Capture e-commerce growth and manage network capacity

We are helping to shape the growth of e-commerce by expanding our network, while increasing the efficiency of our existing infrastructure. We also provide customers with data and insights to help them develop their e-commerce offerings, supply e-tailers with fulfilment solutions, and help small businesses bring their goods online. Parcel volume in 2020 was around 19% higher than 2019, and while part of this growth was due to specific, non-recurring, consumer spending as a result of the pandemic, we expect the market to continue to grow. Consumer behaviour changed during the pandemic, with more people making online purchases and experiencing the benefits of e-commerce. Our focus for the last-mile is to offer innovative solutions that provide customers with a broad range of delivery options.

Expanding our Parcels network

We are continually adapting our network and network requirements as the e-commerce market grows, and the mail market evolves. Planning and realising new sorting centres and logistic capacity are multi-year projects based on growth projections. The severity of the Covid-19 pandemic was unexpected, and the sharp rise in e-commerce meant volumes had to be absorbed within our current locations. While no new sorting centres were planned for 2020, we managed to significantly scale up our processing capacity by extending operating hours, expanding our routes and fleet, and escalating the use of the retail network. And while we are proud of the how we responded, it was an operational challenge. By the end of the year we had reached the limits of our processing capacity, which had a knock-on effect for customers and consumers. Going forward, it remains vital that we find the right balance between generating sufficient capacity to capture growth and serve customers and consumers, while remaining cost effective and reducing the risk of excess capacity.

To manage the volume growth in 2020, we rolled out additional capacity across the Benelux. In Zaltbommel in the Netherlands, we moved into a new cross-dock facility that enables us to process transshipments during the night streamlining our inter-depot flows. This depot replaces our cross-dock facility at Nieuwegein, which we will transform into a small parcel sorting centre (SPSC), enabling us to sort the growing volumes of small parcels more efficiently than our current sorting centres. The SPSC, which will enable us to expand our network capacity by 10-15%, will open in 2021. We also began developing a new sorting centre in Westzaan in the Netherlands, which we will open in 2021. Once operational, this centre will be capable of processing up to 60,000 parcels per day.

As wholesalers and retailers optimise their sales channels, they increasingly need state-of-the-art warehousing and fulfilment. In 2020 we continued to develop the second in-house fulfilment centre for, one of the Netherlands leading e-tailers. The centre will open in the second half of 2021. In Belgium, we opened a new parcel depot in Mechelen, which will help us process the parcel volumes created by the country's growing e-commerce sector, which was boosted by the pandemic effect. We also broke ground on a new high-tech parcel sorting centre in Willebroek, which will be built in 2021 and fully operational at the beginning of 2022 at the latest.

Continued focus on retail

We also continued to focus on and expand our retail network , making it easier for customers to collect and return parcels. By year-end, we had 3,760 retail locations across the Netherlands (2019: 3,387). Including parcel and letter lockers, these increase the number of parcel points in the Netherlands to 3,906 (2019: 3,508). In Belgium we had 526 retail locations at year-end (2019: 447).

The closure of non-essential shops for extended periods during the Covid-19 pandemic has had an impact on our retail network. While the Dutch government ordered non-essential shops to close from December 15, those offering mail and parcel services were allowed to remain open to carry out those specific services only.

However, they help maintain the flow of parcels through the system, enabling e-tailers to drop parcels off and consumers to collect, send and return items. They also continue to play an important role in society, which is why we continually invest in and expand the number of retail points across the Benelux. We invested around €4 million to provide support to retailers over and above their usual fee during the lockdown in December 2020 and €14.5 million in January and February of 2021, with 85% of retail points remaining open. We also set up mobile parcel pickup points, which helped process volumes redirected as a result of non-essential shop closures.

We also began making changes to our retail points to improve the consumer experience. Staff at retail locations are now provided with a photo of a consumer's parcel on their terminal, making it easier to find. We expanded the number of Scan & Go points, which let customers drop-off parcels themselves, and began opening unmanned parcel points at a wider variety of locations, such as gyms, museums, and libraries. Customers are looking to pickup and drop-off parcels quickly and easily, and we believe expanding our network of unmanned locations introduces the right level of convenience and flexibility.

Parcel and letter lockers

Our self-service parcel and letter lockers continue to be popular among consumers, who are able to send letters and pick up and send parcels 24/7 at locations across the Netherlands. We opened 25 additional lockers in 2020, including at supermarkets, DIY stores and petrol stations, bringing the total to 146 by year-end.

They contribute to our strategy of providing consumers with access to our services across a broad range of channels. We also replaced a number of smaller lockers that had compartments for 16 parcels, with larger versions that have 49 compartments. Our newest lockers are designed using a data-driven process, which results in the optimal use of space within the locker. Additionally, an algorithm analysing usage prevents the lockers from becoming overloaded.

Working to reach 90 countries

At the beginning of the Covid-19 pandemic, a number of countries closed their borders to traffic from abroad, leading to reduced air traffic. As a result, more than 90 countries became inaccessible. Eildert Panman and his colleagues at Cross Border Solutions (CBS) worked to make these countries accessible again. “CBS set up a crisis team with people from different departments, which tracked exactly to which countries planes would fly. The team then worked on finding other ways to reach those countries . We used more freight planes, while within Europe we chartered more trucks. And on a couple of occasions mail for the United States was delivered by ship. The crisis team tracks which mail batch is being sent by which method. Everybody is very motivated, and we all want the mail to be delivered. The atmosphere is good, and our efforts meant we were able to reduce the number of destinations that we couldn't reach. In fact, we are doing so well that other countries want to have their international mail delivered via the Netherlands, which is a great compliment.”

Seizing international e-commerce opportunities

The international e-commerce market grew rapidly in 2020, and Spring helped ensure that consumers purchasing goods from e-tailers abroad received them quickly and efficiently. Our focus on remaining open and accessible throughout the pandemic meant that customers were able to rely on us to process their orders quickly and securely. Unlike many operators, we maintained our services during the first wave of the pandemic. While the sharp reduction in air freight capacity meant it was extremely challenging to ensure we had enough network capacity, we used all available space to meet the needs of our customers. And with the Covid-19 pandemic causing a reduction in international mail volumes, this was the first year that our international-e-commerce business overtook the traditional international mail business. More information on how we achieved growth in international e-commerce in 2020 can be found in a separate story box later in this chapter.