June 19 (Bloomberg) -- Deutsche Post AG, Europe’s largest mail service, is adding parcel centers and delivery sites with automation equipment to speed dispatching as a boom in online shopping may lift deliveries to more than 1 billion this year.
“The e-commerce boom means customers want convenience services, like same-day deliveries,” Uwe Brinks, the company’s chief production officer, said in an interview today in Obertshausen, Germany at the inauguration of its largest parcel center. “In order to achieve that, we need mechanical sorting equipment, and we need to move fast.”
Deutsche Post is pushing online shopping partly to help offset declining demand for traditional mail. While shoppers in Europe’s biggest economy are lagging behind the U.K. and some U.S. locations in Internet shopping, more web-based ordering means demand for the service is likely to grow by as much as 7 percent a year, according to the company’s estimates.
The Bonn, Germany-based company will spend a “double-digit” million euro amount on the Obertshausen center, the largest single investment in a budget of 750 million euros ($1 billion) to upgrade its delivery network, Brinks said. At the size of five soccer fields and able to handle 50,000 units per hour, the facility is the largest in Europe and has about double the capacity of the company’s 33 existing centers.
Deutsche Post will also build 60 new smaller delivery sites with automation equipment installed this year and next, expanding its network of 200 sites. With the majority of standard parcels handled in the morning, these locations will enable deliveries for goods on the evening of the same day they’re ordered, a service currently being tested in the Cologne region.
Brinks said the company may handle between 1.5 billion and 2 billion units per year by 2022, as online sales of fast-moving consumer good such as food and toiletry articles are still in its infancy in the country. The company’s market share in parcels may climb to 42 percent this year from about 41 percent.
“We are looking for new sites, and we are looking at expanding our existing sites,” Brinks said. “Online shopping has enormous potential.”
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