services, including financial transactions. These growing services require investment and increased funding to ensure we can meet communities’ needs.
“As Australia’s most trusted delivery partner, facilitating 82 per cent of the nation’s e-commerce, we are uniquely placed to take advantage of a number of growth opportunities. This includes serving our business & government customers better, rejuvenating the role of the post office in the community, focussing on the significant international opportunities, and creating and simplifying our products that people value and trust.
“To build world-class service we are investing in capacity and efficiency in major parcel processing facilities and across our delivery network, with over $300 million of investment in FY18 and $500 million forecast in FY19.
“We are proud that Australia Post plays such an important role in our country, contributing over $6 billion to the economy. For every role we employ, we secure another in Australia including two in regional and rural areas. Our trusted brand and posties are loved by Australians. Around 91 per cent of Australians have visited a post office in the last six months, on an average of 10 times, with 85 per cent of Australians saying it was very important their local post office remains.
“To help keep all our people safe, including our posties, we will invest an additional $30 million in skills, tools and capabilities. We will reduce the number of motorcycles on delivery routes where other transport is safer, such as three-wheeled electric delivery vehicles and electric bicycles.”
Australia Post also made a significant contribution to the community by paying $593 million to the federal and state governments, through dividends ($79 million) and taxes ($514 million), while remaining entirely self-funding. Furthermore, the fully funded cost incurred by Australia Post in meeting its community service obligations during the year was $404 million.
Australia Post has forecast there will be greater pressure on profitability in the 2018/19 financial year due to the continued decline in letters and caution around domestic and cross-border retail conditions.
The 2018 Remuneration Report for key management personnel has also been released today. This report is available at www.auspost.com.au/2018remunerationreport. This year the report also includes forecast remuneration payments for FY19.
At a glance

  • FY18 profit after tax of $134m, up 41% on previous year.
  • Excluding property, pre-tax profit up 280% from $19 million to $72m.
  • Parcel revenue $3.5bn – volumes up 11%. Letter revenue $2.4bn – volumes down 10%.
  • Other businesses contributed $1bn – consistent year-on-year with significant mix changes.
  • Significant contribution to government. Tax payments up 22% to $514m and tax collected up 6% to $1.2bn. Dividends up 57% to $79m.
  • 18th consecutive year all community obligations exceeded.

Aussie consumers want after-hours delivery as part of online shopping package

A survey of 1,009 Australian consumers who shop online has revealed a demand for better delivery services.
CouriersPlease (CP) – a parcel delivery service – carried out the survey which included online shoppers who had made at least three purchases online in the last 6 months. The results indicated that more than 50 per cent of participants wanted after-hours delivery.
Specifically, 60 per cent of respondents wanted weekend parcel delivery services and 52 per cent wanted after-hours delivery of their online shopping purchases.
An additional survey of 193 online sellers found similar results. Also conducted by CP, this survey found that 67 per cent would choose same-day delivery services and weekend parcel delivery services for their customers whenever possible.
The findings also indicate that both online retailers and shoppers would like to see more parcel collection and drop off points for customers to collect and return their online orders (39 per cent and 38 per cent respectively).
CP CEO Mark McGinley, said: “Online shoppers live busy lives and often can’t or simply don’t want to wait around for their package to arrive. Our solution to this problem was to develop an extensive network of free and secure, drop-off and collection points. With over 1,000 POPShop retail outlets nationwide, shoppers can pick up their package at a nearby location, and at time that best suits them – including weekends and after-hours.”
“In continuing to offer more flexibility to our customers, CP is working to implement new services this year to improve the delivery process for our online retailer customers and their shoppers. These new technologies will provide consumers with greater visibility over the parcel delivery journey and streamline the overall customer experience.”
 

Not at work: 29% of employers don't allow deliveries to work

New research indicates that 50 per cent of employees get their online shopping delivered to their workplaces, despite 29 per cent of employers disapproving of this practice.
The results come from an independent survey of 1013 Australian adults, commissioned by parcel delivery service CouriersPlease (CP), which delivered nearly 18 million parcels Australia-wide and internationally in 2017 alone.

