Last mile Hermes invests over 100 million euros

Over the next five years, Hermes Germany will be investing over 100 million euros in wage and personnel costs for parcel delivery. Service partners working for Hermes will thus be in a position to pay their delivery staff an hourly wage of at least 12 euros.

Hermes distribution center in Rostock, Germany

Over the next five years, Hermes Germany will be investing over 100 million euros in wage and personnel costs for parcel delivery. Service partners working for Hermes will thus be in a position to pay their delivery staff an hourly wage of at least 12 euros. In the 2019 financial year, an initial increase to at least 10.15 euros will be implemented, already significantly higher in many metropolitan regions such as Munich. This is largely being financed by an increase in parcel delivery charges. On 1 November, Hermes also launched its first peak surcharge for retailers in the run up to Christmas.

Hermes Germany is currently cooperating with around 280 service partners who provide up to 95 percent of Hermes’ delivery services in Germany. Service partners are wholly independent companies that apply to deliver parcels on behalf of Hermes and operate with their own staff. All Hermes service partners are regularly audited by external organisations; in 2018 all partners were audited. Since its introduction in 2012, the auditing process has been successively optimised and enhanced. One special focus of the external monitoring measures lies on compliance with applicable wage and working time laws.

“In times of booming online retail, delivery staff and our service partners are the backbone of parcel delivery operations. With this significant investment of more than 100 million euro, we are looking to strengthen this cooperation and ensure that the couriers get increased recognition for their performance,” says Olaf Schabirosky CEO of Hermes Germany. “We are gradually increasing the remuneration paid to our service partners so that they in turn can pay their employees higher wages across the board. An hourly wage of more than 10 euros has been initially planned for 2019. We are gradually raising this internal wage threshold to at least 12 euros per hour.”

Higher prices for higher wages

The increase in wage and personnel costs has been made possible, among other things, by a price hike for parcels. Hermes had already announced at the back end of February that it would generate additional income from price adjustments as of 1 March in order to invest in the remuneration paid to service partners and delivery personnel. The same applies to the peak surcharges in the Christmas business, which have been in effect for the first time since 1 November. “Further price adjustments are planned for next year – not only to further raise delivery staff pay, but also with a view to future-oriented investments in infrastructure, digitization and electromobility,” says Olaf Schabirosky.

Most recently, Hermes invested several million euros in the introduction of digital route planning software to facilitate intelligent route and traffic planning. The software is also used by service partners nationwide and is intended, among other things, to simplify the induction of new delivery staff. At the same time, Hermes is pushing ahead with the expansion of the nationwide ParcelShop network, which is to be expanded to up to 20,000 drop-off/pick-up points. Parcel recipients can use ParcelShops free of charge as an alternative delivery address, e.g. for online orders, and have up to ten days to collect their parcels. This consolidated delivery of parcels to a single delivery point, e.g. a ParcelShop, is economically efficient, reduces traffic congestion and emissions and relieves the stress on couriers.

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