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KPMG expresses Christmas delivery concerns

KPMG expresses Christmas delivery concerns

With Christmas fast approaching, delivery companies are feeling the pressure to fulfil retailers’ expectations. With more and more retailers’ offering customers later “guaranteed delivery dates”, some as late as 24 - 48 hours before Christmas Day, there is concern that the recent shortage of HGV drivers will lead to parcel companies not being able to deliver.
 
The number of HGV drivers on the roads is decreasing, and the recent change in EU regulation introduced in October this year, which requires HGV drivers to now obtain a separate Certificate of Professional Competence (CPC) qualification on top of their existing HGV license, appears to be putting off potential candidates.

The four-part test, costing up to £270 a time, is proving to be a real deterrent for would-be new drivers according to recent statistics* which show 40% of lorry drivers are over 50 while only 1% are under the age of 25. 
 
Justin Zatouroff, global head of post and express at KPMG, said: “The Christmas package delivery peak roughly doubles average daily volumes at this time of year, but these potential driver shortages mean that not all retailers will be able to fulfil their delivery promises to customers. 

"Some retailers may be forced to bring forward their last online order dates so that they are able to guarantee delivery before Christmas. However, this could see them miss out on the lucrative last minute surge in online orders before the big day.
 
“Ultimately there are a number of choices faced by the retail supply chain, be it retailer or logistics supplier. They can sacrifice service, they can increase the costs base or they can seek alternatives, the answers are not obvious.
 
“Most of the delivery companies have already planned for the peak period months in advance, but the reality is that even the best-laid plans are limited by resource and capacity, any major change from the anticipated positions will undoubtedly place a strain on services.
 
“The truth is that as long as children get to unwrap their presents from under the tree, then most consumers will be satisfied, if not delighted. As such, delivery companies will probably prefer to increase the cost base and deliver, rather than risk significant penalties for a post-Boxing Day arrival.
 
“The most likely blockage point seems to be the hub to depot delivery and this is where driver shortages become a reality. The solution, with appropriate pricing, may be to use subcontractors with the extra resource and capacity to help fill the gap."
 
Zatouroff concluded: “Retailers need to be mindful that as well as fulfilling customers’ original orders, they will need to prepare themselves for the inevitable wave of product returns and exchanges. In some cases this can be in excess of 30% which will put considerable strain on couriers' capacity. 

"It’s clear that forward planning and improved communication between retailers and parcel companies is imperative to ensure customers receive their goods on time. Unfortunately we can’t all rely on reindeers!”

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