The logistics transformation of the postal industry

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The logistics transformation of the postal industry

Diversification is now a common currency in the postal industry:  mail in its diverse incarnations, including hybrid, parcel and express services as well as financial services and,  increasingly, digital communication solutions.  Over the past few years, postal organizations have started to offer value-added logistics services in response to new

  • Global connectivity and the societal impact it has on consumers shopping anywhere/anytime, and expecting quick gratification and delivery,
  • Convergence of retailer sales and distribution channels and the resulting back-end integration of operations, networks, and information
  • An explosion of consumer choices (can you cite all of Apple’s  i-products?) that are  ever increasing manufacturing and supply chain management  complexity and volatility.
Postal organizations engaging in value-added logistics services tend to follow a progressive path:
  1. Building on their core in  parcels transport and delivery, postal organizations assist retailers (small and medium ones in particular) to position themselves for online commerce.  These eCommerce platforms offer retailers and consumers a one-stop-shop experience, whereby physical inventories are brought up online,  payment processes are integrated to facilitate purchasing and fulfillment of the orders, visibility of the shipments is maintained from origin to destination, and returns are seamlessly integrated into the online purchasing process.  Some posts go as far as offering a full range of fulfillment services that include warehousing, kitting/packing, labeling, and shipment on behalf of the retailers.
  2. Banking on globalization, the fall of trade barriers, the growing purchasing power in emerging markets, and the power of brand-names, postal organizations are expanding their eCommerce offerings by promoting cross-border solutions, establishing  supra-national alliances with other postal organizations, or acquiring shipping and distribution companies in foreign markets in order to control the distribution chain. These services help brand-name retailers who may be reluctant to expand into some international markets and want to market-test their products before committing to these markets.
  3. The growth of eCommerce is generating an equivalent growth in product returns which require seamless and cost-effective processes to recover as much value as possible.  Postal organizations are providing domestic and cross-border return services  by leveraging their collection networks, but fail, so far, to offer value-added services such as upstream return management.
  4. Some postal organizations are facilitating consolidated direct entry to reduce shipping costs, provide customs clearance and  other compliance requirements (security, hazmat, etc.).  In general, however, direct entry is largely provided by freight forwarders who also offer value-added logistical support. Freight forwarders are, however, carrier agnostic and will tender the consolidated consignments to the carriers of their choice.   Opportunities exist for postal organizations to work with etailers, online shoppers, and freight forwarders in order to own a larger share of the value-added logistics process.
  5. Finally, this transformation journey includes the acquisition of third-party logistics (3PL) providers by postal organizations.  In most cases, these 3PL providers maintain their independence from the postal operators, working under their own brand/identity, operating structure and business focus.  In many instances, these acquisitions are strengthening the postal operators’ foothold in international markets as many of their acquisitions are conducted outside their national boundaries. These acquisitions enable postal organizations to integrate their distribution networks with the 3PL providers and leverage their customs-logistics services.  These include computer repairs, cold-chain management, garments logistics, and healthcare logistics.

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