September 2020 - How parcel networks failed Victorians in August, Secret Label wonder
Date Posted:2 September 2020
“Isn't it nice to think that tomorrow is a new day with no mistakes in it yet?.” — L.M. Montgomery
Welcome to our subscriber newsletter.
August almost broke us - well not the business, but in some respects our spirit.
AusPost in Victoria experienced a meltdown of epic proportions that stranded thousands of our parcels for way too long, but not just us, every retailer was on the receiving end of a painful black eye.
The frustrations with delays were unbearable for our customers and also for us, on top of the lock-down restrictions it made for too many testy moments.
Having been through 40 or 50 major congestion periods over the last 13 years, this was undoubtedly the worst and glad to see the back of it - although there is still a little bit of freight "trapped" in their network hiding in a dark warehouse somewhere.
AusPost have started slowing down interstate connections to help Victoria catch up, so the overall delay is now spreading around the country instead of being just isolated in Victoria for most of August.
Dare I say it, perhaps consider looking at Sendle as an alternative in the short-term, currently we do not have open incidents with Sendle, but plenty still with AusPost, albeit trending down.
Read our blog below on Groundhog Day, AusPost hits the wall - a scathing analysis on why freight performance fails retailers and consumers so badly in Australia.
There's quite a bit of excitement surrounding this month's Secret Label. Silky, rounded and sweet notes of milk chocolate, caramel, toffee and a buttery cocoa body that's syrupy and delicious.
Playing it safely in the middle, we are loving the acid balance in this Secret Label likely to appeal to those black coffee drinkers so often neglected by Australian coffee roasters. In milk it's just a wonderful array of rich, smooth and creamy sweet chocolate flavors with a delicious balance.
Many of you may be wondering why we are using plain white bags instead of our custom packaging.
Quite simply, the supply of custom bags has been incredibly difficult since the pandemic as no coffee bags are manufactured in Australia (our Australian supplier sources them from a specialized manufacturer in Taiwan).
Lead times are blown out to over 4 months - so it remains an ongoing challenge waiting on our last 40,000 bag order to arrive. The plain white bags are exactly the same specifications.
Please take our advice and order your supplies earlier, whether it's from us or anyone else, allow more time for transit - just like COVID, this frustrating parcel network congestion is going to be with us for a while!.
September 2020 Secret Label
Our September 2020 Secret Label is now available for a limited time in 1kg packs of whole beans (default), or you can select your preferred grind setting to be ground for you from freshly roasted coffee beans.
An origin that's been in chronic short supply and largely absent from our Secret Label landscape over the last few years makes a triumphant return in the starring role of this delightful blend.
Super-silky, rounded, sweet notes of milk chocolate, caramel, toffee with a buttery cocoa body that's syrupy and delicious.
Playing it safely in the middle this month, we are loving the acid balance in this Secret Label which is bound to appeal to those black coffee drinkers so often neglected by Australian coffee roasters.
In milk it's just a wonderful array of rich, smooth and creamy sweet chocolate flavours with a delicious balance and long, clean finish of textured chocolate.
AROMA - Nut, dried figs, cocoa.
FLAVOUR - Sweet milk chocolate, caramel, toffee, cocoa nibs.
ACIDITY - Medium, citrus, balanced.
BODY - Rich, full, syrupy.
BALANCE - Excellent.
AFTERTASTE - Nut, chocolate, toffee.
OVERALL - Refined acidity with a lovely balance of cookies and cream.
For a limited time only - ending when the allotment has run out which may occur before the end of the month.
Sorry, no 500g packs available.
Grab it here - September 2020 Secret Label - SORRY all SOLD OUT
Groundhog Day - AusPost hits a big wall in August
After 13 years of relying upon parcel networks around Australia, we could clearly see the early signals.
Pressure was building, more and more retailers had pivoted to online and some had totally abandoned their bricks and mortar stores.
Parcel networks were already at choke point capacity - vans and trucks were turning up at our warehouse in the afternoons already full and we had to try and find space to jam another couple of pallets of cartons into their already crowded cargo areas - utterly ridiculous.
Ramping up freight capacity you would imagine should be relatively simple, more vans and drivers, even if you have to hire the vans it's not that hard when a business is growing at such frantic rates - many would say it's a good problem to have.
Too much freight was moving around the country via the parcel networks instead of the more efficient large pallet-type bulk transport feeding traditional retail stores. Despite all the media reports of economic doom during the pandemic, consumers were actually spending like crazy, just on different stuff.
It was not only the sheer volume of parcels but also the types of cargo in parcel networks causing gridlock - what is referred to as "ugly freight", car parts, tyres, batteries, inflatable pools, chairs, flat packs, surfboards, etc. plenty of big, bulky items that cause the automated systems designed to scan and route nice cube shaped cardboard cartons to all of a sudden halt and revert to manual bypass - slow and painful. It's like hitting the emergency stop on a high-speed train.
The second wave of the pandemic was already upon us and state premiers were talking about tighter restrictions.
In our communications during June and July, we urged our customers to order earlier, allow more time for transit and importantly never rely upon or assume parcel networks are working like they did 12 months ago - things are way different now and it's the new norm that will be with us for a while yet.
