UK Courier Market Outlook
Here at Ebit we work with many clients on projects to improve their courier services to clients and deliver value across this essential area. Whilst there are many factors that drive a successful project, the challenges experienced within the sector itself have a major impact on pricing and services. We sat down with our COO, James Platt, to review some of the factors that may impact on the market in the near future
Hi James, what are the major factors that will impact the UK courier market and pricing for our clients in the short and medium term?
In the UK high interest rates continue to have a knock on effect, whether looking to finance investments (vehicles, improvements and capex) or . There has been a recent small cut and there are several organisations predicting further cuts over the next 12 months but these will not be significant enough, in our view, to ease the cost of living crisis experienced by many consumers and may further impact with higher property prices. The National Living Wage has already risen this year to counter the high inflation and interest rates seen over the previous years. There are predictions that this will again rise next year (April) by between 3-5% to keep it in line with increases in goods and services. This again adds to cost pressure for manufacturers, service suppliers and labour intensive business as margins for many are already reduced and increases may need to be passed on to consumers
The ongoing push to decarbonisation continues to add demand for businesses to conform to sustainable standards, investing in non-fossil fuel solutions and renewable technologies and infrastructure. Whilst the target for Net Zero is longer term (2050) there remains pressure on businesses to implement this sooner by consumers. I believe there remains an expectation that ongoing investment will be needed to maintain and improve on this standard. This may take many forms including the use of alternative fuels (rather than just electrification of fleets). There could also be a review of packaging solutions, in which goods are delivered. In turn, this could lead to potentially ‘less robust’ paper based solutions, again demanding the need for innovation in the delivery network in terms of product handling, etc
Over the next few years changes in consumer demand will continue to drive the way in which the courier / delivery industry has to grow and adapt. As consumers are integrated for item purchase and delivery across social media channels, TV channels (Netflix, Disney+ etc – where in entertainment purchases might grow), as well as more on-demand in store purchases, the high street is predicted to move to a ‘less physically stocked’ more digitally driven experience with fulfilment of goods purchased expected to be 1-2 day maximum (changing where physical goods are stocked for delivery adding further demand onto delivery businesses networks). This will also include the growing presence of ‘personalisation’ of goods purchased – this will require further integration of courier services with service providers with potential for ‘non-personalised’ stock held closer to end consumers.
Changing demographics may also play a significant role in future developments, with an aging populations around the world. This may also lead to new challenges and solutions, with couriers adapting technology and ensuring ease of use will also be key when choosing a delivery partner as older generations become more tech-savvy but may demand a different type of delivery service.
How can providers counter these challenges and what innovations might this bring to the UK courier market?
We’re currently looking at 3 projects with couriers and the breadth and depth of innovation and change within the industry is staggering. Technology will continue to be prevalent as companies look to further imbed smart AI technologies in all areas of their operation From smarter route optimisation and geofencing to smart delivery lockers the aim remains to significantly streamline operations. The drive to enhance and improve efficiencies, provide high levels of customer satisfaction and innovate in this competitive market is sure to deliver substantial change
General infrastructure investments will need to continue, potentially driving cost if efficiencies cannot be found. This is to account for things like increases in PUDO technology, such as the continued development of drone delivery and autonomous vehicle services to account for how consumers want to shop. This will also need to account for returns and ensuring these become easier to process, which has become a large driver for retail clients in recent years. Advanced tracking solutions are expected to become more intuitive and user-friendly, providing real-time updates with higher levels accuracy. This will not only improve operational efficiency but also help foster a sense of trust and reliability among customers.
To mitigate some of the supply chain risks, courier services are turning to big data analytics. This technology helps anticipate potential disruptions and allows companies to put alternative measures in place, leading to increased service levels and more on-time deliveries. We have already begun to see the impact of AI & ML technologies and this is expected to be further imbedded which will have a significant impact along the supply chain, again including and enhancing the visibility and customer experience.
There has been a lot of media coverage around autonomous vehicles and drone deliveries. The future may see the rise of delivery drones, robots, self-autonomous vehicles, and smart package lockers, but these technologies appear to be a bit further down the line for delivery at scale. When deployed, these technologies will aim to be faster, more efficient, and cost-effective, potentially transforming the e-commerce delivery landscape
In short, there are many, complex challenges facing the courier market over the next 2 years that could have an impact on costs and these companies are continuing to invest and innovate whilst identifying efficiency opportunities.
Here at Ebit we’re proud of the clients we work with to deliver strategic projects and implement cost savings and the successful companies who deliver to the high expectations we set for our clients. The savings and service improvements we have delivered have helped many companies add value to their bottom line, not only in the realm of courier services but across multiple direct and indirect procurement categories. Our average ROI remains 5:1 across our client engagements. If you want to find out how we can make a difference to your business start the conversation.
