Parcel distributors’ guide to e-commerce logistics

Every second, 2,760 parcels are shipped globally. This constant flow of goods being delivered and returned is a vital part of the 24/7 marketplace, where consumers everywhere can purchase practically any item at any time from online retailers, including local niche webshops and global mega-merchants. Making this distribution happen is the Courier, Express, and Postal (CEP) industry, whose players act as the link between e-tailers and consumers, shipping billions of parcels worldwide each year.

By Bjarne D. Johansen

What is the role of Courier, Express, and Postal services in E-Commerce?

CEP services involve:

Picking up parcels and letters from senders: (r)etailers, fulfillment centres, offices, individuals, etc.
Bringing items to distribution hubs and parcel sortation centres
Sorting and preparing parcel and mail for further delivery
Distributing items to delivery centres and local depots for ‘last mile’ delivery, or delivering items directly to recipients (businesses, individuals, etc.)
Handling returns, which includes all of the above in reverse order

‘Cyber Monday’ on December 2, 2019, saw online shopping approaching or surpassing the $10 billion mark in just that one day, in the United States alone. Average worldwide retail sales are expected to keep growing above 10 % in the coming years, according to eMarketer.

The explosive growth of e-commerce has drastically changed the CEP industry in several ways:

Postal services have had to reconfigure their businesses from mostly handling traditional letter mail to cover parcel delivery as well
Some couriers, whose primary focus used to be same-day document delivery, have extended their area of business to delivering small parcels
With 48-hours delivery becoming the norm, express services are becoming more common
With more players in global e-commerce and distribution, competition is fierce, and consumers are increasingly expecting faster and cheaper – even free – delivery

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How does a distribution hub work?

At the centre of CEP operations is the distribution hub, where shipments are received, processed, and sorted for further distribution. Here are just a few of the tasks performed at distribution hubs:

Parcel picking: Unloading parcels from trucks onto the conveying system
Label reading: Parcel labels contain information about where a parcel came from, where it’s going, and how it’s going there
Data processing: When parcels are scanned, distributors capture data about the condition and location of a parcel at a given point in time. In the case of non-machinable, or unsolvable, parcels, operators need to improve the data associated with a parcel
Sortation: After being inducted into the conveying system, parcels are sorted based on destination, e.g. postal code
Vehicle loading: After sortation, parcels are moved to the right delivery vehicle

Each of these operations can be automated to varying extents. Some distribution hubs rely heavily on manual labour, while other hubs have in place what’s close to “lights out” sortation where parcels are handled completely automatically from the moment they arrive at the centre to they are loaded onto vehicles for delivery. This is called door-to-door automation.

Follow the journey of an e-commerce parcel in the graphic below. Click to enlarge – or download the graphic here.

Major e-commerce challenges for CEP providers

With practically any item you can think of being available for purchase and delivery, CEP operators need to handle a wide range of challenges at sortation centers.

1. Predicting incoming parcel flow to plan sortation operations

The rapid developments in global e-commerce make it increasingly difficult for parcel distributors to use historical data for projecting which types and sizes of parcels will arrive at the doorstep. At the same time, the emergence of more global e-tailers with different standards for how to package goods drastically changes the overall composition of items being shipped worldwide.

2. Handling irregular items

Handling shipments at distribution centres used to be somewhat simpler. To a large extent, parcels were parcels, letters were letters, and items that would fall in between the two categories, so-called “rest mail”, were occurring at a manageable frequency. Now, with more packages to process than ever before, conventional distinctions between parcel and letter are being challenged, and especially tiny parcels have distributors working at capacity limits.

3. Dealing with ‘no-read’ and unsolvable parcels

Poor data exchange between CEP operators and the emergence of home-printed labels are giving rise to processing issues. More specifically, unsolvable or no-read parcels are caused by various issues, including: 1) parcels not having a barcode or label at all, 2) the barcode is damaged or otherwise unreadable, 3) the barcode’s data structure is not compliant, or 4) the barcode does not contain data for further processing. Unsolvable parcels is a major headache as they require additional manning and facilities.

4. Accommodating for peak seasons

E-commerce shopping trends are highly seasonal, and the global emergence of shopping holidays like Black Friday, Cyber Monday, and Singles’ Day, is challenging capacity planning at parcel distribution centres. While a major business opportunity for CEP providers, without proper planning, peak seasons put operations at risk. Operators must find the balance of planning for fluctuating demand without wasting money on overcapacity.

5. Ensuring a safe and healthy work environment

With day-to-day delivery becoming the industry standard, CEP providers are under increasing pressure to distribute faster. Automation enables high-speed sortation, but for human operators to interact safely and efficiently with automated systems, they need smartly designed workplaces. Ergonomics can help optimise operations, e.g. better parcel handling, while limiting work hazards, like heavy lifting, repeated movement, and unnatural working positions.

5 things to consider for your automated sortation system

Sortation is the beating heart of modern Courier, Express and Parcel (CEP) operations. As such, choosing the right solution for automated sortation at your distribution centre is a major business decision. With potentially hundreds of possible sortation designs, it’s an acquisition that requires careful consideration in terms of both capacity, performance, and specialisation. At the same time, emerging trends and new international players in global e-commerce make it increasingly difficult to know which is the right solution now and in the long run. To get started, download our guide: “5 things to consider for your automated sortation system”.

Automate your sortation for successful e-commerce distribution

Prepare your hub for the growing opportunity of e-commerce parcel distribution with an automated sortation solution that fits your needs. By investing some time in the initial requirement specifications now, you can have a sortation system designed for your operations.

Learn more about BEUMER Group’s solutions for e-commerce