End-to-end Delivery: Parcels

In addition to the delivery of “small packets” along with our post, we take delivery of many of our internet purchases and all larger items via one of many national and international delivery services. This has led to an increasing number of ridiculously inefficient courier deliveries to our residential neighbourhoods.

This section discusses:

Existing Provision

What

Here we are considering not only the existing “small packet” category that is often carried along with the mail but also anything that is delivered by a courier or delivery service. This can range from a hefty document to an item on a pallet. The vast majority of items however are relatively small and weight not more than perhaps 10kg.

How

Delivery vehicles range from ordinary cars (as used by some “home” delivery networks) through, the ubiquitous “white van” (typically a 3.5 tonne model) to lorries - often with a tail-lift for the heavier items. Most deliveries occur during the working day (rarely at weekends) and almost all require a signature though some will leave goods in the porch or with a neighbour.

If no-one is home when the delivery arrives, a card is normally completed and pushed through the letterbox asking the owner to arrange redelivery or to collect from the depot which can be tens of miles away. Not only does the intended recipient then have to spend time and fuel getting to the depot, they typically cannot do so until the van carrying their parcel has returned from its round and been unloaded. This completely negates the intended benefit of paying (often significantly more) for a next day delivery.

If you’ve ever looked inside the back of one of these delivery vans, or witnessed a driver trying to unearth your parcel from beneath a mound of others, you will understand why items need so much packaging. It is not unusual for goods to be damaged in these vans or at the depots. The standard of outer packaging varies hugely. When mixed with several hundred other items in the cavernous back of a van and thrown around country roads for a few days, as can often happen when a redelivery is needed, it’s a wonder as much comes out of the vans in one piece as does.

Volume and Frequency

As we shop online more, so more and more goods are sent to us rather than taken home from the shops with us. This is leading to rapid growth of delivery firms and an increasing number of interruptions per day for those of us who (like me) work from home. It is not unusual for me to have to come to the door four times in a single day to sign for goods that have been delivered by four different deliver firms.  This is becoming a significant annoyance – and that’s before I calculate how much diesel they have spent coming from their depots anything up to twenty miles away. (Believe me – I know where the depots are as I’ve had to go and collect items from them on more than one occasion).

Financial Model

Delivery costs are an unwelcome but, reluctantly, accepted part of online shopping. They do deter users from placing small orders – for which the £3 or more minimum delivery charge represents a significant premium on the price of the item and often wipes out the cost benefit that made us look online in the first place.

From the widespread use of largely empty boxes for shipping small items, one can infer that space is not at a premium in these delivery vans as the shipping charges are determined by weight rather than volume of the item.

As the vast majority of deliveries at to residents from large businesses, it is these volume shippers that the carriers gear their pricing towards with contracts giving hugely reduced prices in return for guaranteed volumes of deliveries. Home workers and small businesses who only occasionally need to send a package via this means therefore find it very expensive. An element of this is obviously the need for a driver to divert to the residence or business premises to collect the (often single) item to be delivered.

Another problem for local businesses is that rates tend to mirror the “one price anywhere” (at least within the national boundaries) of the local mail service. Long distance deliveries are therefore being subsidised by more local ones.

Without any form of discount for short-haul deliveries, say within the catchment area of many local businesses, this makes these services completely unaffordable. Hence local retailers and businessmen often make their own deliveries within their area. Every florist has at least one van out on the road for example. These companies who have no commercially viable option but to do deliveries themselves contribute to the ever growing number of vans criss-crossing our local communities day in, day out. This also makes it harder for new businesses to start.

If someone starts up a business on their own in any venture that requires their personal skill or expertise to perform the service or make the goods they sell, but also needs to deliver or collect items they are at a serious disadvantage to the established competitors. They typically can’t afford to hire a driver and until volumes grow, will have no alternative but to burn valuable hours, not to mention expensive fuel running half-way across their “patch” to make a single delivery.  The established competitor not only has drivers to let his skilled employees concentrate on the more valuable, revenue earning side of the business, the will also be much more efficient and hence cost effective in their deliveries as they will make several drop-offs on each journey compared with the newcomer’s one.