The first sign of trouble was an innocent post by Gary Starr (Executive GM Auspost) on LinkedIn back in late July claiming AusPost had smashed a record for parcel volumes just a week earlier.
So to put this into context, his post was around 2 weeks before Melbourne entered Stage 4 restrictions and there was certainly nothing to suggest they were experiencing congestion - quite the opposite actually as it appeared to be something akin to a chest-beating triumph.
To see a big surge in parcel volumes when there was no "major sales event" or key driver for consumers to buy immediately peaked my attention - wonder what's causing this record level of parcel freight ?.
Maybe it was the Stage3 "stock up" or panic-buying that fuelled the surge, or perhaps it was from a large retailer or national marketplace running special promotions and dumping tons and tons of freight into the networks suddenly, we will never really know but one thing's for sure to see a freight record broken without a direct link or reference to an event is a telling sign that congestion is immediately ahead.
We had sent our August newsletter on the 5th and ironically claimed that freight had been working surprisingly well up to that point - which was true and remarkable given our sense things were not as they should be.
Sure enough, it was the calm before the storm for in just a few short days we would be regretting that statement as it came back to bite us hundreds of times over and over.
When Melbourne entered Stage 4 restrictions, there was a lot of confusion about who was allowed to keep running and how this might affected businesses. For us it was business as usual, but with stricter COVID-safe plans, so we couldn't initially see what all the fuss was about.
Behind the scenes apparently AusPost was close to being forced to heavily restrict their operations in Victoria as last minute, frantic negotiations with the state government enabled concessions for AusPost to continue, albeit at reduced capacity.
Without warning or notice, at some point in early August, probably around the time Stage 4 was implemented, AusPost made a secret decision to process some of the Victorian freight via the Sydney Parcel facility. That is, just load unsorted parcels into semis and truck them up to Sydney for scanning and routing.
The decisions about what they sent to Sydney were arbitrary - it affected every sender equally.
The communications to retailers and merchants was appalling by virtue of the absence of any specific detail - all it said was that some parcel tracking may show unusual or different routing without qualifying what that really meant.
By unusual or different, you might think OK, they are going to use the Dandenong Mail sorting facility in conjunction with the Melbourne Parcel Facility - across town, not bloody well trucking them interstate and back again to hide in dark warehouses for up to 2 weeks!
At no point in the first 15 business days of August when AusPost was handling up to a million parcels every day in Victoria did they advise us, or presumably any other merchant of their internal decisions to route a portion of Victorian and Tasmanian freight via Sydney - that important fact didn't come out until the 3rd week of August and well after the pain was inflicted upon Melbourne recipients.
So we got smashed, slammed and dragged around like a rag doll by Melbourne customers complaining about delays and why their parcels are stuck in Sydney. Ironically it had been a big 3 weeks in August for us with parcel volumes up 25% and Melbourne roughly 40% of our total order volumes, that's a lot of parcels stranded.
Some customers were really quite reasonable and understanding (thank you), others were brutal in blaming us when it's completely outside of our control.
We ended up running around Melbourne in the late afternoons before the curfew with coffee in the van delivering emergency supplies to some of our local customers that had parcels stranded, but it was futile trying to scale that process rapidly.
At the time, we tried to make some sense of what was happening - our interstate customers were seeing acceptable transit times, but almost all our Melbourne customers were experiencing significant delays at a time of the strict Stage 4 lock down.
Melbournians had been giving up so much for so long to fight the COVID battle and yet they were once again being further penalized by having their parcels disappear into the Bermuda Triangle that was AusPost Victoria in August.
The routing via Sydney was a secret that nobody in AusPost was willing to reveal or communicate properly. Every time we asked pointed questions, it was met with "please have some patience, we are experiencing higher volumes and we have less resources". Nobody would give us a decent answer, just some cut and paste generic response.
We initially thought the most logical explanation was that AusPost had loaded ULD's (cages) of parcels on the wrong truck by mistake and it's gone via Sydney - having seen this many times previously in the past.
Then it started happening on different days - first the manifests from Monday 3rd August, then the 4th and the 5th, 6th and so on - surely this was no routing error and something more deliberate was going on but we could not see it until Melbourne customers started complaining about delays more than a week later.
There were also rumors circulating that AusPost had shutdown the Melbourne Parcel Facility due to staff infections and deep cleaning as it is located in one of Melbourne's virus hotspots, so routing everything up to Sydney kind of made a bit of sense, albeit annoying.
The incidents for delivery delays kept piling up and getting worse every day. Customers were frustrated, angry and at times unreasonable in demanding we do something to fix it. But nothing was making sense as it kept point back to Melbourne delays and AusPost was unable to implement any plans to remedy.
August freight congestion in Victoria was to some extent another Groundhog Day with the same situation occurring back in late March and April when panic buying caused extreme congestion in the parcel networks although that was more widespread around Australia.
With over a thousand of our own parcels stranded in the AusPost network it was stressful for us to cope with the daily pressure from customers angry their parcels had been delayed and being totally impotent to fix it.
We have access to senior AusPost executives from earlier escalations and we leveraged this privilege to understand more about what was happening as the support centres were like robots with their generic pre-scripted responses.
