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BusinessDay www.businessday.co.za Thursday 16 March 2023
INSIGHTS: COURIER SERVICES
Lockers add convenience An interesting trend in the local courier industry is the introduction of delivery lockers which are playing a role in disrupting the industry. The Courier Guy was one of the first to introduce a smart locker delivery system. Called pudo — which stands for Pick Up Drop Off — the lockers have the advantage of being highly cost effective and convenient for customers. The company currently offers 1,100 lockers situated around the country with delivery locker to locker starting from just R50 for an extra small 2kg parcel. To ensure the safety of packages, pudo lockers are located in monitored areas and have multiple security systems including video surveillance, anti-break locks and a package detection system. To send a package, users login via the pudo website or app, make a booking by selecting a locker, filling in the online waybill and choosing the correct box size. Users have the option of sending locker to locker, door to locker or locker to door. All of these options are facilitated by The Courier Guy’s network of drivers and depots. Once the package has arrived at a pudo locker, the recipient receives a text
The company currently offers 1,100 lockers situated around the country.
message and an e-mail with a unique pin and QR code, either of which can be used to retrieve the package. The receiver has 36 hours in which to collect the package from the locker, after which it is sent to the closest pudo kiosk or depot. Most lockers are open 24/7 — although ones located in malls adhere to centre hours — so packages can be collected whenever it’s convenient. The Courier Guy is not the only company to introduce lockers. DSV has also introduced an anytime courier option called DSV Lockers which means that neither the driver, parcel, recipient nor sender needs to be at the same
place at the same time. Strategically positioned at fuel forecourts — primarily Engen service stations — and other publicly accessible locations, they are a direct-to-consumer service which cuts costs and increases efficiencies. Similar to pudo, customers are sent an SMS and email notification when their parcel is ready for collection and are given 48 hours to collect the parcel. “The introduction of lockers is an exciting new development in the logistics space,” says Saepa CEO Garry Marshall. “It offers an additional layer of convenience for recipients who aren’t sure where they are going to be at a given time of the day.”
INSIGHTS: COURIER SERVICES
Global reach is critical
Customers also •expect one-stop solutions in digital world
Accelerated by the Covid-19 pandemic, increasing global connectivity and the consequent growth of digital marketplaces, global crossborder and domestic e-commerce has experienced significant growth in recent years. Online shopping increased 77% year on year in SA in the early part of the pandemic, accelerating the innovation and adoption of digital commerce by half a decade. Shopping, working and socialising online became commonplace. According to a report by eMarketer, global cross-border ecommerce sales reached $4.28-trillion in 2020, a 27% year-over-year growth. The ability of the last mile couriers to adapt to this new normal has been critical to their success. The transformation is underpinned by a changing demographic with millennials
Tommy Erasmus … ideal position. increasingly fulfilling decisionmaking roles and expecting mobility and choice on last mile deliveries. This calls for innovation and because supply and demand are no longer necessarily housed within the same country, global solutions and reach both globally and intra-country are critical in providing one-stop solutions to a demanding audience. By way of example, the complexities post-Brexit for UK-based e-commerce companies into the European market varies vastly from those in SA, the latter characterised by its own unique set of wellpublicised challenges. Yet, there
remains a common thread of traditional logistic principles that require optimisation. These include scale to leverage supplier pricing which translates into affordable services, bi-directional load balancing on international lanes and global presence to provide control in delivering a seamless, visible service to end consumers. Tommy Erasmus, group CEO of SkyNet Worldwide Express, explains that “SkyNet found itself in an ideal position to react to this changing environment in that we had access to a global network of SkyNet branches with strong domestic networks and global coverage combined with an entrepreneurial agility to adapt quickly. An example of this agility was providing solutions to UK-based SMEs where access to the European market had become difficult due to the introduction of onerous crossborder vat and duty processes post-Brexit. “By partnering with Eurora, a company geared to providing seamless translation of product description into legally required Harmonised System (HS) codes combined with giving SMEs
access to Import One Stop Shop import validation not readily available to smaller exporters, we have been able to restore market access and competitiveness for these SMEs. “The automated solution is not only available to UK customers but to all customers globally including South African exporters into Europe and anywhere else in the world. The ability to communicate in advance to the end consumer the full array of traditionally hidden VAT and duties payable on import, and enable payment upfront, not only reduced costs for the consumer but provides a seamless and accelerated clearing and delivery process on arrival in the import country of delivery.” SA, however, needed different solutions in this space. SkyNet has responded to the need for improved security by partnering with security company Fidelity to deliver high value items in cash-in-transit vehicles. As the e-commerce space evolves and matures, a critical element has become the speed of delivery. Consumers have become increasingly
accustomed to delivery of their online purchases often within minutes rather than days. Driven primarily by the grocery sector, this expectation, together with the visibility in delivery tracking on a real time, live basis is fast becoming an expectation within other e-commerce sectors. Locally grown online courier companies such as Droppa are offering their mobile techdriven on-demand services to corporate SA with ambitions to expand internationally following their partnership with couriers such as SkyNet. Their ability to have hyper local presence within suburban metropolitans gives them access to consumers within minutes at an affordable price point. This space within the logistics world is paving the way to what no doubt will become the new norm. “As a South African company with an aggressive acquisition strategy and investment into new mobile technology companies such as Droppa, we are confident that we can rival and improve on any global competitor’s e-commerce offering,” says Erasmus.
