The demise of the office post-Covid could dramatically increase delivery costs, warns ParcelHero. It forecasts that the price of failed first-time deliveries will soar to around £2bn in increased costs and new surcharges.
New research from the home delivery expert ParcelHero reveals that only 20% of professionals want to work full-time from their offices post-Covid, with a quarter saying they will resign if forced to do so.
Although increased working from home (WFH) will reduce a proportion of business overheads, ParcelHero warns that it is also likely to result in increased delivery costs to businesses, retailers and customers.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says courier prices and surcharges are likely to rise because of the boom in WFH, as the high failure rates of home deliveries make them far more expensive than deliveries to offices.
He comments: “Only one in five workers want to return to the office full-time and influential employers such as Unilever have already announced their staff will never return to their desks five days a week. Of course, many employees welcome this long-term commitment to flexible working, but these new business practices are likely to raise courier delivery prices in the future. That is because failed deliveries to business addresses are rare while, even before the pandemic, at least 5.6% of UK first-time deliveries to private homes failed.
“There are two, key reasons why most couriers far prefer B2B deliveries. Firstly, business deliveries are likely to be concentrated around High Streets and industrial estates, thereby reducing delivery times and fuel costs. Residential deliveries, on the other hand, tend to be far more spread out. Drivers may have to cover many miles to make just one or two deliveries.
“Secondly, people are certain to be at work premises to take delivery during office hours. Even before the pandemic hit the UK, over 1 in 20 deliveries to private addresses could not be delivered first-time, either because the receiver wasn’t in or didn’t hear the door. Second and third delivery attempts dramatically increase costs for couriers and further stretch delivery networks already struggling to satisfy the boom in e-commerce.
“Couriers do already factor in their increased costs when making home deliveries – up to a point. Most parcel companies add a surcharge for deliveries to home addresses of around £2.40. These surcharges could well be raised if the impact of Covid on business deliveries continues to grow after lockdowns have ended.
“With the latest lockdown now lifting, but millions more parcels being sent to home addresses compared to pre-Covid levels, failed deliveries are likely to soar in the next few months. The price of failed deliveries to business, which before the first lockdown was estimated to be around £1.6bn, is likely to climb to around £2bn in extra costs and increased surcharges.
“To predict the impact of lockdown wind-down, we only need to look at the typical rise in failed, first-time deliveries between May and June every year to see what is likely to happen. In May, an average of 4.39% of first-time home deliveries fail. In June, that often nearly doubles to 9.1% of home deliveries being “carded” – left an attempted delivery message by card or text. Whether that’s due to spontaneous breaks in the sunshine or annual holidays, people appear more likely to forget expected deliveries or their booked pick-ups.
“Similarly, the eagerly anticipated end of lockdown in June will see greater numbers leaving their houses, which is bad news for businesses, retailers and couriers. Traditionally, a significant portion of employees have used their office addresses for personal deliveries during working hours. The trend for failed deliveries during summer months looks set to escalate if staff are working from home. The e-commerce data company PCA Predict says that failed deliveries cost retailers an average of £14.35 an item. That figure doesn’t even include the time spent processing refunds and arranging redeliveries.
“As far as employers are concerned, their business costs could go even higher, with the introduction of a charge for failed collections from their employees’ homes. One national courier is already charging over £10 for a failed pick-up and that could be copied across the industry if the problem increases.
“WFH costs will also mount for companies who still use franking machines for business post. They will be losing out on their negotiated postage rates because most employees can’t accommodate franking machines or specialist stationary. Of course, most couriers use printed labels and the pandemic will hasten the demise of old-fashioned mailing practices.
“So, what can be done to reduce the cost and hassle of failed first-time home deliveries for couriers and businesses? One obvious answer is a considerable increase in the number of parcel lockers, to avoid the problem of people not being home to take delivery. The UK badly needs thousands more lockers to reduce the number of failed deliveries.”