Unprecedented Peaks
In the fast-paced realm of global logistics and e-commerce, the role of international postal services has never been more crucial. Post & Parcel speaks with Eduardo Herrera, International Director of Correos y Telégrafos S.A., to gain insights into the dynamic landscape of cross-border logistics, Correos’ unexpected peak season performance and Spain’s potential as a strategic player in international logistics.
Can you tell me about your role?
As the International Director of Correos I take care of all business to do with imports and exports and I’m responsible for both the sales and the operations. I look after customers across mainland Spain and the Canary Islands.
How has peak gone for Correos?
Peak has gone better than we expected and higher than our client’s expectations. We have been able to manage these unexpected volumes and have taken advantage of our capacity. And, better than that, we have been able to do it whilst retaining our standard of service. For our main clients we create a commitment to ensure that we can process and deliver the volume they forecast. That can be up to two or 3 times their regular volume during standard season. This helps us to prepare our network to manage the volume, and avoid any potential backlog.
Why did you expect peak volumes to be lower?
All our customers have been talking about smaller volumes – even the biggest global companies expected peak to be smaller than it has been. And even now, in January, we are managing big volumes, potentially because of New Year sales and returns. For us peak has been brilliant.
Volumes have reached record levels, with international business accounting for the majority of the total volume.
When you say record levels, even compared to during the pandemic?
Even though the peak in 2021 was huge, we have surpassed these levels. I would say the biggest difference in 2021 was that the volumes were more stable – there were more days or weeks at high levels.
What key projects are you working on?
Over the next two years one of my key priorities (and also challenges), is to make Correos more international so we can have a bigger and better role in the international market.
How do you plan to do this?
The next challenge for cross border e-commerce is to be able to link the international business with the domestic performance. We need to develop our technology – our IT systems – to help us with this.
We also want delivery to be more of an interactive experience to ensure an even greater degree of success. We have a service called “Correos Modify” where the client/consignee can adjust the delivery time, address and contact. This tool helps us to guarantee a more efficient delivery performance.
Will you use AI?
Artificial Intelligence is very relevant for our systems. We are developing a TMS (Transportation Management System) for the Group using AI. The idea is to use it to help us be more efficient in our daily work. We will also use AI to help our sustainability goals as it can help us to avoid unnecessary kilometres and improve our delivery timings.
How is AI useful for the sector in general?
I think that as a sector, we should admit that we emit emissions. Transportation is not clean. However there are things that we can do to address this challenge. We can face it in three ways – one is emissions reduction, trying to use electrical fleet, try to be smarter with our delivery methods, using AI. Secondly we can use it to help us become more conscious about our packaging waste.
Correos is aligned with United Nations development goals, and sustainable management.
For Correos, as a public company, commitments towards society and sustainability are a must.
As a result we are investing a lot in our facilities, trying to use renewable energy as much as we can, so the combination of the three points can help us to be more sustainable.
I think that it is going to be very complicated to reach Net Zero emissions by 2030.
What are the key challenges to sector-wide sustainability?
For public companies like Correos, we are compelled to invest in sustainability because of our commitment to the government. Therefore, all investments needed to develop sustainability initiatives should be converted into profitability terms. This is quite complicated because the market is not prepared to pay for more sustainable delivery.
So for example if we offer a green product that is sustainable but customers have to pay more for it they might want to invest in it from an ethical standpoint , but essentially they will look for something which is cheaper.
So it is a sad reality and one which all of us in the market – operators, clients, retailers, and consolidators – are very concerned about.
The market holds the key to how sustainable the sector can be.
What other challenges do you anticipate for 2024?
A key challenge for Correos is to keep a degree of competitiveness in a very unstable market. I’m referring to the difficulties in transportation and costs increasing as a result. It has been a never-ending tale of disruption – we have to avoid flying over Russia and now we have had to divert routes around Africa to avoid problems in the Red Sea. The price of the fuel has increased, the costs have increased but the market hasn’t. So for us the big challenge is to remain competitive in the market and be able to balance all the risky factors at the same time.
How is it possible to mitigate all of these ongoing challenges?
For Correos the only way to be profitable is to be more efficient. Correos, as the designated postal operator is forced to cover and deliver every corner in Spain, independently of profitability. So it is important to be as efficient as possible in this role. This is an area we are improving a lot. We have brand new facilities for our international business which are already enabling us to easily handle unexpected volumes.
In 2023, Correos has launched a new facility for its international operations. It is located at Madrid Airport, and has a processing capacity of 300.000 parcels per day. Customs clearance is now handled right there too.
Correos is the host sponsor for WMX Europe this June – why is now a good time to hold the event in Spain?
I think now is the time to present Spain’s potential as a major player in international logistics.
E-commerce turnover in Spain has increased by 25% year-on-year in 2023 to reach 72.000 million euros. Our strategic geographical location also offers us a unique advantage, serving as a gateway not only to Europe but also to South America, given our close proximity to these markets. We have a great delivery infrastructure and finally, we offer a lot of potential for retailers. If you look at the number of transactions in the first quarter of 2023, more than 363 million transactions were recorded, 16.1% more than in 2022.
What could the sector learn from Correos?
One thing that Correos does really well, that we could export to other countries, is Correos Market.
Correos Market is a digital marketplace, our own e-commerce platform which aims to promote local products and offer small businesses a digital channel through which they can sell and deliver products outside of Spain. It is a very simple concept to copy and importantly it is profitable for all sides. Correos Market is helping many small businesses to grow and for us the marketplace helps us increase our volumes. And every time Correos increase our volumes, we have the chance to improve efficiency, costs and opportunities.
Currently, Correos Market already has 1,952 sellers from all over Spain who offer, through seven categories (food, drinks, crafts, fashion, health and beauty, home and technology), more than 32,000 references of quality products from companies.
How important is it for you to support small businesses?
Big businesses have their own departments to do international business so they don’t need the marketplace but for it is important for us to support small businesses because of our government profile. Our business is intertwined with social responsibility.
What are you most looking forward to at WMX important Europe?
I think that events like WMX Europe are very important because you have the chance to hear many ideas and it is amazing when you hear a country or an operator who has done something beautiful and inspiring. The event is a place to share experiences, user knowledge, contacts and sometimes you can end up working together.
I’m looking forward to WMX Europe as it is a really good opportunity to promote our country and show delegates that Correos has a very ambitious plan to be a much bigger player in the international market.
About Eduardo
Eduardo Herrera joined Grupo Correos as Chief Executive Officer of Correos Express S.M.A on July 2020, before becoming Group Chief Operating Officer of Correos y Telégrafos on February 2021 and member of the Executive Committee. Currently, he is in charge and leading the International Business.
He has 30 years of diverse leadership experience in different industries, such as security, technology and including more than 20 years’ experience as a senior executive in logistics and parcels industry.
Eduardo joined Grupo Correos for the first time for a period of 5 years from 2005 to 2010 as CFO of Correos Express before taking the position of Correos Express’ CEO and COO of Correos.
Eduardo Herrera holds a bachelor’s degree in Economics and Business Administration from Universidad Autónoma de Madrid (1992) and a postgraduate degree in Accounting and Finance from Universidad de Deusto.
Eduardo will be speaking at WMX Americas in Miami this month [February 2024]. For more information on the event see: https://www.wmxamericas.com/
Find out about WMX Europe, sponsored by Correos, and held between 18 – 20 June 2024 at Hotel Puerta America, Madrid, Spain: https://www.wmxeurope.com/