Grocery delivery services ramp up Fitch Solutions, a division of the global financial information services company Fitch Group, says grocery delivery services are fast becoming a mainstream offering in SA, with a significant rise in first-time users. It expects to see a rapid increase in the e-groceries sector in the next seven years, particularly among urban and wealthier consumers looking for convenience. Established grocery retailers, including Checkers, Pick n Pay and Woolworths, have all introduced an e-commerce offering in recent years using courier and logistics providers to handle deliveries. The most successful player in this space is Checkers with its Sixty60 grocery deliver app which has re-positioned the brand from a convenience perspective. According to holding company Shoprite’s latest annual financial results, Checkers Sixty60 continues to maintain its growth trajectory. The app recorded a 150% increase in annual sales and is the top local grocery app with 2.4-million downloads. The retailer currently services Sixty60 customers from 300 stores around the country. RTT On-Demand, a division of the RTT Group, has played a key role in last mile logistics for Checkers Sixty60 from its launch. To enable more innovation and to protect the intellectual property of the Sixty60 sales channel, in late 2021 Shoprite entered into a joint venture with RTT Group. Both parties own 50% of the
30
minutes’ grocery delivery is a service offered by Yassir Express, which launched in Gauteng in December 2022
Above: Spar has partnered with SkyNet Worldwide Express and Inhance to provide the last mile delivery of its SPAR2U delivery service. Right: Diederick Stopforth, sales and marketing executive at SkyNet.
joint venture logistics entity. Pick n Pay offers online grocery shopping through an on-demand service called Asap. In 2022, the retailer launched a new PnP Groceries section on Takealot’s Mr D platform, with orders delivered by Takealot’s delivery fleet in a bid to expand its on-demand delivery service capabilities. PnP Groceries is intended to be available
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BusinessDay www.businessday.co.za Thursday 16 March 2023
nationwide by the end of 2023. Spar was a late arrival to the same-day grocery delivery space, only launching in March 2022. It has partnered with SkyNet Worldwide Express and Inhance to provide the last mile delivery of its SPAR2U delivery service. Diederick Stopforth, sales and marketing executive at SkyNet, reveals that unlike many of its competitors, SkyNet is leaning towards a predominantly electric delivery fleet utilising both two-wheel and three-wheel variants. He says: “Beyond the obvious environmental benefit in reducing carbon footprint, there are operational gains in lowering the cost per unit as well as capacity in the threewheel vehicles to deliver significantly larger orders.” As a late entrant to the market, Spar and its partners
have been able to adapt its model from the early mover learnings. “Our intention medium term is to optimise the delivery model by serving all tenants of any given centre through the same delivery fleet. The larger loading capacities of the threewheelers means that we can consolidate a number of orders in the same vehicle,” he says. “This has many advantages. Not only does it offer retailers delivery at a reduced cost, but it benefits gig economy drivers who will be able to reduce the costs in serving multiple revenue-generating deliveries on a single delivery run.” In 2022 Uber Eats launched Uber Eats Market in partnership with Smart Kitchen Co, initially as a pilot project in some areas of Cape Town and later to nine online store presences around SA. It plans to have markets operating in more than 30 locations by the end of March. A number of other e-grocery players have also entered the local market including Algerian on-demand food and grocery delivery platform Yassir Express and Zulzi. The former, which has become popular in a number of north African markets, launched in Gauteng in December 2022, offering a high-speed delivery service in just 30 minutes based on a dark store model. Zulzi is another addition to the on-demand grocery delivery sector, promising delivery in an ambitious 15 minutes. The platform provides delivery via 300 independent drivers.