The alternative to collecting and delivering is to have a shop or office where customers come to collect and/or deliver goods. Take, for example, a jewellery repair business. A highly skilled craftsman will have to incur the costs of a high street presence and then travel to and from there so that he can accept and return items there. If a local, cost effective and secure delivery service was available, he could work from home, saving significant sums and reaching break-even at a much lower level of business.

Providers

The explosion of online shopping since the turn of the century has seen a huge number of carriers appear. I regularly receive deliveries from Parcel Force (the Royal Mail offshoot), UPS, TNT, DHL, Home Delivery Network, BusinessPost and several others. I’m sure if I went and sat by the main road I would see all of these and more passing through our small village at least once every day. This cannot make sense in the long term.

Trends

The rise of home deliveries is well documented - and already discussed in passing above. This has led to a ridiculous number of different companies covering any given area. It has also forced those supplying such goods to reduce costs by automating their order fulfilment as we see, for example, with the huge Amazon dispatch centres.

As the rise in internet shopping flattens off, however, as it must do when it approaches saturation, competition will become increasingly cut-throat for the available business. Only by being cost effective for lower value goods will the market continue to expand. Rising fuel and labour prices will drive margins down and only those with the largest customer bases and hence most numerous and efficient delivery networks will survive. The industry will have to consolidate and will probably end up having four or five large carriers with global delivery networks. Some of these may swallow up national mail services, allowing further economies of scale – but acquiring the poison-pill of universal delivery obligations.

Many types of “bricks and mortar” businesses are having their revenues squeezed by online businesses and their margins hit by increasing travel and delivery costs.  This is particularly hard on small firms who cannot compete with the online presence of their larger, national or global competitors.

Another recent trend has been the increasing use of standardised cardboard boxes – which seems to manifest itself in the delivery of ever larger boxes containing ninety percent air and a small item strapped to the bottom. This not only means that more plastic wrapping is needed to stop the lonely contents rattling about, it also results in disproportionate amounts of cardboard being used to ship small items.

With Localnet

What

As mentioned under the discussion of the postal service, the boundary between “post” and “parcel” delivery is somewhat blurred in localnet. Rather than the 2kg limit or similar that separates these in the current scheme of things, a more practical division is according to how they can be delivered in localnet.

The service discussed here is therefore the delivery of “small packets” and “parcels”. The former are expected to represent 80% or more of the deliveries by number, if not by weight or value.

How

As intimated above, small packets are delivered to and collected from residential properties in  OmniBoxes. Such deliveries are only made on the early morning round if specially requested. There are no collections on the early morning round as the space in the vans is needed for commuters but collections are made on all subsequent rounds.

Anyone sending items via a parcel delivery service today is well acquainted with cardboard boxes, packing materials, parcel tape and long complicated forms. Although these are still needed for goods going on to those companies’ networks, any delivery going within the Localnet area needs none of this. The  OmniBox is much more robust than any cardboard box; the sliding dividers within it hold items firmly up one end or corner of the box when needed; the lid clicks shut and the routing is done with a couple of clicks online. This could save a significant amount of time and materials.

There is no need for the resident to be present for either delivery or collection of small packets. Signatures are not collected as the evidence of delivery is from the DeliveryPoint noting the arrival of a specific container. For larger parcels, which will not be delivered via the delivery hatch, customers will be able to choose which of the subsequent delivery rounds their parcel is on. When combined with the system's ability to show the recipient the exact location of each vehicle, the customer only need be present at the house for a short period.

Volume and Frequency

The number of items delivered to residents will not be directly affected or reduced by the Localnet service. However, all deliveries that would have been made by the existing delivery firms must be delivered to the LocalHub for the final leg to made using the delivery van thus consolidating all of the previously separate trips into one, much more efficient one.  These same vans can collect deliveries that residents have sent for onward delivery to destinations outside the Localnet area.

