Amazon Cost per Parcel Delivery

How have you seen the cost per parcel decline over the last two decades?

It will not. In delivery, it will not. I don’t believe the cost will decline, at all. I believe, today, the level that it will reach in many places, in Europe or in the US, the levels of ecommerce in general, are close to the optimal, for many carriers and for Amazon, as well. Therefore, this cost will only grow by fuel, wages and stuff like that. There are a few innovations that are coming to help, such as lockers and pick-up points. But I don’t believe it will decline. I think it will be capped, as far as possible and flat for a few years and, after that, slightly increase, over time.

So you think Amazon, particularly, will have to wear the increase in the cost, potentially, if they go to one-hour delivery?

Yes, absolutely. That’s a no-brainer. The one or two-hour delivery increases the cost of delivery. Even the evening delivery that we have, it’s just mathematical, but reducing the window of when you deliver, that decreases the density. The problem is, in a delivery network, you have to at least come from the place where you picked the parcels up. This is called the stem time, in this business, which is the time between the location where you pick up the parcels and the first delivery, has to be amortized in the round. The rest could be very dense, but this first part, you need to deal with. You don’t always deliver around your delivery station; you sometimes have to do 20 or 30 miles before you get to your first delivery. This could sometimes take an hour. In that hour, you don’t deliver any parcels, so therefore, the more you reduce this window, your productivity in delivering gets worse. I don’t believe that we will see decreasing costs in parcel delivery.