Inside the robot superhub delivering a glimpse of Royal Mail’s future

Josh Mewes was elated when he first saw Royal Mail’s new “superhub” in Warrington, outside Manchester.

© Paul Cooper
Royal Mail’s new automated warehouse for parcels in Warrington – Paul Cooper

“I stopped and it was like looking at the Grand Canyon,” says the operations manager. “This place is going to change so much for us as a company.”

That’s the hope, at least. The robotic plant is part of the 506-year-old institution’s aim to automate almost all of its increasingly lucrative parcel business by 2023-24, up from a current roughly 70pc.

It comes amid cut-throat competition from other logistics players such as Amazon, and increasingly demanding customers.

Meanwhile, the top brass is under pressure to arrest the company’s share price as Czech businessman Daniel Kretinsky, who owns around 20pc, watches on. Royal Mail has shed almost half of its value since the start of the year as fears over industrial unrest loom large this summer.

Parcels are a key plank of chief executive Simon Thompson’s vision. Currently accounting for about 56pc of the group’s £8.5bn revenue, sites like the one in Warrington are targeted to boost those figures higher.

The 32,000 square metre depot – equal to 4.5 football pitches – is capable of sorting more than 800,000 parcels a day using robots, before delivering them across the north-west of England.

It is expected to employ 600 staff at full capacity, albeit making some jobs redundant elsewhere in the ecosystem as few packages are expected to touch the human hand.

As demand for handwritten notes dwindles and shoppers turned to home deliveries in record numbers amid the pandemic, Royal Mail has become a self-professed “parcel business that also delivers letters”.

© Provided by The Telegraph
Royal Mail’s new automated warehouse for parcels in Warrington – Paul Cooper

Five billion parcels were sent in the UK in 2020, up from 3.8bn in 2019, with 160 boxes shipped every second – or 14m each day. It meant Royal Mail made most of its money from dispatching packages rather than letters for the first time in history.

Although demand has cooled off with customers returning to physical chains in recent months, domestic parcel volumes are still up more than 30pc compared to pre-pandemic levels, the company claims.

The superhubs are part of a wider revamp after years of underinvestment since Royal Mail was privatised in 2013. It formally split from the Post Office a decade ago, although the pair still work closely together.

A second depot, in Northampton, is due to be launched by summer 2023, with a third possibly in the pipeline.

In Warrington, a truckload of Boohoo orders makes its way on to an intelligent system of conveyor belts and scanning technology.

A few metres away, packages from Boots, Asos and Myprotein in large, red containers are picked up and placed by tall robotic arms onto the conveyor belts. They then reach hundreds of ‘slides’ that determine which postcode they are destined for, before being loaded onto vans on the other side of the building.

Royal Mail says it can receive last-minute orders from retailers nearby – “even at 1am” – and send them to customers the next day, something it was unable to do in the past, which it hopes will give it a competitive edge. It can also accept larger parcels – a barbecue, for instance, weighing up to 30kg.

© Provided by The Telegraph
Royal Mail’s new automated warehouse for parcels in Warrington – Paul Cooper

The so-called flow room upstairs allows its handful of engineers to orchestrate the routes of its 94 trucks, 24 hours a day, and keep an eye on each individual parcel once it enters the warehouse.

A wall of CCTV screens and live data feeds capture the health of robots and the wider systems, while technicians use walkie-talkie radios to speak to colleagues “on the floor” and resolve any issues that might arise – even illegible addresses on parcels.

Such technology marks a shake-up for Royal Mail that has, until recently, struggled with a lack of automation. Yet it still has a way to go – and competition to fight.

“They have been way behind everyone else because they’ve been historically state-owned, capital-constrained, unionised and a large national bureaucracy,” says Gerald Khoo, a transport analyst at Liberum.

“Royal Mail is evolving, but it’s very much catching up rather than leading. It has always been light and slow, ideally things that will fit through a letterbox. That end of the market is in decline.”

Royal Mail’s dominance of the letter market, enabled by 90,000 posties walking to 31m addresses up and down the country, is not mirrored when it comes to parcels.

Rivals such as Hermes and DHL have been stealing market share in recent years by offering lower prices and deliveries on Sunday or the same day.

The biggest threat, however, remains Amazon’s logistics business which has become the number two player in the UK since launching in 2012.

Royal Mail may take comfort in the fact it is still the leading parcel courier, accounting for just over a third of the market in 2020, compared to 15pc for Amazon, according to data from logistics company Pitney Bowes.

Grant McPherson, chief operating officer, rejects suggestions that Royal Mail has been slow to adapt to the rise of online shopping and parcel delivery.

“I think any company would like to be at the cutting edge of technology and I think we are,” he says. “Doing things sooner? I think this is the right time.”

He describes Amazon, which is also a customer, as “healthy competition”.

“We see some of the great things that they do, we deliver quite a lot of parcels for them because we go to places they don’t go or don’t want to go.”

He adds: “Competition is good, it’s healthy and it spurs us on. We want to be ready for the future, [and] the explosion that is coming in parcels.”

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