Deliveries will become much more predictable and significantly more efficient. There is also scope for reduced cost service within the local area. This, combined with deliveries and collection opportunities at least once and typically twice daily, should encourage a lot more residents to use it to send items to each other and to and from local businesses. Home workers, in particular, can be fed a supply of raw materials on which to work and can send finished goods on. Small production lines can even be formed with each worker passing goods on to the next in the chain.

Financial Model

Deliveries out of the Localnet area will still traverse an existing carrier’s network and must pay the appropriate rates. However, these rates should be better for a resident of a Localnet area than they are today for a single pickup – or even for small businesses. The courier has a single pick-up and DeliveryPoint for several thousand addresses (residential and small business) so does not incur the per-collection overhead they would today. Each LocalHub should, in theory, be able to negotiate a contract with a delivery firm with rates that are comparable to those they would qualify for if the LocalHub was an online retailer needing at least several hundred of shipments a week. This can only be done with one carrier, however, but as most residents will have little or no preference for a particular carrier, they can be offered these rates with the contracted carrier. Should they wish to specify an alternative carrier, they will get much worse rates.

The long haul firms no longer incur the cost of covering the area with one or more of their delivery vans and staff. Yet this first or, more often, “last mile” element of the delivery service has already been charged to the sender. Hence if Localnet is to make these deliveries and collections on their behalf, saving them labour, fuel and vehicle costs, the courier firm should pay Localnet accordingly. This may be a fixed price per item or, more likely, based on weight or a combination of the two. The total weight is an attractive option as it is easily handled by simply weighing the cage or pallet of goods as it is loaded onto or removed from the delivery firm’s truck at the LocalHub.

If costs can be kept very low for deliveries within the local area – as they should be – there is much less need to “just pop something over to so-and-so”. The time and fuel saved can be better spent in many cases. A significant premium will be charged for larger items that require several container slots to be left empty to accommodate them – and these may be slower to reach their destination. If the van heading out on a delivery round is completely full of containers and has no room for the item it will probably have to wait for a later one.

As every item delivered efficiently using the electric Localnet van is potentially one more journey saved for someone, delivery within the Localnet area should be priced, at most, on a cost-plus basis – and preferably even subsidised. Doing so, rather than sticking with the much higher rate needed to allow a flat rate national service, will open up whole new flows of goods and enable many more to work part-time and from home. By default, more than one item may be consolidated into a single container to save space. Should the sender wish to avoid this for any reason, such as privacy, security or for extremely fragile items, a premium will be charged. The box is then kept sealed between collection and delivery.

There is even an argument for delivery within the same route to be free. Half of all such intra-route collections involve nothing more than a few minutes on the delivery van before being dropped off. (The other half are in the opposite direction and the destination property will not be visited again until the next round). This would have a huge impact on how we share and reuse items locally within our communities. If it was zero cost and negligible effort to send something to someone else who can make better use of it than we would we’d all be more inclined to pass on hardly used school rugby shirts and the like to our neighbours. 

Providers

The existing delivery firms will no longer require the huge fleet of small vans and army of drivers that they currently employ. These individuals should be employed, instead, by localnet and work within a much smaller geographical area as part of a permanent team. The work should be much more varied and rewarding - both from the perspective of potential career paths and in terms of social interactions with their colleagues and customers.

The backbone networks of container lorries, automated sorting offices, freight trains and cargo planes should be largely unaffected. In fact, the volumes carried here should increase as the more cost effective “last mile” allows the cost to the consumer to come down and hence makes shipping more affordable.

Consolidation within this industry is inevitable. The organisations most likely to go the wall with the introduction of localnet are those using owner-drivers for low cost delivery networks. Even these players would be unable to compete with lower overheads of localnet where the delivery infrastructure, the time and fuel are shared across many other services. So it is actually a blessing in disguise that in a localnet area no other residential delivery services would be permitted.

Other carriers could migrate to specialist niches - such as the delivery of heavier, bulkier loads. Some could focus on the delivery of specific classes of goods - such as those that are better brought in bulk to LocalHubs and distributed in reusable packaging as part of a localnet grocery service.

