Shopping Without Frontiers

Whether furniture, books or jelly babies – after a few clicks, the goods are on the way to you. But the annual increasing volume of parcels is not only putting deliverers under pressure. 

Online trade is booming. In 2017 parcel service porviders sent about 3.3 billion shipments to customers. Foto: Fotolia – Nikita Kuzmenkov

Fast, faster, fastest is the motto. Vendors are advertising daily delivery and are fueling the interest in time critical products like groceries too. Although the situation is tense already, attempts are being made to attract customers with ever new offers.

The market is constantly growing. The Federal Association for Parcel and Express Logistics reports a 6.6 percent increase in the first half of 2017. Far over 3.3 billion shipments are expected for the whole year and 4.15 billion for 2021, which would equal an increase of over 30 percent in only five years. DPD, for example, saw a lush plus of 17 percent in private parcel delivery in Germany. However, the desire to buy by click has its downside: delivery vehicles parking in the second row or blocking bus lanes and sidewalks, annoyed local residents and stressed out drivers. This is exceptionally problematic from environmental aspects, for the purchasing of these products is mainly being made by foot or by bike at the moment.

In view of the extravagant Christmas business Hermes pulled the plug, introducing upper limits for online traders for the first time. If those were exceeded, the respective deal was forgone. The enterprise had already reported local narrow passes in late summer. “Especially the last mile is becoming more and more of a bottleneck”, says Dirk Rahn, COO with Hermes Germany.

Last Mile Costs are Rising

Hermes suggests using parcel shops as pick up addresses to speed up the delivery process in busy times like on Christmas. This would also relieve delivery drivers, who are hard to find on the labor market anyway – “also because the free-delivery-mentality among customers makes it almost impossible, to make the job more financially appealing”, says Rahn. Low or non-existing delivery fees  have become self evident to customers, free return has anyhow. This lowers service providers’ margins and does by no means represent their reality. “Costs in parcel logistics, especially on the last mile have been rising disproportionately for a long time”, says Thomas Horst, sales CEO with Hermes Germany. The company has now raised prices for business clients by 4.5 percent on average on the first of March, in November and December there will be an additional peak charge per shipment. With this, investments will be made. Predominantly in salaries of delivery personnel.

Too many parcels require new concepts.. Foto: Nicole de Jong

Less Home Deliveries – Shipments Should be Picked Up

Altogether online trade in its current form progressively becomes an act of squaring the circle. Because of the increase of bottlenecks for parcel service providers, the Federal Association for Online Trade (BVOH) has demanded a reorientation of the business and a decrease in home deliveries in the meantime. Customers must  be lead to partake more in the delivery process by suppliers, says Oliver Prothmann, collective President with Funke-Mediengruppe (Funke Media Group).

Pick up points should also be considered. To improve the situation, DPD demands, that municipalities commit much more and provide designated parking areas. Industry leader DHL can even imagine cities to exclusively contract service providers via biddings. The contractor could then come up with an overall solution, bundled with possible synergy effects. When ordering groceries, shoes, and new bedlinens, customers would not be serviced by different providers on different days anymore. The Federal Association for Parcel and Express Logistics (BIEK) however apprehends this to create an “exclusive logistician”.

E-commerce is still a relatively new phenomenon, so that data on environmental consequences, effects on infrastructure and cityscape is still relatively thin, states Sven Altenburg, who is committed to the subject with economic research company Prognos. “It is certain however, that the growth of online trade will distinctly increase the number of deliveries to residential areas”, he says. Even if all vehicles drove electrically in the future, this would admittedly improve air pollution, but, on the other hand not change their size and room consumption. “The infrastructure is simply not designed for such an amount of delivery traffic”, he emphasizes.

Delivery vehicles compete for the best place on the roadside.. Foto: Matthias Rathmann

Rising Risk of Accidents in Residential Areas and City Centers

The different road users therefor get in each other’s way increasingly, competing for the limited space. According to Prognos, the results are: “a strong increase in potential for conflict related to usage competition, obstruction of traffic and risk of accidents in residential and urban areas.” And even innovative delivery concepts have their downsides, for pick up stations, as well as delivery areas and micro depots in the clients’ direct vicinity consume space alike. Space, that is consequently no longer available for private parking, trees or climbing frames for children.

It is controversial, whether private shopping trips are being reduced by online orders. “Results are still vague indeed, but according to the latest traffic studies, the number of shopping trips has not decreased”, says Altenburg. For when consumers repeatedly inform themselves in local stores first, to then – often for a lower price – purchase online, it is not registered in the statistics. Even those, who supposedly ecologically have their goods delivered to a pick up station may cause additional traffic in certain cases – namely by using their own car to pick them up. E-commerce is not only a growth propellant for the parcel business, with online trade also comes a whole flood of e-mail. E-mail volume in Germany reached an all time high in 2017, as reported by web.de and GMX.de, where half of all Germans have their favored  e-mail account. The counted number of mails rose by 145 billion compared to 2016, which equals a plus of 23 percent. Online shops after all are on second place in sending e-mail. To them, e-mail is one of the most important means of communication, according to analyses. For by e-mail, customers are continuously being informed on the status of their purchase, and additionally get offers, gift cards and news letters, individually tailored to their behavior.

 Online Trade Drives Up Energy Consumption

Therefor Prognos expert Altenburg is not quite sure about what the balance between online and stationary trade looks like in terms of total energy consumption. “There is no exact data on that topic yet, but it’s quite possible that a brightly lit hardware store performs better in that respect”, he gives consideration. In addition, everything that is delivered, has to be packaged first. More buy-clicks equal more card paper. Even if this was fully recycled after transport – it would have to be disposed of first and its production again consumes water and energy.

Even a cargo bike could be the solution. Foto: DPD

What does the future look like? Right now, one third of the customers are dissatisfied with overall delivery, according to studies made by management consultancy PwC. “One out of four customers claims having received damaged goods and one out of five faults unpunctual delivery”, they say. Big parcel services also experiment with technological innovations. But according to the PwC studies, customers still look at drones, delivery robots and especially trunk delivery with skepticism. Even pick up stations are refused by 57 percent of the respondents, with their actual use having decreased by three percent compared to 2015. After all: 61 percent of the respondents value delivery through electric cars or delivery bikes when choosing their online supplier. To them, this is even more important than fast delivery (59%).

In principle, logisticians consider the ongoing digitalization as a lifeline, but it will take years until all safety aspects and data protection issues are fully clarified. Altenburg tends to foresee a postage charge for future deliveries, which are currently free. “Thus, personnel and driving distances could be reduced”, he says. Whether shifting the last mile to private traffic is the ecologically better solution is hard to tell. “Therefor a thoroughly planned, finely woven net of pick up stations, ideally located at junctions like public transport stations would be crucial”, Altenburg believes. Thus, additional personal traffic could be minimized.