By Jennigay Coetzer – First published in Business Day newspaper, 28 January 2011

An increasing number of companies are looking for an integrated logistics partner that can provide end to end supply chain solutions, as opposed to just express delivery.

This includes express delivery, transport, freight forwarding, warehousing, stock counting, and even sometimes extends to staff that are on site filling water coolers and replenishing photostat machines with ink while they are packing boxes, says Keith Pienaar, vice president for contract logistics and distribution for the African region for UTi, which owns Sun Couriers.

“Sometimes we are also asked to take over the security function and transport managers to and from the airport when required.” He says some companies outsource their entire  delivery function, which could mean having a fleet of vehicles on site, for example to do dedicated deliveries to all their customers and being on standby to handle emergency runs.

“We help the client to dispose of its vehicles and use our own branded vehicles.” He says reasons for outsourcing this function include the fact that companies do not want to have to manage a team of drivers, and they can save up to 20% on the cost.

“Our drivers can handle 40 stops a day instead of an average of 15 stops when companies do it themselves, and we use the most cost effective vehicles.” Courier companies are also more experienced in route planning because this is their core business.

Business to business courier delivery clients are ordering goods for just in time delivery, instead of holding stock, he says. As a result, they expect their items to be delivered in a hurry. “The courier services market usually dies around 15 December, but it was still pumping on 21 December,” says Pienaar.

He says nowadays even bigger clients cannot provide volume requirements in advance, which makes it difficult for courier companies to budget and gear up. This often means vehicles having to run 80% full, doubling up on loads, or downsizing vehicles.

He says Sun Couriers has short leases on its vehicles, which allows it to do this, and as a group UTi has thousands of vehicle, so vehicles can be swapped between divisions and subsidiaries. “We replace some 300 smaller vehicles a year, across the group.”

He says the issue of labour brokers versus permanent employees will pose challenges for the courier services industry this year. The government requirement is to have 70% permanent employees and 30% part time or labour brokers.

“Many of the smaller courier companies currently employ all labour brokers and the medium and large ones tend to have 50% permanent and 50% part time or labour brokers,” says Pienaar.

He says another issue is the imminent introduction of the traffic department’s Aarto regulations, which could have a marked impact on the courier industry, because drivers committing multiple traffic offenses that have their licenses suspended will be unable to drive. “This will mean having to take on new staff and teaching them the routes,” says Pienaar.

Jennigay Coetzer is a freelance business and technology journalist with 25 years experience, and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

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