Published on September 10, 2018

E-commerce logistics : La Poste adapts its industrial facilities to next-day delivery

In light of e-commerce growth, Le Groupe La Poste is modifying its organisation and industrial framework. Benjamin Demogé, Industrial, Logistics and Information Systems Director of the Services-Mail-Parcels Business Unit (BSCC), explains the reasoning behind and the results of this transformation.

Why launch a new industrial framework in Parcels ?

Thanks to the surge of e-commerce, the B-to-C parcels market (that is, from businesses to individuals) is seeing strong growth. In order to hold onto its leader position with 70% market share, La Poste must meet several strategic challenges: capture growth in parcels and international e-commerce, strengthen synergies between the BSCC and Chronopost to become more competitive, and, lastly, adapt its delivery network to keep pace with growth in parcels.

So, La Poste has decided to invest 450 million euros in a major modernisation and transformation plan for Colissimo. There are three main reasons for this: the current network is overloaded, it is made for two-day delivery while growth is being driven by next-day, and it does not allow for cost reduction in an environment of strong rate competition. We are therefore going to open new parcel platforms to increase the network's capacity, adapt it to next-day delivery, and reduce our costs. We have already announced the opening of two Colissimo platforms, one in Pas-de-Calais, one in Isère, and also a Viapost platform in Brive. More announcements will be made in the coming months.

In more concrete terms, what needs to change to boost next-day delivery ?

If we want to do true next-day delivery, that is, the day after the customer places an order, we need platforms in proximity to parcel production centres (the North, the Greater Paris region, Lyon, and the South) in order to keep transport costs low and allow corporate customers to drop off parcels as late in the day as possible. We also have to limit parcel handling. When we sort them twice, we waste time and are unable to do as many next-day deliveries.

That’s why we need very large platforms with high-speed sorters, plenty of loading docks, and preparation and distribution platforms (PPDCs) that can handle bulk. If the customer is in Lille and we have to deliver to Lyon by the following day, we must go directly to the destination office without going through a second platform. That is why we will be opening the largest platform in France in Douvrin, Pas-de-Calais.

So it's a matter of becoming more competitive ?

Yes, because the competition is intense, which is driving down prices. To confront this, major initiatives are underway: technological changes in machines to make them much more productive—increasing sorting speed—but also changes in means of transport, such as increasing the use of swap bodies. Currently, we transport parcels partly in bulk and partly in trolleys. In the future, most parcels will be transported in bulk, which means our production and distribution sites must be transformed considerably.

The other major challenge is capturing international growth in e-commerce...

Growth in international trade has been impressive, particularly in Asian imports. Our volumes of international small parcels (PPIs) have grown by 30% in one year. Most of these flows go through the Roissy hub, which is overloaded and historically designed for mail. We have also decided to invest in modernising it and adapting it to accommodate freight. So, we will create one site for exports and another for imports at Roissy.

We are also working on strengthening the industrial capacities of Viapost, which currently handles 100% of PPIs, and we are investing in consolidating rounds, or fine sorting, to make postmen's work easier.

Colissimo on the one hand, Chronopost on the other... Do you envision some synergy ?

The BSCC and Chronopost share customers, and their products are sometimes similar. So it made sense to enhance the synergy there. At the beginning of 2016, we initiated Chronopost delivery by postmen. It was a wonderful instance of intra-group synergy. Moreover, these flows have been growing 20% annually to reach 12 million this year. In other words, the BSCC is already Chronopost’s leading delivery partner.

On another note, the BSCC and Chronopost work together in the Bordeaux logistics hotel, which is a joint Chronopost/DPD/Colissimo parcels office. This is a first for the Group. The site opened in late 2017 and is working well. Its model could be replicated in other large cities when all the objectives are reached.

Finally, we have one last shared initiative: connecting our information systems so that Chronopost parcels can be sorted in BSCC hubs and vice-versa.

Will these changes impact postmen’s roles ?

The growth of e-commerce is an opportunity, because it means more parcels in postmen's satchels even as the quantity of mail is dropping considerably. So we must adapt our infrastructure, our organisation, and our means of transport.

In terms of infrastructure, we are adapting our delivery sites for bulk by creating multi-flow PPDCs. We are also going to open PPDCs in which planning of parcel rounds will be completely automated to optimise delivery round times. One such PPDC will open in Poissy by the end of the year.

In terms of organisation, we plan to push back postmen's departure times for their rounds to a little later in the morning so we can increase the number of Colissimo parcels delivered the next day.

Lastly, in terms of transport, we have a very diverse fleet suited to all density levels and housing types, whether that be down-town blocks of flats or isolated farms in rural areas. The fleet will change based on increasing parcel flows as well as traffic constraints that certain municipalities are imposing to protect the urban environment.

Plus, cities are where we're seeing the most growth in e-commerce...

That’s right; e-commerce is growing differently across the country. Demand is strongest in large cities; their residents are younger, use digital technology more, and have higher income. That explains why these areas are where growth in parcels and PPIs is strongest, where there is more competition, and therefore where we need to be the best. The challenge is the quality of service and value-added services that are part of Colissimo's “Delivery Plus” charter: end-to-end tracking, delivery within a two-hour window, rescheduling in the event of absence, etc. We uphold this commitment for Colissimo for two-day delivery; we also have to do it for next-day and PPIs. And yet to do this, we must have perfect command of our operations and optimise them.