Practically any item you can think of is available for purchase online today – and distribution centres are busy. With more packages to process than ever before, conventional distinctions between parcel and letter are being challenged, putting strain on distributors’ established workflows.
Handling shipments at distribution centres used to be somewhat simpler. To a large extent, parcels were parcels, letters were letters and items that would fall in between the two categories, so-called “rest mail”, were occurring at a manageable frequency.
Now, with the increase in global retail e-commerce – average worldwide sales are expected to keep growing above 10 percent in the coming years, according to eMarketer – combined with a fiercely competitive market where senders are shipping items in smaller and smaller packaging, rest mail is becoming a growing issue for Courier, Express and Parcel (CEP) providers.
Rest mail covers odd shipments that are too large to be considered letters and too small to be considered parcels by conventional standards. For example, items being shipped as large letters because it’s cheaper, even though parcel would have been the better option from a packaging perspective.
The larger cause for concern for distribution centres, though, is the occurrence of tiny parcels. The strong competitive forces in e-commerce—combined with postal subsidies favouring mailers outside Europe and North America—drive down international shipment fees, making it a relatively small proportion of the total purchase price. As such, instead of ordering more items at a time, we as consumers are increasingly willing to order single, smaller purchases, which are smaller than postal services’ conventional ‘small parcel’ measurements. Some of these orders are minuscule, like a set of ear plugs or PC spare parts.
The mailers of these tiny shipments, typically global e-tailers, are looking to keeping the packaging—and postage costs—to an absolute minimum. A common example is to ship an item with packaging that can just barely contain the address label, or worse: wrapping the address label around two sides of the parcel allowing for even smaller packaging.
Small parcels generally fall into the rest mail category if their width and length don’t exceed the size of an A3 sheet (29.7 x 42.0cm); a folded t-shirt for example. For some distribution centres, small parcels make up to 80 percent of the total items handled - up from just half less than ten years ago. This change is a natural consequence of our online shopping habits: we tend to buy more books than couches online.
The accumulating amount of rest mail often have distributors working at capacity limits. Both in terms of physical space at centres, the number of operators manning sortation systems and the amount of hours delivery trucks spend on the road.
Tiny parcels are at the risk of, quite literally, falling between system transfers while conveyed through the automated system. In worst cases, tiny parcels might end up with the wrong delivery because the automated system was not designed to process an item of that size. As such, whenever an item deviates from predefined standards, it often needs manual sorting and slows down distribution.
To learn more about how problematic shipments can disrupt operations at a distribution centre, we recommend you read our article on “How to deal with no-read parcels”.
Typically, automated sortation systems are designed to operate within certain size restrictions optimised for handling regular, relatively large parcels - up to 120 x 80 x 80 cm. A coffee table, for example. The smallest machinable parcel on such a system would typically be book-size, not smaller than 20 x 15 x 1 cm.
When shipments below this size limit begin to make up a larger proportion of all items handled at a distribution centre, that’s when challenges begin.
To manage the immediate issue of accumulating rest mail, distributors have three options. They can:
Without a sortation system for handling rest mail, these items will have to be picked up physically and moved to the respective gate for delivery. Obviously this is inefficient compared to automated sortation and the additional manning is expensive.
While it’s possible to redesign an existing sortation system to be able to handle rest mail, it’s usually rather costly, and often, there’s a better business case for designing a separate system.
A dedicated rest mail sortation system will typically be designed to handle items up to approximately A3 size. There are a few things of such a system that are worth highlighting:
With a dedicated rest mail system, distribution centres can achieve a very high degree of automation. If 80 percent of your shipments are rest mail, which used to be handled manually, these can now be automatically sorted, with the remaining 20 percent being sorted on your established system.
From a wider perspective, the rest mail issue needs to be accommodated for, not only during sortation at hubs, but throughout the logistics chain.
Instead of loading all items onto delivery trucks indiscriminately when picked up from customers, CEP providers can benefit from already thinking about pre-sortation. For example, by dividing items into three groups: small parcels in one group; regular and larger parcels in another; and odd-size or otherwise non-machinable items in a third group. Once the items make their way to the distribution centre, these groups can be loaded onto their respective sortation processes.
Get the full overview: Read our guide to e-commerce logistics for parcel distributors.
Distributors who have primarily specialised in courier rather than postal services, have traditionally had separate systems for sorting small, regular and oversize items, respectively. These kind of centres were – with just a few adjustments – better equipped for handling the increase in rest mail. As a result, these distributors have seen their market share increase along with the growth in small parcel shipments. Where courier services used to be more or less solely about delivering documents, i.e. flat items, they now make up a significant part of the market for handling small parcels.
Distributors who invest in a new sortation system based on parcel mix projections will be much better equipped to handle rest mail while still being able to handle regular and large items.
Emerging trends in global e-commerce make it increasingly difficult to know which is the right solution for automated parcel sortation.
Bjarne has 40+ years of experience in the design of material handling systems. He has seen more or less all types of systems within courier, express, parcel and warehouse distribution services, and has served as advisor and designer for systems handling all kinds of goods, including fashion, groceries and frozen food. When finding the right design solution with customers, Bjarne relies on his unmatched understanding of value chains and business models in logistics.