The parcel and postal industry is at a fascinating crossroads, according to Bernhard Bukovc, CEO of connect2posts. There is a plethora of challenges, from tariffs and trade barriers, new technologies, geopolitical tensions and supply chain issues, to changing customer demands and shifting fiscal priorities.
However, there are also unique opportunities available that are being supported by collaborative thinking. These topics were the focus of discussion during the ‘Strategic adaptation: Thriving in the new normal of logistics’ session at Parcel+Post Expo on October 21. Parcel and Postal Technology International caught up with Bernhard after the panel discussion to find out more.
What assumptions are being made about how the industry is developing, and how can those assumptions be challenged?
One is around business models – there are so many business models out there that were built on how things were done in the past. The question is, are those business models still valid? It is easy to say ‘we do things because that is how they have always been done’ and it is easy to adapt business models, but that might not be enough. If you look at competitors that are starting from scratch… they are starting with a completely different mindset. Take last-mile delivery – what role does out-of-home play and what are competitors doing? It is completely different from what the traditional operators are doing.
There are also assumptions around what the customer wants and whether operators really know what they want. Of course, operators ask their customers and there are surveys and studies, but when you look a bit deeper, things can be very different.
Looking at surveys from a couple of years ago, the focus was on next-day and same-day delivery, and that was key to the business models. Now you have competitors stepping in and saying that speed isn’t relevant – it is the cost of delivery and the move to out-of-home that is now shaping the business models.
We have a lot of C2C volumes these days and it is assumed that postal companies can do this well because they have a huge advantage, but do they? I’m not so sure. If some of the new companies stepping into the C2C market don’t find a local postal partner because they are too expensive or don’t offer the service the company wants, the company just puts a locker in place and has items delivered there, and so postal operators shouldn’t assume they are the only option.
We also have assumptions around sustainability and that everyone must be operating sustainably. Of course that is true, but sustainability only really flies when it is tied in with the right business model. For example, route optimization. By making delivery more efficient, you can reduce the number of vehicles on the road, make the routes shorter and reduce CO2 emissions – there is a business impact because you reduce costs and emissions, and it is also better for the customer because their items are delivered more quickly. Finding the right business model for sustainable solutions is important. Of course your operations should be sustainable, but do it in an intelligent way that works for your business and is really going to lead to transformation and result in adaptation of your users.
Should the industry be more collaborative to help drive the changes needed more quickly?
I think knowledge exchange is good and there is a lot more collaboration now, but there is also a lot of pressure. In the panel discussion Charles [Brewer, Pos Malaysia’s group CEO] talked about what he has learned from industry events such as UPU – what we ‘must’ and ‘need’ to do, but I want to see what has actually been done. Actions speak louder than words.
I know that Charles is transforming Pos Malaysia and doing lots of great things, but when you listen to some other CEOs of state-owned postal companies, they have not yet understood what it takes to succeed is the modern world. I think one of the reasons is they don’t have as much pressure – because they’re government owned, they don’t have the same competitive mindset.
And then you have another set of postal operators, some of which are privatized, which have the mindset that they want to play a crucial role, diversify in other areas and be a big player in the parcel sector and grab market share. Those operators are striving to compete with market entrants such as e-commerce marketplaces that deliver themselves or C2C providers with lockers, for example. Has everyone really understood the challenges and the speed of development? No. A lot of carriers are waiting too long, and it will be interesting to see where those carriers stand in the next year.
What will the next 12 months look like?
We know that if you don’t move, you fall behind. With the developments in data analytics, AI and other transformative technologies – who will do it? Who will lead the way and benefit from adopting those technologies? Those that do will benefit because they will have data transformed into decision-making, faster processes, being more profitable and so on.
In the area of robotics, it depends on where you are geographically but if you look at some of the Nordics and central Europe, for example, they have problems onboarding workforce. So, what are they going to do about it? Are they moving into the direction of robotics to address those workforce challenges? There are some postal operators who are very definitely looking into humanoids, and others that are moving their resources to China as the technology is so far advanced there. There are issues, but they only become issues if you don’t know how to address them.
Postal operators also need to be looking at whether they’re onboarding the right people. Are they recruiting visionaries that will drive technology adoption forward and make it ready for everyday use? Postal operators need to ask themselves if they have been doing their homework on future technologies such as AI, or have they just created a great chatbot? The ones that have done their homework around how AI can be used to bring efficiencies to every part of their business are the ones who will grow market share and succeed.
It is all very well having a vision for the use of AI in the next three years, but operators need to be doing these things right now because you can be sure the new entrants will be.
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