Online shopping volumes force transformation of postal networks

The UK’s postal sector is being forced to embrace cutting-edge technology to transform networks for a parcel-dominated future, according to a new report by leading supply chain consultancy TMX Transform.

The report, titled “Collapse or Revolution: How a smart supply chain can deliver for postal,” highlights how postal operators are adopting AI, automation, and network redesign in a booming e-commerce era. The research features interviews with TMX inhouse postal experts, including Australia Post’s former Group Chief Operating Officer Bob Black, former Chief Customer Officer Christine Corbett, and former General Manager Strategy Ben Franzi; as well as TMX Transform’s global executive director of supply chain, Tom Fitz-Walter, and supply chain directors Max Reynolds and Jamie Dixon.

In Britain’s postal sector, legacy sorting systems struggle with today’s parcel complexity, while infrastructure designed for letters cannot efficiently handle the e-commerce explosion. The last mile, faces additional pressures from urban congestion and rising customer expectations.

“There is tension between achieving speed, reliability, and cost. Consumers need choice, but in many cases must choose between speed and price. There’s a trade-off,” Bob Black, TMX Transform non-executive board director and postal expert said.

“We’re seeing a global shift. Royal Mail is challenging six-day service mandates, and PostNord will stop delivering letters altogether by the end of 2025. The Universal Service Obligation is being redefined to reflect a parcel-first future,” said Black, who brings over 30 years of postal industry experience to the analysis.

The transformation is already happening on UK soil, with Royal Mail making significant technology investments across its network. Earlier this month, the postal operator unveiled a solar-powered “postbox of the future” with a built-in barcode reader and a hatch to accept parcels larger than letterbox size. Described as “the biggest change to postbox design since their introduction more than 175 years ago,” the innovative units feature solar panels that power a barcode scanner, allowing customers to easily drop off parcels with pre-paid postage.

“Smart organisations are moving from static planning to systems that update constantly by the second, by the hour, by the day,” said Black. “It’s not just about one part of the supply chain – it’s about creating an end-to-end view that’s holistic, dynamic, and gives you solutions rather than just data. AI isn’t specific to just one part of the supply chain. It needs to integrate across the entire process from manufacturers and their suppliers through to final delivery.”

The whitepaper identifies three key pillars essential for postal success in the digital era:

1. Network Redesign: Consolidating fragmented facilities into technology-enabled hubs positioned at the “centre of gravity” where demand is highest
2. Last-Mile Optimisation: Implementing sophisticated route optimisation and out-of-home delivery solutions to manage the rising costs of final delivery
3. Automation & AI: Deploying artificial intelligence and simulation technology to predict, adapt, and optimise operations in real-time

The report reveals that strategic network redesign alone can deliver significant financial benefits, with organisations experiencing a 15% year-over-year cost reduction once implemented.

“The question is: what does your network look like? You need to design both the network and its nodes with a specific function in mind. Then, you can assess the level of automation required to achieve that function effectively. It might be enabling a significantly higher product flow through the node to ensure on-time delivery to customers,” Tom Fitz-Walter, TMX global executive director supply chain said.

“We’re seeing a 15% year-over-year cost reduction once these network optimisation strategies are implemented — but this isn’t just about saving money. In postal, it’s about survival through growth. If you can’t move volume, you’ll lose customers, full stop. Smarter network design shouldn’t be a cost-cutting measure; it’s a customer retention strategy. This is an investment in resilience because your workforce will change. The question isn’t if, it’s when, and you need to be ready,” Fitz-Walter says.

With parcel volume expected to double over the next five to seven years, postal operators that embrace these technological advancements will be best positioned to thrive in the increasingly competitive delivery landscape.

TMX Transform has partnered with postal organisations worldwide, including Royal Mail, Australia Post, New Zealand Post, and Singapore Post, to implement these transformative technologies and strategies.

The complete whitepaper “Collapse or Revolution: How a smart supply chain can deliver for postal” can be downloaded here: https://tmxtransform.com/postal-and-parcel-whitepaper/