Evolution

In the early years of adoption, we will see the volumes and diversity of goods sent within the Localnet regions grow as people discover more and more things they can share with or sell to others and find more and more ways to have goods come to them for repair, for valuation, to be restored, painted and so on. A low cost, low hassle, secure goods delivery service is a huge benefit to many – especially the elderly or disabled and those without transport.

As the Localnet service expands geographically, so the proportion of items that can be set in its containers without additional outer packaging and packing materials increases. Ultimately, the long distance carriers should adopt the Localnet containers themselves and transfer goods in these over their networks. The exception to this, for the foreseeable future, would be international deliveries by air. Here the weight of the container and the inefficient use of space make them inappropriate for loading onto planes.

Also, as Localnet covers more and more of the population, so manufacturers will start to modify their product dimensions and shapes to suit the service. The impact on small items may be no more than a slight adjustment to a bend radius so they fit in the box more neatly or made taller and thinner so they take up less room in the box. On the other hand, items that are just taller than the inside of the box may be made shorter and stouter so as to fit upright in the box.

Still larger and more awkward items may be redesigned to fit within the dimensions of the box or even, to integrate the necessary features of the box within their own construction. A good example of this might be a small electric generator, the sort used to power a bouncy castle fan in the middle of a field. As long as these are made with the same dimensions as a Localnet container; have the same attachment recesses and protrusions and contain a compatible identification chip they can be collected, delivered and routed around the network efficiently just as if they were a pre-filled container. The surrounding frame may even make them easier to handle once they reach their destination. Although the frame adds a little to the cost of the item, the ability to ship them to and fro more cheaply and without packaging makes them much more attractive to hire for short periods.  Goods that this would work well for include:

 

Comparison

The table below assesses the impact of localnet on this service on a scale of -5 to +5 (details here)

  Existing services As part of localnet Score
Scope Small packet to pallet. Small packet to parcel. -1
Frequency Residential deliveries rarely more than once a day. Saturday usually more expensive and Sunday often not available. Few do same day service. At least two delivery options a day, seven days a week. Same day pickup and delivery within localnet area.

 
Security Items individually tracked and signed for. Short-term contract drivers a concern. Items tracked to or from DeliveryPoint. Staff known and accountable. 0
Convenience

Robust packaging needed, complex forms and arranging collection. Have to stay in for deliveries. These are rarely accurately scheduled.

Ship in Localnet area without packaging or forms. No need to arrange collection. Unattended delivery.

 +4
Cost

Expensive for small businesses and residents to send goods. Delivery charge is a prohibitive for small volumes of low cost items.

Improved rates for sending long distance. Very low or zero cost of sending or receiving in Localnet area.

 +4
Quality Far from perfect. Rough handling and packing of vans. Small packets travel in robust, waterproof containers, which are automatically routed. Larger parcels travel in OmniPods that are much smaller and less densely packed than existing vans. +1
Carbon Footprint Many delivery vans, usually diesel 3.5 tonne or more. Long routes, sparse stops. Electric vans, delivered with other items so sharing transport overheads. +3
Time

Several minutes to pack securely, arrange collection. Potentially hours wasted waiting in for collection or delivery.

 Very simple to send. No need to wait in at all for small packet deliveries. Choice of round and visibility of van location reduces wait time to minutes for larger items. Delivered with other items so fewer interruptions per day. +2
Resources Used Outer packaging, packing, securing tape. None in most cases for local delivery of small packets. +2
Reuse & Recycling No special effort made to recycle packaging. Much less packaging to recycle but any there is goes straight in a PaperBox at the DeliveryPoint as the item is unpacked. +2
Landfill Waste Polystyrene packing material. Less or no plastics needed for local deliveries. +1
Other Differentiators

Delivery drivers often new to route and now it poorly if at all.
Not all drivers trustworthy.

At least several diesel vans traverse each street most days.

Delivery van crews know route intimately.
Two man crews of local residents more careful with local knowledge.

Electric vehicle three times a day.		 +2

Services