Taking an agile approach

Operating in the South African environment comes with its own unique challenges for courier companies. SAs failing infrastructure, high levels of crime and a scarcity of skills all have an impact.

RAM MD Graeme Lazarus explains that under normal circumstances the business operates in a fast-paced and cost-sensitive environment, and having to deal with ongoing and prolonged periods of loadshedding, failing infrastructure and rising fuel prices does have an impact on its ability to deliver a reliable, efficient and costeffective service.

He says RAM has responded with an agile approach to how it runs its business to ensure it can adapt quickly. We have strategies and back-up support in place to deal with loadshedding at our hubs, as well as on the road; we ve become creative and innovative in terms of how we plan our routes around failing road infrastructure, and we continue to focus on managing our costs.

A long-term thorn in the side for the courier industry has been the hijacking of its delivery vehicles or theft out of its vehicles.

As courier vehicles typically transport high value commodities, they have long been soft targets for criminals, says Garry Marshall, CEO of Saepa. “The challenge is that industry players are not security companies and drivers don t carry weapons. The biggest consequence of this is the impact on staff and their physical and mental health and wellbeing.

Pre-Covid one of the biggest headaches for courier businesses was home deliveries. It was not uncommon to find that two out of every three deliveries failed either because nobody was home to take delivery of the parcel, or because the delivery vehicle was unable to access the address if it was situated in an estate, for example. including 16% who have bought more than half of their groceries online. The study surveyed 11,000 consumers from 12 different countries including SA. Statista, a leading provider of market and consumer data, says e-commerce revenue is expected to show an annual growth rate of 12.46%, resulting in a projected market volume of $11.12bn by 2027

Delivery failures add to the cost of delivery which is why local courier companies have responded by becoming more innovative and implementing specialised technology, including predictive software, to ensure a lower failure rate.

They re getting better at delivering to township areas by employing drivers who are familiar with the area. Courier companies have no choice but to get to grips with delivering in areas even when there is a lack of street signage, says Marshall. “Fortunately, this is a resilient and agile industry which adapts where necessary.

E-commerce revenue is expected to show an annual growth rate of 12.46% resulting in a projected market volume of $11.12bn by 2027.

It also expects the number of users in the retail delivery segment to reach 5.8-million by 2027, with user penetration growing from 7.2% in 2023 to

9.1% by 2027 while revenue is expected to grow from $0.64bn in 2023 to $0.96bn by 2027. Christopher Rugg, Business Services manager at DSV, says the data confirms DSV s experience of a South African market that s growing exponentially. As a result, DSV is investing accordingly. DSV s extensive logistics capabilities provide entry level and smaller retailers with the same fulfilment capabilities that larger rivals enjoy, says Rugg.

One of the biggest potential threats facing the local courier industry is a dispute with the South African Post Office (Sapo) which claims that it has the exclusive right to deliver small packages weighing 1kg and less.

The dispute started several years ago when Icasa s Complaints and Compliance Commission ruled that the Post Office had the exclusive right to carry packages weighing 1kg and less as they were deemed reserved postal services

In 2019 a court found that courier company PostNet was in contravention of the Postal Services Act. PostNet secured an interdict which meant it could continue to deliver packages under 1kg until the case is heard in the Gauteng High Court. Industry body the South African Express Parcel Association (Saepa) and online retailer Takealot, the latter which operates its own courier to deliver packages, have subsequently also joined the litigation.

It's no secret that the Post Office is technically insolvent, running up billions in losses each year. During his annual budget speech in February finance minister Enoch Godongwana announced that the Post Office had been allocated R2.4bn to close numerous branches and retrench 6,000 workers over the coming months. SA Post Office CEO Nomkhita Mina has also been reported as saying that the utility is looking to reduce it working hours and retrench employees in a bid to cut its wage bill. The dire state of the Post

Office as a business certainly does not inspire confidence that it has the capability to assume responsibility for express deliveries weighing less than 1kg, particularly given that only 68% of the Post Office s mail got delivered in 2022.

As Saepa CEO Garry Marshall points out, the outcome of the case which is still awaiting a court date has significant implications for the entire express delivery industry.

Most businesses would be reluctant to send sensitive business documents or other high-value items via the utility when they have the option of sending it via an express delivery logistics provider who is able to deliver the package by a specified time and can provide trackability of the package and proof of delivery,” says Marshall.

The Post Office has alluded to a system where private courier companies can act as its agents and deliver parcels under 1kg for a fee. Marshall says the industry would not be in favour of this scheme given that it essentially amounts to an additional tax on the industry. We believe there is a role for the Post Office but we don t believe we are in the same business as it is. Added to this, we don t believe the Post Office has the capacity to provide the same level of service as the courier industry or that it can compete with the reliability provided by the industry.” Marshall says the industry would welcome the Post Office challenging it on a level playing field, but will vehemently resist any efforts by the postal utility to hide behind legislation.