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Supply Chains, the Flood of Parcels, and the Future Role of Mailrooms

Prelude, and the Supply Chain Strain

Now a year and a half after the pandemic struck, we are finally able to look back with 20/20 hindsight to frown upon how governments and industries reacted to the global crisis. However, if we take what we’ve learned and approach this from a constructive mindset, what could we extrapolate for the coming days, months, and years? Moreover, how will the changes in supply chains affect the way we interact with the buildings we live and work from?

According to Retail System, March 2020 experienced a 74% e-commerce increase compared to March 2019. Even if we consider the more conservative numbers highlighted by the World Economic Forum and DHL, we have a 20% and 69% increase respectively. One cannot deny that supply chains have been strained and stretched to their capacity throughout the lifetime of COVID-19.

This increase in e-commerce did not affect all supply chains in a homogenous manner; with the closure of Highstreet shops and consumer hysteria, online grocery shopping for example saw a more than proportional increase. China experienced a 400% increase in online grocery shopping, and most UK online grocers had a 2-week delivery wait period in March/April. Other categories such as furniture delivery and home care products also saw an exponential increase as the pandemic took steam.

This has all led to a new, never before seen tidal wave of deliveries. When analyzing the Parcel Tracker mailroom data, we can notice these trends rather clearly. You can clearly see that in March 2019, the delivery volumes per resident matched and even superseded those in the December 2019 Christmas period (Blue line in graph 1.) Furthermore, when comparing the 2019 period vs the 2020 period, we can observe a year-on-year increase for each month, particularly accentuated in December during festivities, showing how deeply e-commerce has become ingrained in society. DHL also saw an increase from 5.3 million deliveries to 9 million parcels delivered daily in March, on par with Christmas periods.

With every challenge, however, comes a great opportunity and the biggest players in the industry were able to capitalize on this growth. Amazon alone hired 175,000 warehouse workers in March and April. Whilst they did experience some delays in their delivery time frames, their supply chains were primarily strained on the supply side as they were running out of high demand products such as hand sanitiser. Overall, they were able to cope with the pandemic in a very effective manner, for which they were rewarded with a skyrocketing of their market cap.

 Graph 1: The data provided above considers 1500 recipients and 32,000 deliveries. Provided by Parcel Tracker mailroom management software.

Dealing with the Tide of Parcels

E-commerce has fundamentally changed the way consumers interact with the items they buy. At its core, the logistical burden has been moved from the Highstreet onto office and residential buildings. This logistical burden is particularly evident in multi-home buildings and large office blocks, where a single delivery point services hundreds if not thousands of people. In these sites, staff would accept packages from couriers—either at the reception or the mailroom—and  hold the deliveries for tenants, then giving them out when they would come to collect them. For liability reasons, the mailrooms and receptions need to keep a log of the delivery, a task traditionally managed on pen and paper, or occasionally on Excel. As one can imagine, this is a very time-consuming system.

Pre-COVID delivery volumes were already affecting operation, forcing property and facility managers to increase staffing at receptions and mailrooms, or risk deterioration in the quality of service provided. This issue has been further exacerbated by virtue of the spikes we have witnessed over the last year.

But much like with e-commerce players, tough times can present opportunities to make certain organizations stand above the fray. Those building/site operators that did not trivialize the issue saw their quality-of-service improve, parcel losses decrease, storage issues dealt with, and most importantly: an increase in overall tenant satisfaction

This crisis went on to show that the mailroom really does serve as the nervous system of the building, be it a business or a residential building. Once an item arrives in at its specified address, the recipient expects to have it within their hand within minutes. This is particularly critical in labs, fast fashion, and manufacturing, where the time between receiving a package on-site and collecting it is critical. 

Much like in first and last-mile logistics where over the last year technology, organizational know-how, and quick thinking have allowed couriers and e-commerce to adapt to the new realities, mailrooms have also had the tools to adjust. The facility managers that have embraced logistics and property technology have been able to drastically mitigate the effect of deliveries, whereas those who haven’t struggled.

There is a wide range of solutions currently on the market that have digitalized and automated the parcel management process. The most advanced systems make use of AI and computer vision to detect recipient names off parcel labels and notify them their packages have arrived. This automation has shown a 60% decrease in parcel management times. A study in motion conducted by Parcel Tracker has shown that average package handling times went from 121 seconds to 47 seconds.

Data from Parcel Tracker study in motion.

The Reality

Mailrooms will have to adapt to the new realities. Most facility managers and operators justify inaction as they believe the record high online shopping values will drop drastically as we exit the pandemic. The reality on the ground is that the changes happening to consumer habits and supply chain are sticky, and mailrooms will have to adapt. The real question is: how much pain will operators go through before taking a step toward automation and technology?

Article by Arthur Zargaryan, Founder of Parcel Tracker, the AI power mailroom management software.