- 18 August 2021
- Transport / Logistics Services
In a second quarter earnings call, US carrier Pitney Bowes has announced it is to narrow its e-commerce fulfilment focus to light parcels only after a surge in volumes that overwhelmed the firm.
According to Marc Lautenbach, Pitney Bowes CEO, the company “tried to say yes to as many customers and as much volume as we could” during the pandemic, but it is now focusing on parcels it can deliver profitably and at high services levels, namely parcels at or below 1lb (454g) in weight.
“So as we go forward, we are very focused on handling the volume that we think we can do exceptionally well,” Lautenbach said. “So that limits you to certain lanes where we’ve got capacity as the industry continues to be capacity constrained and, candidly, certain size parcels.”
In the US there is a surplus of demand over the levels of supply. With delivery companies at their maximum capacity, the larger ones are being selective as to the types they deliver to maximise profitability. The two biggest players, UPS and FedEx are prioritising higher yielding parcels from SMEs and sectors with high value shipments such as healthcare.
The earnings call showed a drop in operating profit (EBIT) of 18% of its global e-commerce business and a drop of 21% of its pre-sort services in the financial year 2020 compared to 2019.
“One of the things that happened last year is we got so much volume all at once, we had to throw a lot more cost at it both from a labor and transportation perspective,” Lautenbach said.
The carrier handled around 45 million parcels in Q2 according to Lautenbach. Volumes are set to increase in Q3 and Q4, though he predicts no volumes record will be broken in the Q4 peak season thanks to its change of focus.
“We’re clearly going to try to accommodate as many clients as we can again this year, but we’re going to do it in a way that we can have the highest commitment to service levels, at the same time, do it in a way that’s economical and profitable to us,” he said.