Principles of CEP services {courier, express and parcel services}

Networks as keys to success
Since their market introduction in the middle of the 1970s, courier, express and parcel services have successfully grown. Two reasons for this development are the clearly structured processes used in the transport services and modern information processing. Another reason is the special services that are provided to customers. By offering these innovations, CEP service providers have established themselves around the world in the logistics-services market.
The types of networks in the CEP market
The basis of CEP services (Courier, express and parcel services) is distinct networks. These networks can be designed to suit the form of product. As a result, various types of networks have arisen in the CEP market. These networks are the direct-service network, the multi-stop network, the depot network and the hub-and-spoke network.

Direct-service network The direct-service network is the simplest form of network. This point-to-point network is used particularly by city couriers. But national and international courier services also frequently employ this concept, particularly for shipments of time-critical or valuable goods.

Multi-stop network
In multi-stop networks, pick-up and delivery points are linked. These networks - also known as “milk runs” - employ consolidation to increase the utilization rate of vehicles. But, this type of network places higher demands on transport and route planning. Multi-stop networks are used in traditional postal services and in the transport of general cargo. But they are employed rarely in CEP logistics.

Depot network
A depot network is typically used by parcel services. In this network, a depot for pick-up and delivery runs is erected in a region. Shipments between the individual depots are carried out. Planners of a depot network must keep in mind that drivers have to be able to maintain their allowed travel times even for maximum distances. A depot’s primary functions are transshipping and consolidation. High shipping volumes are required to achieve efficient use.

Hub-and-spoke networks
A hub-and-spoke network consists of a central hub and distant warehouses. A single connection exists between the individual warehouses and the hub. This type of network minimizes the necessary number of transport connections. For parcel distribution, hub-and-spoke networks are frequently combined with depot networks. Here, transports on busy connections are performed with direct service shipments (as in depot networks). In planning a hub-and-spoke network, one consideration must be that all depots can be reached from the hub in approximately the same driving time. This is why a hub is usually located in the central part of a country.

Hub-and-spoke networks with sub-hubs
A hub-and-spoke network can be expanded through the use of sub-hubs. In busy regions - e.g., the Ruhr region in western Germany or in the economically strong region of southern Germany - shipments that have the same target region are pre-sorted in regional hubs. This takes pressure off transports to the central hubs and reduces transport procedures. As a result of Germany’s toll on trucks, transports have become more expensive. To reduce the number of driven kilometers, increasing numbers of regional hubs are being built.

Pioneer in information processing
In the area of information processing, parcel services have proven to be pacesetters in the introduction of innovative concepts for the entire logistics industry. CEP services have used advances such as barcode technology to ensure a high level of process security and delivery service. A parcel’s Barcode is scanned at all important stations of the entire distribution process and logged as a timestamp in a computer system. This applies to stations like pick-up, arrivals in a regional and central hub, and deliveries to recipients. As a result, information about transported goods is available throughout the entire transport chain.
To further improve processes, CEP service providers are reviewing the possibility of using innovative communication and identification technologies like RFID (Radio frequency identification).

Customer-service innovations
Parcel-service providers were one of the first groups to offer their customers “track and trace”. This online service serves as an interface that enables people to check on the status of their shipments. In marketing, this option is seen as an important instrument to promote customer loyalty.
In addition, the rate system of CEP services is usually very straightforward and transparent for customers. It includes price lists that are based only on weight, size and time of delivery for domestic service. Price calculations can also be done when the order is placed.

References
Logistik| Vahrenkamp 2007
dhl - discover logistics - course - cep - principles