CEP industry trends: Royal Mail's drones, FedEx's EVs and more
By FarEye | October 13, 2022
The pandemic-led shift in consumer behavior left an unprepared courier, express and parcel (CEP) industry battling to handle rising shipment volumes. Online shoppers wanted fast, flexible and free deliveries and they continue to actively seek a seamless delivery experience.
Shackled by legacy business practices mostly used for managing mails and with technology as their Achilles heel, CEP companies struggled to meet consumer expectations even as demand for their services skyrocketed.
Two years down the line, the CEP industry is in the throes of transformation. Companies worldwide are turning towards new technologies to improve their processes while making their businesses more customer-centric, competitive, and environmentally friendly in a fast-growing market. At stake is a slice of the global CEP market that experts predict will touch US$ 519.6 billion by 2027.
Harnessing AI and ML for Efficiency
Some of the top CEP companies are pouring money into machine learning (ML) and artificial intelligence (AI) to automate processes, add visibility to their supply chains and make them more cost-efficient. With the help of Google, United Parcel Services (UPS) analyzes RFID data and uses it to plan the most efficient routes for more than 25 million packages it delivers globally each day.
FedEx Dataworks, an organization embedded within the courier giant FedEx, harnesses the power of data science and ML to improve supply chain visibility. Dataworks uses AI to predict shipping times and accurate delivery dates. Gartner predicts that by 2025 more than 80% of new supply chain applications will use artificial intelligence and data science.
Automation via Advanced Robotics
Intelligent computer vision, an offshoot of AI, helps CEP companies automate repetitive tasks and handle massive shipments with ease. Royal Mail recently opened Super Hub, replete with the latest scanning, sorting, and tracking technology. The hub is set to process close to 800,000 parcels per day. According to Royal Mail’s CEO, Simon Thompson, the Super Hub is a big step towards 90% parcel automation by 2023.
Autonomous Mobile Robots (AMRs) are managing FedEx Express’ warehouse in Guangzhou, China. Reports claim that the robots can lift packages up to 10 kilograms and include a barcode reader that can scan packages and sort them according to destinations. Postal companies like Swiss Post have also benefited from AMRs, upping their parcel handling capacity to 40,000 parcels a day. Automation in the CEP industry is not restricted to warehouses and sorting centers. InPost, a parcel locker technology company, saw its profits rise by 67% thanks to investments made in deploying automated parcel machines (APMs). The company has so far installed 2.6 million lockers across Europe and the UK.Automation in the CEP industry is not restricted to warehouses and sorting centers.
Flying High with Drone Tech
CEP companies are also embracing drone technology to help deliver packages quickly and efficiently across multiple locations. UK's Royal Mail recently announced its plan to open 50 new postal drone routes in the next three years. The UK-based post and parcel service is targeting the use of close to 200 drones in the coming years.
Gartner predicts that in 2026, more than one million drones will be carrying out retail deliveries, up from 20,000 today. The report adds that when autonomous drones deliver parcels, their operational costs are at least 70% lower than a van delivery.
Pivoting to a Sustainable Future
The World Economic Forum predicts that by 2030 the growth of e-commerce alone will result in 36% more delivery vehicles, generating an additional 32% of carbon emissions. CEP companies are actively looking to reduce their carbon emissions and become more sustainable. DHL Express recently introduced electric vehicles (EVs) to its fleet in Singapore. This initiative is part of Deutsche Post DHL Group's global target of running 60% of its vehicles electrically by 2030, which will strengthen its portfolio dedicated to EV logistics as well as the increased pace of decarbonization.
FedEx partnered with General Motors subsidiary, BrightDrop, to electrify its fleet and cut down its carbon footprint. A Reuters report says that 150 BrightDrop zero-emissions delivery trucks will roll on Los Angeles streets and highways as FedEx transitions from electric vehicle testing to adoption. FedEx is focused on its goal of making 100% of its pickup and delivery fleet vehicle purchases electric by 2030.
In March this year, United States Postal Service (USPS) placed its first order of 50,000 vehicles – a minimum of which will be for 10,019 battery electric vehicles (BEVs). According to a USPS press release, the order is part of USPS's Next Generation Delivery Vehicle (NGDV) program, and offers significant benefits through the introduction of safer and more environmentally-friendly vehicles. The USPS processes and delivers nearly 128.9 billion pieces of mail annually and it has identified over 9000+ delivery routes for using electric vehicles.
A 2021 Accenture report calls out four clear strategies that post and parcel companies can take to stay in business. They can leverage the retail networks and digital platforms and become a central point between consumers and businesses or use new delivery models to offer better urban delivery services. A 2021 Accenture report calls out four clear strategies that post and parcel companies can take to stay in business. They can leverage the retail networks and digital platforms and become a central point between consumers and businesses or use new delivery models to offer better urban delivery services.
Another method for growth is to become a one-stop shop for e-commerce delivery, fulfillment, and payments between retailers and consumers or expanding geographically and focusing on cross-border markets.
The CEP industry’s future is being reshaped by new-age technologies like AI, ML, robotics, big data analytics, cloud computing, and predictive analytics. Investments in tech are going to be a game changer for the industry.
The e-commerce realities have forced companies to take a hard look at their old and redundant ways of doing business. The companies that prioritize digital transformation and strategically use modern technologies will emerge as frontrunners in the segment.