Sustainability is a key focus
DHL offers •customers a
comprehensive portfolio of green logistics solutions Sustainability is becoming an issue that is impacting every industry sector, including the freight forwarding and courier industry where there is a growing focus on reducing carbon emissions. Driven both by new regulations and consumer demands, logistics companies globally are facing pressure to create sustainable business practices. In the US, the Securities and Exchange Commission now requires that public companies include climate-related disclosures in their annual report. A Gartner survey of senior
DHL Group aims to use 30% sustainable aviation fuel by 2030. business leaders about their business priorities revealed that sustainability has become the fastest growing strategic business priority. This growing interest in improving sustainability is encouraging many businesses to re-examine their supply chains.
According to the Sustainable Freight Buyers Alliance, freight transport accounts for 8% of global CO2 emissions with a predicted increase to 42% by 2050. The alliance says freight forwarders can support the transition to a more sustainable logistics industry by asking and
opting for sustainable transport products that help to shift the dial and reduce emissions. In a first for the express logistics industry, DHL Express recently announced the launch of GoGreen Plus, a new service that will allow customers to reduce the carbon emissions associated with their shipments through the use of sustainable aviation fuel. Produced from waste oils, sustainable aviation fuel can reduce greenhouse gas emission by up to 80% over its life cycle compared with conventional jet fuel. GoGreen Plus is part of Deutsche Post DHL Group’s sustainability goal of achieving net-zero emissions by 2050 and contributes to the group’s interim target of using 30% sustainable aviation fuel for all air transport by 2030. The company initially launched the service in the UK, followed shortly thereafter by
Italy, Denmark, Sweden, Canada, Australia, SA and the United Arab Emirates. Customers based in these countries have the option to select GoGreen Plus when choosing their shipping service through MyDHL+, the company’s online shipping and tracking platform. The service is designed to be fully flexible as it can be selected for individual shipments. GoGreen Plus will become available to all DHL Express customers globally in the next few months, with customers having the option to tailor the CO2reduction they want to achieve and the amount of sustainable aviation fuel they use. Unlike offsetting initiatives, GoGreen Plus (insetting) reduces emissions within the logistics sector and can be used for DHL customers’ own voluntary emission reporting, explains Jed Michaletos, MD at
DHL Express South Africa. “Insetting allows customers to bring down their Scope 3 emissions, the indirect greenhouse gas emissions that occur in a company’s value chain, including downstream transportation and distribution.” Sustainability is a key focus for DHL Express, he says. “We believe we have a responsibility to set an example and be leader in the area of sustainability. That means reducing our carbon footprint and setting high social and governance standards. “Not only did DHL pioneer the first green logistics products but we were the first logistics company to commit to a zeroemissions target. DHL currently offers the most comprehensive portfolio of green logistics solutions in the industry to help our customers make their supply chains more sustainable and help them achieve their environmental targets.”
Growth of e-commerce around the world benefits logistics providers DSV’s easy entry-to-market logistics services are helping reshape the retail environment. Although e-commerce was growing at a steady rate preCovid-19, the pandemic served to disrupt the traditional retail market by driving consumers towards online retailers. Logistics companies had to adapt to this new trend to meet both consumer and retailer needs at a time of disruption. Johan Roos, senior information technology manager at DSV, says e-commerce’s growth and future potential is being driven by consumer safety, accessibility and convenience needs. It’s also broadening the retail space because it offers entrepreneurs exceptionally low barriers to entry.
