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How Parcel Lockers Will Transform Last Mile Delivery

The following was contributed by Dr. Arne Jeroschewski, Founder and CEO of Parcel Perform

There are many last mile delivery innovations in the market. So why am I focusing on parcel lockers and collection point networks as the innovation that will transform the last mile?

Imagine this scenario 50 years ago:

The postmen making their rounds in your housing estate would only deliver letters to your doorstep. They will not release your letters without meeting someone at the doorstep. If you weren’t at home while the postman was making their rounds or missed them ringing your doorbell, you’ll need to collect and sign off your mail from your nearest post office.

Understandably, this experience is frustrating, wastes valuable time and inefficient for everyone involved. This is why we have letterboxes in central locations that are accessible 24/7 for us to pick up our mail at our convenience.

Surprisingly, we accept this frustrating experience for parcel deliveries even today decades after we solved it for letter delivery. Well, that is why parcel lockers are bound to innovate parcel delivery in the not so distant future.

With parcel lockers, logistics carriers can deliver orders to a set parcel locker location, eliminating the annoyance and cost of failed first deliveries, rescheduling deliveries and the uncertainty of having someone at home to pick up an item within a vague timeframe.

Likewise. consumers enjoy the convenience of 24-hour accessibility. With parcel lockers located closer to their home than post offices, they can pick up and return items at their convenience with minimal queueing and indirectly lowering service costs at the same time. Logistics carriers also see higher first delivery success rates, more parcels delivered per trip and improved efficiency – enjoying up to 5 times more parcels delivered per courier with the use of parcel lockers.

The parcel locker system strengthens the global last mile delivery experience. In a recent analysis on the global parcel locker market by Belgium-based International Post Corporation, parcel lockers are already heavily used in Finland, Denmark and China – with a usage rate of up to 43% Consumers prefer the parcel locker method citing the 24/7 availability, ability to select delivery locations and lower delivery prices as reasons.

Perhaps in a few years, we’ll look back and wonder how we could have managed our deliveries without the superior convenience offered by parcel lockers.

How can parcel locker networks be implemented effectively?

Nevertheless, there are several challenges and considerations that we need to bear in mind when thinking about implementing a parcel locker network for every country:

Setting up a successful locker network requires significant investments in infrastructure, technology, and operational teams.
Locker networks may be underutilized if you as a carrier do not command a sufficiently high parcel volume yourself.
There may not be enough network density in the city – a parcel locker close enough to your home – to make usage convenient for consumers
Parcel lockers may even clutter urban environments if too many lockers of different carriers sit next to each other at high traffic locations.

There is a need for a coordinated approach to address these challenges

Therefore, for parcel locker networks to be an effective solution to our parcel delivery challenges, they should be carrier-agnostic; where locker providers and delivery companies work together seamlessly across the industry. Likewise, locations of locker sites should be carefully analyzed for proximity to prospective consumers to help drive route density within the delivery network.

An example of such a coordinated approach can be found within Singapore. In December last year, we at Parcel Perform had the pleasure in working with the Singapore government and the Info-communications Media Development Authority (IMDA) to launch the Locker Alliance programme; a collective parcel locker system allowing different locker operators, end-consumers and merchant partners to use the network seamlessly.

Lockers are situated in several transport hubs near public housing estates around Singapore, allowing consumers to access their deliveries at their convenience. This project offers a vast range of benefits to consumers and the logistics industry:

  • Parcel lockers at a network density that is impossible to achieve for any logistics player alone while simultaneously bringing the convenience of these lockers closer to the consumer.
  • Higher utilization of all deployed parcel lockers that results in lower operating costs and therefore lower prices for carriers and consumers.
  • Open access logic to allow all players to effectively operate and use parcel lockers regardless of their size and capacity to make significant infrastructure investments

We at Parcel Perform are honoured to have worked closely with IMDA to develop the Interoperability Platform that unites all key e-commerce industry players to improve the last mile experience in Singapore.

We’re excited to see what lies ahead for parcel lockers and the last mile delivery!

Singapore is the first country to take this inevitable bold step and will be the showcase for many markets to follow. Beyond Singapore, there are plans to expand the Locker Alliance to other ASEAN countries. Regional locker operators like Thailand’s Box24, Hong Kong’s Pakpobox and Indonesia’s Popbox Asia are exploring developing such a network to create a more conducive e-commerce environment in the region.

This model can possibly open up e-commerce business opportunities for retailers and logistics players around the region. I’m excited about the prospects of this service offering and look forward to continuing our contributions!

Dr. Arne Jeroschewski is the Founder and CEO of Parcel Perform. He has held leadership roles and developed products, businesses and technologies for Zalora, Singapore Post, and DHL eCommerce, after advising companies in the industry at McKinsey.

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