Demand Volatility in Logistics Operations and its Effects on Operational Management within Parcel Service Providers

Sammanfattning

The recent explosion in popularity of e-commerce has contributed to increased volatility of demand in parcel logistics chains, giving rise to the conflict between the rigidity of the physical and human resources and unpredictable volumes of parcels generated by consumers' orders. While there is a considerable body of research dedicated to last-mile logistics from a strategic point of view, surprisingly little research has focused on the impact of this phenomenon on the operations of the people involved. This paper explores how demand volatility affects the operational activities of parcel service companies, focusing on how volume variations affect route planning and capacity use, what problems emerge when dealing with high and low demands, what adjustment methods are used, and whether they lead to solving the initial problem or to secondary issues. This paper employs qualitative design of case studies based on semi-structured interviews with operational managers, terminal workers, coordinators, and drivers of five parcel delivery organizations – UPS, Airmee, Bring, Bonway and PostNord – in Sweden, including representatives from different organizational levels, from drivers to area managers. Thematic analysis with six pre-established themes was performed to analyze the results. As a result, it was found that demand volatility occurs systematically and depends on the peculiarities of each organization, following company-specific weekly and seasonal patterns caused mainly by e-commerce. High volumes pose capacity constraints for sorting operations, human resources, and transportation vehicles, while low volumes pose idle cost concerns due to similar constraints. The coping strategies include flexible scheduling, real-time route adjustment, and managing capacity outside the organization; however, all of them have their own secondary costs. Information asymmetry, uncertainty associated with upstream supply chain dynamics, and lack of real-time destination information emerged as the reasons why all organizations struggled to implement plans in practice. Overall, the main finding was that demand volatility was handled but not solved, with experiential judgment playing an essential role alongside technologies-based forecasting techniques.