Multi-level postal network for improved efficiency: A case study of Slovenian post

The purpose of this paper is to analyse the possible improvement in logistics solution of the Post of Slovenia through reorganisation of the hierarchy of the postal system with the introduction of regional postal centres and parcel post, based on the improvement of the transportation between the postal units. The hypothesis is that by changing the spatial hierarchy and allowing retention and transhipment of parcels among hubs at different levels, economies of distribution costs can be achieved. With the introduction of regional parcel centres and parcel posts, the current two-level parcel distribution (postal centres and posts) is reorganised into four-levels, with the objective to overcome problems that arise at the postal logistics centres and to reduce transport costs. The function of the postal logistics centre remains the same. The postal logistics centre continually collect, process and dispatch parcels. The only difference is that the trucks collect and deliver parcels to a greater extent from and to the regional parcel centres. Up to now, they have only collected and delivered parcels from and to smaller post offices. The improvement aims to reduce transport costs at parcel distribution that represent more than 10% of the share of distribution costs (between the initial and final post office). The remainder of the costs includes the collection, redirection and delivery of parcels to the addressee. We will prove that despite the relatively small percentage of transport costs, the savings could indeed be great due to parcel separation in the area covered by the Postal Logistics Centre, Ljubljana. The solution to the system at four levels indicates lower transport costs where additional fixed costs for introducing regional parcel centres are included.