“Isn't it nice to think that tomorrow is a new day with no mistakes in it yet?.” — L.M. Montgomery
mycuppa September 2020 Newsletter
August almost broke us - well, not the business, but in some respects our spirit.
AusPost in Victoria experienced a meltdown of epic proportions, stranding thousands of our parcels for too long.
Still, it was not just us; every retailer was receiving 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 significant congestion periods over the last 13 years, this was undoubtedly the worst, and I'm 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.
AusPost has started slowing down interstate connections to help Victoria catch up, so the overall delay is spreading around the country instead of being isolated in Victoria for most of August.
Consider looking at Sendle as an alternative in the short term. We do not have open incidents with Sendle, but there are plenty still with AusPost, albeit trending down.
Read our blog below on Groundhog Day, AusPost hits the wall - a scathing analysis of why freight performance fails retailers and consumers so severely in Australia.
There's quite a bit of excitement surrounding this month's Secret Label. We love the silky, rounded and sweet notes of milk chocolate, caramel, toffee and a buttery, syrupy and delicious cocoa body.
Playing it safely in the middle, we love the acid balance in this Secret Label, likely to appeal to those black coffee drinkers so often neglected by Australian coffee roasters. Milk has an incredible array of rich, smooth and creamy sweet chocolate flavours with a delicious balance.
Many of you may wonder why we use plain white bags instead of our custom packaging.
The supply of custom bags has been complicated since the pandemic, as no coffee bags are manufactured in Australia (our Australian supplier sources them from a specialized manufacturer in Taiwan).
Lead times have blown out to over four months, so waiting for our last 40,000 bag order to arrive remains an ongoing challenge. The plain white bags are precisely the exact specifications.
Please take our advice and order your supplies earlier, whether from us or anyone else and allow more time for transit - just like COVID, this frustrating parcel network congestion will be with us for a while!
After 13 years of relying upon parcel networks around Australia, we could see the early signals.
Pressure was building, more and more retailers had pivoted to online, and some had abandoned their brick-and-mortar stores.
Parcel networks were already at choke point capacity - vans and trucks were turning up at our warehouse in the afternoons already complete, 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 should be relatively simple: more vans and drivers. Even if you have to hire the vans, it's not that hard when a business grows at such frantic rates - many say it's a good problem.
Too much freight was moving around the country via the parcel networks instead of the more efficient sizeable pallet-type bulk transport feeding traditional retail stores. Despite all the media reports of economic doom during the pandemic, consumers were 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. Plenty of oversized, bulky items cause the automated systems that scan and route excellent cube-shaped cardboard cartons to suddenly 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 discussing tighter restrictions.
In our communications during June and July, we urged our customers to order earlier, allow more time for transit, and, significantly, never rely upon or assume parcel networks are working like they did 12 months ago - things are way different now. The new norm 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 in late July, claiming AusPost had smashed a record for parcel volumes just a week earlier.
So, his post was around two weeks before Melbourne entered Stage 4 restrictions, and there was certainly nothing to suggest they were experiencing congestion - quite the opposite as it appeared to be something akin to a chest-beating triumph.
Seeing a significant surge in parcel volumes when there was no "major sales event" or critical driver for consumers to buy immediately piqued my attention - I wonder what's causing this record level of parcel freight?
Maybe the Stage 3 "stock up" or panic-buying fuelled the surge, or perhaps it was from a large retailer or national marketplace running special promotions and suddenly dumping tons and tons of freight into the networks. We will never really know, but one thing's for sure: seeing a freight record broken without a direct link or reference to an event is a 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 authentic and remarkable given our sense that 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 regret that statement as it came back to bite us hundreds of times over and over.
When Melbourne entered Stage 4 restrictions, there needed to be more clarity about who was allowed to keep running and how this might affect businesses. For us, it was business as usual, but with stricter COVID-safe plans, we couldn't initially see the fuss.
Behind the scenes, 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 Stage 4 was being introduced, AusPost made a secret decision to process some of the Victorian freight via the Sydney Parcel facility. 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, affecting every sender equally.
The communications to retailers and merchants were appalling because of the absence of any specific detail - all it said was that some parcel tracking might show unusual or different routing without qualifying what that meant.
