UK parcel deliveries decline for first time in a decade – Pitney Bowes asks is automation the answer?

New data from Pitney Bowes, a global shipping and mailing company that provides technology, logistics and financial services, has revealed that UK parcel volumes have declined for the first time in more than a decade.

This latest Parcel Shipping Index, featuring 2022 data from 13 countries, also found that coming off two years of pandemic-fuelled growth, global parcel volumes increased only 1% in 2022, impacted largely due to the lockdowns in China.

The UK shipped, received and returned 5.1 billion parcels last year, a 5% decline in volumes from 5.4 billion parcels in 2021, attributed to a drop of 7% in ecommerce sales.

Physical stores performed markedly better than online stores, and even Amazon experienced its lowest-ever annual growth rate of 5.2% in the country. This is the first time the UK has experienced a parcel volume drop since 2013.

The latest Index also shows 14 million parcels were shipped in the UK each day in 2022 or around 162 parcels per second. Per capita parcel volume for the UK declined nominally from 80 to 76 with an average of 181 parcels shipped per household during 2022.

The report highlighted that the UK parcel market is highly consolidated, with the top five carriers (Royal Mail, Hermes, Amazon Logistics, DHL, UPS) accounting for 71% of parcel shipments in the country. In GBP, parcel revenues declined by 2%, from £18.7bn to £18.3bn.

Following this news, Stephanie Cannon, SVP (operations excellence & collaborative innovation) at Pitney Bowes, provides an exclusive guest comment for DeliveryX:

Automation will move ecommerce delivery driving into the fast lane
Fleets and their supporting infrastructure are fundamental pillars of ecommerce and come with some of the highest costs incurred by the industry. With automation at the wheel, however, delivery
vehicles are becoming more efficient, sustainable, and even safer.

When you think about how automation is driving change in our industry, you probably picture the Autonomous Mobile Robots (AMRs) that have captured imaginations with their futuristic, even humanoid, aesthetic.

But while companies such as GreyOrange and Geek+ are living up to the hype, other AMRs often struggle to work at speed or simply get stuck in the busy warehouse environment. Developments in delivery, meanwhile, may not be all the rage but are equally exciting and probably readier for widespread adoption.

Driving progress in the industry
Introducing automation to the transportation process unlocks efficiencies that would otherwise be unachievable. AI-equipped vehicles such as those provided by Gatik, for instance, always map the most efficient to their destination, saving time and satisfying customers who increasingly demand immediate services. Indeed, recent research from delivery company ParcelHero has revealed that more than half (56%) of shoppers in UK now prioritise same-day delivery, up from just a third in the first year of Covid lockdowns.

Of course, delivery vehicles that always drive in the most efficient manner are conducive to meeting sustainability goals. Speeding up and slowing down at precisely the right time allows them to achieve the fuel efficiency that companies need to meet their obligations to the environment. Combine this with other technologies – such as Range Energy’s trailer electrification platform that provides delivery vehicles with 30-40% diesel savings – and logistics companies can cut both costs and carbon emissions in droves.

In these ways, automation is making transportation more efficient and more sustainable, providing ample investment appeal for ecommerce companies. It is unlikely to be long before we see the industry take up similar technologies across the pond.

Save “humans vs robots” narrative for sci-fi
Safety is understandably the elephant in the room whenever discussions of autonomous vehicles arise. Rather than posing a risk to people, however, the best uses of AI in transportation actually help human drivers.

Semiautonomous long-haul vehicles developed by Plus.AI, for instance, are ideal for taking over drivers’ duties for monotonous stretches of highway, reducing fatigue and thus the risk of accidents. This is much the same arrangement as the one on modern passenger aeroplanes, with autopilot doing most of the flying and humans on hand to perform the trickier tasks.

Seemingly seismic changes therefore need not appear so threatening. While many people are understandably concerned about the impact that the rise of AI will have on their long-term employment prospects, early evidence suggests that the experience of human workers in this industry will in fact improve as automation spreads.

AI-assisted driving, for instance, will address driver shortages not by making humans obsolete, but by making jobs more accessible. Whereas new entrants to the profession are often dissuaded by the premium placed on experience, the support from new technology will make driving jobs more suitable for people who do not necessarily have those decades in the industry. Moreover, these more appealing jobs will improve recruitment and retention for companies, contributing to a more positive working culture where resilience is built in.

We are already starting to see some of these benefits at Pitney Bowes, so the return on investment is obvious. Ecommerce companies everywhere will soon follow suit as economic strain continues.

Forecasting the future
This is a pivotal time for automation in ecommerce. In the UK, months of inflation has fomented a cost-of-living crisis and a recent hike in interest rates will likely curb consumer spending as we approach the festive season. This so-called “golden quarter” is therefore at risk of losing its sheen for online retailers.

These conditions could concentrate investment in AI in areas where companies can most easily imagine automation, namely warehouses and fulfilment centres. But with this rationalisation will come opportunities for the most innovative industry players to come to the fore. In the long term, this raising of the required standard will see investment pour into the areas offering best ROI – and transportation will be foremost among them.

Stephanie Cannon, SVP (operations excellence & collaborative innovation) at Pitney Bowes

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