AusPost Executives explained the situation and then it all became abundantly clear......albeit too late. AusPost was not coping with the abnormal demands from the surge of online shopping and they were in fact experiencing serious trouble in Victoria.
The Melbourne Parcel Facility has a peak processing capacity of 600,000 parcels per 24 hours and that's pre-pandemic running with full staff and 3 shifts.
To comply with government restrictions, AusPost had to cut back to 2 shifts and reduce their staff by 1/3.
This meant they could at best only process 300,000 parcels per day and that's assuming the ugly freight is being managed properly.
Problem was though, more than 1 million parcels were being jammed into the AusPost Victorian parcel network every day it certainly does not take a rocket scientist to work out things are going to end up pear-shaped really quickly and that's exactly what happened by the beginning of the 2nd week in August.
In AusPost's words, there was no respite, every day they were being overloaded with parcels and had no choice but to route via Sydney to avoid a gridlock around the country, but they could have handled it a lot better by informing merchants of this decision, rather than letting everything blow up for a long time and then hiding behind lame excuses of delays.
With too much freight being lodged, all AusPost can do is store cargo in dark warehouses until they have time to process it - but time and resources were not available.
As we saw with the delays in April, hundreds of thousands of parcels get stuck in these dark warehouses for too long as they don't have enough resources and often the concept of First In, First Out (FIFO) gets abandoned.
Bear in mind, these temporary storage locations don't have the full array of systems and staff to keep things moving in an orderly fashion and you must also remember, nobody and I repeat NOBODY will go looking for a delayed parcel, they always wait until it passes through a scanner or Xray system, so in reality pleas for help go unanswered or ignored.
On the bright side, some parcels were managing to get through in reasonable time, but largely it's totally random as to what arrives and when and today it's performing a lot better than during the first 3 weeks of August. Rough finger in the air, I'd say about 90% of Victorian freight during August suffered delays and at least 40% seriously unacceptable delays, but we can't tell accurately because they won't provide delivery performance reporting tools.
Behind the scenes, I suspect there has also been a bit of game-playing by some parts of the AusPost workforce, but of course we can't substantiate or prove it.
Each time AusPost suffer congestion and we have been through this 40 or 50 times before, there is extreme pain for everyone, that pain continues for a week or more then they cave into the pressure by lifting overtime thresholds for AusPost workers.
Nobody wins in those circumstances - the retailer suffers a terrible black eye and the customer gets the shits and often mistakenly thinks it's the sender's fault or shops elsewhere thinking another retailer gets a better grade of freight service - which is a false or invalid assumption.
How AusPost manage to clear congestion miraculously remains a mystery, but we have our suspicions. AusPost, like most large enterprises are ruled by accountants, not entrepreneurs.
Service performance means little when you own the largest market share and a virtual monopoly so AusPost continue run their business using cost metrics, not customer feedback, often it's more about achieving higher efficiency by cutting out costs rather than expanding capacity and improving performance.
If you think this is just throw away rhetoric and venting- take this real example.
Our afternoon pickup collections can at time be difficult for no reason other than AusPost claim it's because there are less drivers or vans available or that our area only justifies one van run.
It's not a new problem that arose during the pandemic, we have been fighting this battle for at least 4 years and at one point they forced us to use large cages and load them into trucks using a forklift at night despite having 50 vans in the local depot with most of them running around the nearby streets almost empty.
The commercial estate we reside in has grown in size by 900% in the last 3 years and still they won't take this added demand into consideration - almost every warehouse in our area sends out freight everyday, but AusPost stick their heads in the ground and ignore it, pretending it's still 2009 - this is precisely the culture of cost control, not service outcomes.
We saw the same thing back in April - first the Executives allegedly put overtime bans in place, everything gets clogged and congested, followed by complaints that become too painful and they lift overtime limits, workers start getting parcels cleared over weekends, evenings, etc. hence the backlogs disappear relatively quickly.
As a business trying our best to always achieve great outcomes for our customers, these sorts of ding-dong decisions by AusPost executives are just infuriating because they keep lifting prices and never offer discounts or refunds when they stuff up.
Australia's parcel networks simply don't cope with anomalies.
It's never been able to perform during Easter, Mother's Day, Xmas, January, Black Friday/Cyber Monday, Public Holidays, School Holidays or the October and November peak freight periods.
We are just about to enter the peak freight season now - running from September through to the end of January. Historically, it's this period where freight runs the slowest, due to the inventory build up for Cyber Monday/Black Friday, Xmas and the short staffing during January.
AusPost Executives don't see the parcel networks improving until the end of January 2021 as the demands for parcel freight keep on rising. That's quite a frightening prospect if I'm being honest.
So the moral of this story is simple - plan ahead, order early, expect delays and please be patient.
Every merchant and retailer has the same access and grade of service with AusPost, nobody gets special treatment, except medical supplies and that's less than 0.4% of parcel volumes.
When we get time, we will continue to explore alternatives that help mitigate parcel freight meltdowns by moving inventory via different methods as relying upon fragile parcel networks remains a key risk to our customer experience and a situation we have no control over.