By unusual or different, you might think, OK, they will 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 daily 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 critical fact didn't come out until the 3rd week of August, after pain inflicted upon Melbourne parcel recipients.
So we got smashed, slammed and dragged around like a rag doll by Melbourne customers complaining about delays even though we shipped orders immediately the same day.
Ironically, it had been a big three weeks in August for us, with parcel volumes up 25% and Melbourne roughly 40% of our total order volumes. That's many parcels stranded.
Some customers were quite reasonable and understanding (thank you), and others were brutal in blaming us when it was entirely outside our control.
We ran around Melbourne in the late afternoons before the curfew with coffee in the van, delivering emergency supplies to some of our local customers who had parcels stranded. Still, it was futile trying to scale that process rapidly.
We tried to understand what was happening at the time - our interstate customers saw acceptable transit times. Still, almost all our Melbourne customers were experiencing significant delays during the strict Stage 4 lockdown.
Melbournians had been giving up so much to fight the COVID-19 battle for so long. Yet, they were 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.
The most logical explanation was that AusPost had loaded ULDs (cages) of parcels on the wrong truck by mistake, and it's gone via Sydney - having seen this many times previously.
Then it started happening on different days - first the manifests from Monday, 3rd August, then the 4th and the 5th, 6th and so on - indeed, this was no routing error. Something more deliberate was happening, but we could only see it once Melbourne customers complained about delays more than a week later.
Rumours also circulated that AusPost had shut down the Melbourne Parcel Facility due to staff infections and deep cleaning. It meant that all Victorian parcels were trucked to Sydney for sorting.
The incidents of delivery delays kept piling up and getting worse every day. Customers were frustrated, angry and sometimes unreasonable in demanding we do something to fix it.
Everything kept pointing back to Melbourne delays, and AusPost could not 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. However, that was more widespread around Australia.
With over a thousand of our parcels stranded in the AusPost network, it was stressful for us to cope with the daily pressure from customers angry that their parcels had been delayed and being impotent to fix them.
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 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 experiencing severe 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 entire staff and three shifts.
To comply with government restrictions, AusPost had to cut back to 2 shifts and reduce their staff by 1/3.
It meant they could, at best, only process 300,000 parcels daily.
The problem was that 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 will be pear-shaped quickly. That's 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 flimsy excuses of delays.
With too much freight to manage, AusPost stores cargo in these dark warehouses until they have time to process it. But crucial time or resource level never becomes unavailable.
As we saw with the delays in April, hundreds of thousands of parcels get stuck in these dark warehouses for too long. The simple or basic concept of First In, First Out (FIFO) often needs to be revised.
Bear in mind that 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 that 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 managed to get through in a reasonable time, but it's random as to what arrives and when, and today, it's performing better than during the first three weeks of August. Rough finger in the air, about 90% of Victorian freight during August suffered delays and at least 40% seriously unacceptable delays. However, we can't tell with any sense of accuracy as AusPost won't provide delivery performance reporting tools.
Behind the scenes, I suspect some parts of the AusPost workforce have played some game-playing, but 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, and 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 cleared 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 continues to run its 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.
Take this real example if you think this is throw-away rhetoric and venting.
Our afternoon pickup collections can sometimes be intricate for no reason other than AusPost. They claim it's because fewer drivers or vans are 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 four 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 900% in the last three years. Still, they won't consider this added demand - almost every warehouse in our area sends out freight daily.
Yet AusPost sticks its head in the sand by ignoring demand, pretending it's still 2009—a culture of cost control instead of service quality outcomes.
We saw the same thing back in April. First, the Executives allegedly put overtime bans in place, and everything gets clogged and congested, followed by complaints that become too painful, and they lift overtime limits. Workers start getting parcels cleared over weekends and evenings. The backlogs can soon disappear relatively quickly.
As a business trying our best to achieve excellent customer outcomes consistently, these sorts of ding-dong decisions by AusPost executives are infuriating because they keep lifting prices and never offer discounts or refunds when they stuff up.
Australia's parcel networks 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 from September 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 see the parcel networks improving at the end of January 2021 as the demands for parcel freight keep rising. That's quite a frightening prospect.
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 as 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 critical risk to our customer experience and a situation we have no control ov
