Following the industry’s busiest week of the year in December 2017, data revealed that the average distance travelled by couriers was up by 20%. The UK’s delivery system has been on the rise for the past few years, especially with the rise of online shopping.
According to the Pitney Bowes Parcel Shipping Index 2017, parcel deliveries increased by 12% to 2.5 billion in 2016. With expected growth to continue in the period 2017 to 2021, a compounded annual growth rate of 10% has been predicted — meaning the market could potentially be worth a substantial £119 billion by 2021.
Here, Northgate Vehicle Hire, specialists in long term van hire, look at the contributing factors to the market’s success – whilst also touching upon the issues that could hold the industry back.
The rise of online shopping
In 2017, online fashion sales in the UK reached 16.2 billion. By 2022, this figure is expected to grow by a huge 79%. Compare this to a poll which found that 50% of retailers had experienced a drop in in-store sales and it’s clear that digital offers the greatest area of opportunity for fashion retailers – but the success mirrors across more than just the fashion industry. The majority of e-commerce websites are experiencing growth in demand, sales and delivery, which is a large contributor to the growth of the UK’s courier service too.
Dominated by Royal Mail, Hermes and Yodel, the UK parcel market was estimated to be worth nearly £10 billion in 2017. In a recent report, it was estimated that DPD averages around 1.6 million parcel deliveries per week! Parcelforce average around 70 million per annum, Yodel 135 million per annum, Hermes 190 million per annum and Royal Mail a huge 826 million parcels per annum. Some would say that the success of the parcel market is directly linked to the growth of online shopping.
With the introduction of next day delivery, same day delivery and weekend deliveries, ordering products online for delivery has never been more convenient. A wider range of delivery options to consumers has provoked an explosion in demand, making the e-commerce market more diversified. Currently, B2C deliveries make up 42% of the UK’s parcel market, and it is expected to continue to rise – at a faster pace than the B2B market.
The risk of sick days
In 2017, many self-employed couriers reported that they can be charged up to £250 per day if they take a leave of sickness. With the rising demand of quick delivery services, many couriers can deliver around 80 parcels per day – each of which are scheduled in per driver per day. But what happens when one courier driver is unexpectedly sick? Who then does their deliveries that day? According to courier companies, charging self-employed couriers covers the cost of hiring in a last-minute replacement from agencies.
Parcelforce, who deliver packages to high street giants such as Marks & Spencer, John Lewis and Hamleys, and are owned by Royal Mail, have been criticised for charging their employees for sick days. With the average self-employed courier working at Parcelforce said to earn around £200 a day for a 12-hour shift, one sick day could potentially cost them £450 – more than double a day’s earnings – if they don’t successfully find someone to cover their deliveries that day.
With the continued rise in offering next day delivery, customers expect to have their parcels the following day after placing an order. In 2014/15, 56% of all domestic deliveries were made via next day delivery. The speed of delivery has become increasingly important to consumers, meaning most major delivery companies now offer next day delivery to their customers, and a small selection even offer same day. As demand continues to grow, delivery companies are aware of the need to meet delivery expectations. This is why they require appropriate cover in situations where deliveries are at risk of running behind, and they can’t provide the service as offered.
According to Parcelforce, however, of their self-employed drivers, the contract includes a clause that stipulates that, when needed, they are responsible for supplying cover.
Amazon’s robot postmen
Big courier companies have experienced a bit of a wobble following recent news that Amazon plan to launch their own parcel delivery system. Following the news of ‘shipping with Amazon’, shares in delivery companies have tumbled. Originally launching in the USA in the coming weeks, if successful, it will become available in the UK. This will put pressure on one of the UK’s biggest courier services, and current Amazon shipping partner, Royal Mail.
Designed as a box-shaped robot, the robotic ‘postman’ can open smartlocks on doors and deliver parcels any time of the day – even while you are out of the house. In the form of small autonomous ground vehicles, the robotic postmen have a storage compartment for the parcels, which can also be refrigerated for grocery style deliveries. Furthermore, they can also deliver and collect parcels in general out of office times – between 2am and 6am, for example.
Writing in the patent application, the duo behind the AGV creation, Tye Michael Brady and Ethan Zane Evans, said: “The AGVs may be owned by individual users and/or may service a group of users in a given area (e.g. in an apartment building, neighbourhood, etc).
“The AGVs may travel out to meet a transportation vehicle, and may line up in a particular order.
“After items are received, the AGVs may travel back to deliver the items and may be equipped to open and close access barriers.”
Up until now, the parcel market has continued to see significant growth, with a high proportion of their success attributed to the rise in online shopping and an increase in desirable delivery options. However, with some companies under scrutiny for their treatment of workers, and with new delivery developments, the industry could be faced with increased pressure in the coming months and years. Is the success of e-commerce enough to keep business booming?