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Yodel clears backlog but is there a deeper problem?

15 December 2014

Yodel has cleared the parcel backlog it announced last week, which prompted a wave of disparaging national newspaper headlines.

Yodel said that, as planned, scheduled collections of parcels from its clients into its central sortation centres resumed in full today (Monday, December 15). Last Thursday, Yodel announced a 24-48 hour deferment on some of the parcels coming into its sort centres to allow it to process a backlog.

The company now says new parcels entering the Yodel network may still be subject to a 24-48 hour delay, but it said this was "normal” during Christmas peak operations.

Retailers have successfully upped their front-end marketing game with the shopping glut that comes with Black Friday and Cyber Monday. But it is not a huge surprise that some logistics providers have struggled to cope with this surge in online orders.

Courier ParcelHero advised internet shoppers in October to plan ahead to avoid delivery log jams "especially if they are buying with retailers known to use budget carriers who may become overstretched”.

Okay, there’s ParcelHero taking a little dig at some of its rivals. But perhaps the future of the delivery market is greater segmentation and less commoditisation. In other words, you get what you pay for. At the moment, the vast majority of internet buyers just want the thing they’ve bought (and quick) and don’t care (or know) who delivers it. Retailers must be careful not to over-promise. And if customers ‘want it yesterday’, then they have to get used to paying for it.

Another interesting observation from ParcelHero is that the US market for online sales is not growing as fast as the UK’s because "delivery prices are not as competitive”.

ParcelHero supremo Roger Sumner-Rivers said: "The true potential of eCommerce in the US is being held back by the cost of delivery."

I can’t say I agree with that. The US had its delivery hell last year, when UPS and Fed-Ex were accused of ‘failing to deliver Christmas’, after many millions of parcels were delayed. Surely the US has simply adjusted to market forces.

The danger in the UK market is that it is too competitive. If the couriers are too busy cutting each other’s throats, delivery standards will slip.

The shortage of HGV drivers has also added to the worry this Christmas, but I feel this is not the central issue.

The fulfillment function of ‘UK plc’ simply struggles to find the capacity to cope with the Christmas peak. I argued in April that price was key to online retail and that eCommerce would only slow its growth when the fulfillment function could no longer cope with the desire of e-tailers to flog huge volumes of largely low price goods at largely low cost delivery rates. Could we be seeing that capacity reach its limit this Christmas or is there a way to go?

In the meantime, logistics managers can work to improve fulfillment efficiency. In many cases this means investing heavily in automated warehousing technology. This is the route the likes of ASOS and Amazon have taken. 

You can also look at the details in your operations. Any place where a few seconds can be saved can mount up into very significant efficiency gains.

Kite Packaging managing partner Gavin Ashe said: "We have customers dispatching 100,000 books and DVDs a week. Their biggest issue is pack velocity, they want to get product through their packing benches as quickly as possible.

"We will put a packing technologist in, video the process, and look to see how we can tweak it, to change the packaging design slightly to save fractions of a second per pack, that mount up over time.”


Simon Duddy, Editor, Handling & Storage Solutions