E-commerce revenue is expected to show an annual growth rate of 12.46%, resulting in a projected market volume of $11.12bn by 2027. “A growing number of shopfront platforms are creating low barrier opportunities for entrepreneurs. This is especially powerful when coupled with end-to-end logistics solutions which offer order fulfilment and eliminate the need for retailers to own warehousing and
delivery vehicles,” he says. The latest NielsenIQ Barometer Study revealed that “far from the exception, online shopping has become a ubiquitous part of everyday life in SA: 53% of grocery purchasers … bought groceries online in the past six months,
Taking an agile approach Operating in the South African environment comes with its own unique challenges for courier companies. SA’s failing infrastructure, high levels of crime and a scarcity of skills all have an impact. RAM MD Graeme Lazarus explains that under “normal” circumstances the business operates in a fast-paced and cost-sensitive environment, and having to deal with ongoing and prolonged periods of loadshedding, failing infrastructure and rising fuel prices does have an impact on its ability to deliver a reliable, efficient and costeffective service. He says RAM has responded with an agile approach to how it runs its business to ensure it can adapt quickly. “We have strategies and back-up support in place to deal with loadshedding at our hubs, as well as on the road; we’ve become
creative and innovative in terms of how we plan our routes around failing road infrastructure, and we continue to focus on managing our costs.” A long-term thorn in the side for the courier industry has been the hijacking of its delivery vehicles or theft out of its vehicles. “As courier vehicles typically transport high value commodities, they have long been soft targets for criminals,” says Garry Marshall, CEO of Saepa. “The challenge is that industry players are not security companies and drivers don’t carry weapons. The biggest consequence of this is the impact on staff and their physical and mental health and wellbeing.” Pre-Covid one of the biggest headaches for courier businesses was home deliveries. It was not
uncommon to find that two out of every three deliveries failed either because nobody was home to take delivery of the parcel, or because the delivery vehicle was unable to access the address if it was situated in an estate, for example. Delivery failures add to the cost of delivery which is why local courier companies have responded by becoming more innovative and implementing specialised technology, including predictive software, to ensure a lower failure rate. They’re getting better at delivering to township areas by employing drivers who are familiar with the area. “Courier companies have no choice but to get to grips with delivering in areas even when there is a lack of street signage,” says Marshall. “Fortunately, this is a resilient and agile industry which adapts where necessary.”
including 16% who have bought
more than half of their groceries online.” The study surveyed 11,000 consumers from 12 different countries including SA. Statista, a leading provider of market and consumer data, says e-commerce revenue is “expected to show an annual growth rate of 12.46%, resulting in a projected market volume of $11.12bn by 2027”. It also expects the number of users in the retail delivery segment to reach 5.8-million by 2027, with user penetration growing from 7.2% in 2023 to
9.1% by 2027 while revenue is expected to grow from $0.64bn in 2023 to $0.96bn by 2027. Christopher Rugg, Business Services manager at DSV, says the data confirms DSV’s experience of a South African market that’s growing exponentially. As a result, DSV is investing accordingly. “DSV’s extensive logistics capabilities provide entry level and smaller retailers with the same fulfilment capabilities that larger rivals enjoy,” says Rugg.
Companies to face Post Office in court One of the biggest potential threats facing the local courier industry is a dispute with the South African Post Office (Sapo) which claims that it has the exclusive right to deliver small packages weighing 1kg and less. The dispute started several years ago when Icasa’s Complaints and Compliance Commission ruled that the Post Office had the exclusive right to carry packages weighing 1kg and less as they were deemed “reserved postal services”. In 2019 a court found that courier company PostNet was in contravention of the Postal Services Act. PostNet secured an interdict which meant it could continue to deliver packages under 1kg until the case is heard in the Gauteng High Court. Industry body the South African Express Parcel Association (Saepa) and online retailer Takealot, the latter which operates its own courier to deliver packages, have subsequently also joined the litigation. It's no secret that the Post Office is technically insolvent, running up billions in losses each year. During his annual budget speech in February finance minister Enoch Godongwana announced that the Post Office had been allocated R2.4bn to close numerous branches and retrench 6,000 workers over the coming months. SA Post Office CEO Nomkhita Mina has also been reported as saying that the utility is looking to reduce it working hours and retrench employees in a bid to cut its wage bill. The dire state of the Post
Office as a business certainly does not inspire confidence that it has the capability to assume responsibility for express deliveries weighing less than 1kg, particularly given that only 68% of the Post Office’s mail got delivered in 2022. As Saepa CEO Garry Marshall points out, the outcome of the case — which is still awaiting a court date — has significant implications for the entire express delivery industry. “Most businesses would be reluctant to send sensitive business documents or other high-value items via the utility when they have the option of sending it via an express delivery logistics provider who is able to deliver the package by a specified time and can provide trackability of the package and proof of delivery,” says Marshall. The Post Office has alluded to a system where private courier companies can act as its agents and deliver parcels under 1kg for a fee. Marshall says the industry would not be in favour of this scheme given that it essentially amounts to an additional tax on the industry. “We believe there is a role for the Post Office but we don’t believe we are in the same business as it is. Added to this, we don’t believe the Post Office has the capacity to provide the same level of service as the courier industry or that it can compete with the reliability provided by the industry.” Marshall says the industry would welcome the Post Office challenging it on a level playing field, but will vehemently resist any efforts by the postal utility to hide behind legislation.