Hermes UK expecting 25% increase in festive parcel volumes

UK parcel carrier Hermes is predicting a 25% increase in its parcel volumes in the run-up to Christmas, compared to last year. Much of the growth is likely to be driven by more people shopping online, with retail analysts forecasting around a 15% uptick in ecommerce sales in the UK this year, similar to last year’s growth.

Last year Leeds-based Hermes UK recorded growth in its festive parcel volumes much higher than the market average, delivering 40% more packages during November and December compared to the tail end of 2010.

During 2012, Hermes has been carrying out a “substantial investment” in its network, both in expanding customer access and operational capacity.

Customer access has been improving through the company’s online portal, myHermes, and the summer’s launch of a new network of Hermes Parcel Shops, initially with 500 outlets with expectations of 1,000 being available by the end of this year.

Operationally, the company opened new depots this summer in Essex and Kent in southern England, expanded its Bridgend facility and this autumn upgraded its national hub in Nuneaton, Warwickshire, to include new automated sorting systems to boost process capacity by 20%, or around 6,000 parcels an hour. Last month the company revealed plans to open new depots in Coventry and Carlisle in respectively the Midlands and North of England.

Jobs

Hermes has told Post&Parcel that it is now in the process of creating more than 480 temporary jobs to boost capacity during the run-up to Christmas, and is also adding 500 extra courier rounds to ramp up delivery capabilities.

The company said the new jobs would be created in a wide range of positions across the business, so the necessary people are in place to cope with the year’s busiest trading period.

It will include 350 extra warehouse and transport staff across the nationwide supply chain, and 70 more customer service advisors, who will be either based at home or in a new “mini call centre” based at the Coventry depot.

The new courier rounds will provided added scale to the existing network of around 7,500 independent couriers providing Hermes’ last mile.

The company said the extra couriers will provide local resources to handle an upturn in consumer-to-consumer business and product returns.

Hermes said it has also invested “heavily” in its mobile computing system, including purchase of handheld devices, to ensure deliveries are correct and tracking data made available for client enquiries.

Carole Woodhead, the Hermes UK CEO, said: “We have been preparing in recent months to ensure we have the infrastructure and processes in place to deliver the most successful peak trading period yet to our customers.

“This has required considerable investment and planning to ensure we are best placed to handle the predicted surge in volumes.”

With customer loyalty currently flagging within the UK parcels market, with the number of parcel shippers shopping around for another carrier doubling this year, Hermes has been among the carriers that have been successfully retaining customers and picking up some significant new contracts like John Lewis.

Constrained market

The UK has one of the most advanced ecommerce markets in the world, with the market growing by around 70% since 2008.

Some of the UK parcel carriers traditionally focused on business-to-business customers have struggled a little with the sudden deluge of this business-to-consumer demand, however, which comes with different challenges and requirements than B2B deliveries including the massive festive pressure zone in November and December.

Recently Hermes’ rivals in the parcel market have also been announcing big plans to expand their operational capacity to cope with the growth, including DPD, City Link, Royal Mail/Parcelforce. City Link executives said this week that planned new growth in operational capacity throughout the UK market is still not enough to match expected new growth in parcel volumes, which will likely mean that customers will face more price rises next year.

Yodel, the company that took over the DHL Express UK network in 2010 and has had a tough time integrating its two networks, has been publicly quiet compared to its rivals about its Christmas plans. Its service quality issues led to the loss of major customers including Mothercare, John Lewis and Debenhams in the last 12 months or so.

The company is in the process of a leadership change under new chairman Dick Stead, but is a major source of constraint within the UK parcels market at present, setting caps on volumes it will take this year that will see an 18% reduction in the number of parcels it handles.

A spokesperson for the company confirmed to Post&Parcel yesterday that Yodel will deliver a maximum of 4.25m parcels during its busiest week. Holding around a 25% market share, the company struggled to deliver 1.5m parcels a day during its peak time last year.

But the Yodel spokesman did state that the company was investing in temporary capacity to improve its services this Christmas, and had boosted its contingency plans.

“Yodel has invested heavily in contingency planning this year. In order to deliver a successful Christmas for our clients and their customers in 2012, Yodel has reduced and capped the volume of parcels that it will carry during the peak period and will deliver a maximum of 4.25m during its busiest week.

“In addition, the company has also set up four temporary service centres at Billingham, East Kilbride, Newbridge and Basildon to operate through this period as well as creating an additional 15 contingency warehouses and increased storage capacity at the busiest locations,” added Yodel.

The company said it has also lengthened the period of training for its peak workforce, and is in the process of hiring more couriers and owner-drivers to help with deliveries in the run-up to Christmas.