The Changing Parcel & Postal Services Market, Route Optimisation and the Demise of City Link

Written by Integrated Skills

Jan 12, 2015

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Route Optimisation, Route Planning

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postal servicesThe widest possible definition of a parcel and /or postal service is any organisation that is concerned with the receiving, sorting and delivering of parcels, letters and tangible goods. For such organisations efficient and flexible multi-drop route planning is essential as they strive to minimise costs. Across Europe rapidly changing service offerings from organisations such as Royal Mail to Amazon are made possible from the implementation of multi-drop route planning software.Many companies in this sector are only just breaking even as margins are tight and competition fierce so they seek any source of competitive advantage they can find… or not; the recent demise of City Link being a case in point.

SaaS – Route Planning Software that Delivers Greater Bangs-for-Your-Buck

For a forward thinking company reducing the distance driven – or at least minimising any increase in mileage whilst delivering greater volume – enables them to manage and sometime lower delivery costs. Vehicle routing software enables organisations to improve customer service and offer an increased range of products, such as, 1 hour delivery windows. For instance, national service providers with thousands of vehicles that deliver hundreds of thousands of items, need to not only strive for constant efficiency savings which can be reinvested in the business but also need to differentiate themselves from competitors which, as some commentators have pointed out, is where City Link became a cropper. One way to achieve greater competitiveness and differentiation is from the impact of dynamic vehicle routing: Provided that vehicle route planning is holistic and fully integrated into the providers IT framework efficiency savings are practically guaranteed.

This last point is critical: “… holistic and fully integrated into the providers IT framework efficiency”. No point adding ££ worth of IT cost in buying licences and software, servers and better comms when the main aim is to reduce costs. This is where Routing-as-a-Service brings “bangs for your bucks” – a web services call though an API from the core ERP system to an online only, SaaS route optimisation solution delivers instant routes…. And savings! Savings which can be channeled into more service offerings or more attractive customer rates.


The more reliable the parcel & post provider and the greater their overall level of service the more likely they are to undermine the competition.Repeated failure to meet such criteria will result in clients transferring their custom elsewhere. It is obvious that some routes are going to be more cost effective (and easily managed) than others. The cost of a delivery should not change merely because the item is being delivered to a remote location: The dynamic is that if a competitor can move an equivalent item with no reduction in service at the same list price to the same location then you should strive to also. Route planning software enables organisations to identify costs per delivery, per route, per area so that sales teams can be targeted accordingly.

The Carbon Foot Print Benefit

Vehicle route planning exists to deliver more consignments per day from a given number of vehicles / operatives. The delivery of an item in terms of outbound logistics is another side of supply chain planning and economics. Here, route planning software (at its most basic), seeks to decrease the total distance driven for a given quantity of cargo, that is the parcels, mail and other goods. There are two clear financial benefits from such an approach which are reduced fuel consumption and the concurrent reductions in logged driving hours. Furthermore, intertwined with such an efficient multi-drop route planner strategy is the associated benefit of a reduced carbon footprint.

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