  • 37% of employees get their online shopping delivered to work at least 1-2 times a month.
  • An additional 13% receive their parcels at work at least 3 times a month.
  • 62% of those in their 30s receive their parcels at work – more than any other age group.

The survey reveals that 37 per cent of employees receive their shopping at work 1-2 times a month, and 13 per cent admitted it was at least three times a month. Employees in their 30s receive their online shopping at work more than any other age group: two-thirds (62%) admitted they have at least 1-2 parcels delivered at work every month. Employees over 60 may prefer to shop in-store, with 68 per cent saying they receive no personal shopping parcels at work.
Despite the prevalence of the practice, 29 per cent of employees admitted that their employers do not allow personal parcel deliveries at work. Nearly all (90%) employees understood their employer’s policies.
When asked if their employer policy on shopping deliveries was to be enforced, 57 per cent of employees said they would opt to have the parcel delivered at home without a signature, 56 per cent would collect from a post office or depot, 23 per cent would organise a parcel locker and 21 per cent a parcel collection shop (such as a newsagent, petrol station or convenience store) as their delivery preference.
CEO of CP Mark McGinley said: “With the latest statistics showing Australians spent $24 billion online in the 12 months to November 2017, and with online retail sales increasing by 4.7 per cent in November last year – the highest monthly growth rate since 2014 – it’s clear that online shopping is a fact of life for the majority of Australians. While most workplaces recognise this, there are still numerous workplaces that need to adapt to the pervasiveness of online shopping in Australia.
“The retail industry is reliant on smooth parcel delivery options to continue accommodating growing customer demand for online goods. Further research conducted by CP last year reveals four in five (82%) online retailers think that offering more flexible parcel delivery or pick-up options to online customers encourages them to purchase more online.”
 
 

New sorting technology for NZ Post

Siemens Postal, Parcel & Airport Logistics (SPPAL) has equipped New Zealand’s largest mail sorting centres with new Open Mail Handling Systems (OMSs) for flats sorting.
The new OMSs at New Zealand Post’s Auckland and Christchurch facilities can process up to 25,000 magazines, flats, small parcels, letters and postcards per hour.
“The wide range of mail types it can handle combined with its fast sequencing and sorting processes are what makes the Siemens technology especially impressive.” SPPAL said in a statement. “Whereas open or plastic-wrapped magazines previously had to be separately routed to manual sorting, for example, the new system is able to handle these items automatically.”
Vanessa Ellis, General Manager – Network Transformation, New Zealand Post noted that the company is very satisfied with the systems, and the implementation of the project.
“Siemens’ high-performance technology enables us to process a very large range of mail types and formats processed in New Zealand, significantly enhancing our efficiency,” she said.
“The systems are connected to statistics software that allows us to monitor system capacity utilisation, providing a constant overview that lets us respond rapidly to changes.”
Michael Reichle, CEO, Siemens Postal, Parcel & Airport Logistics, added: “We’re delighted to have had the opportunity to deliver our OMSs to New Zealand Post, a system proven worldwide that meets our customer’s high requirements in terms of efficiency, flexibility, ergonomics and customised solutions. The OMS is capable of processing a broader range of mail types and formats than any other sorting system on the market.”
New Zealand Post’s previously existing sorting machines will also be integrated into the overall system.

Amazon trialling own delivery service

E-commerce company Amazon is reportedly trialling its own delivery service, news site TechRadar reports.
According to news company the Wall Street Journal, Amazon’s new service encompasses pick-up of packages from businesses sell on its site through its Fulfilment by Amazon (FBA) service, and delivery to customers, taking over the task usually performed by dedicated delivery companies such as United Parcel Service (UPS) and FedEx.
Although there have been no official reports from the company itself, the Wall Street Journal reports that the pilot scheme has already been launched in London, and soon will head to Los Angeles and other US cities.

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