July 11, 2019
By Marlena DeFalco
Click here to see the article on the National Apartment Association (NAA) website.
For once, multifamily is at the forefront of technological innovation. Because of its many high-density, urban locations, the multifamily industry has no choice but to lead when it comes to package management solutions. It is estimated that a 250-unit apartment community receives 1,500 packages a month. Some communities watch more than 400 packages pass through their doors on a weekly basis. While the industry has already developed and implemented innovative package locker solutions to meet its current needs, it is likely physical solutions will be unable to handle the coming package tsunami.
Enter software-centric logistics solutions. Much like the delivery carriers did years ago, many apartment owners and managers are making the shift from physical solutions to software-centric logistics to improve how quickly packages are delivered to the community, picked up by residents and even returned to the seller.
“We have dynamic circumstances coming at us from all directions - volumes of packages, volumes of carriers, sizes of packages, essentially 24/7 delivery and pick-up time, and finite space constraints,” says Marvin Banks, president of M. Banks Realty Partners and former president of Cortland Partners and CFO of Gables. “These circumstances mandate an evolved level of thinking about how to address package management. If multifamily does not innovate its thought process, it will continue to be overrun with complexity and suffer from sub-optimized rental revenues, NOI and property valuations.”
Modern-era delivery Today’s delivery process is a result of changes in the distribution of goods decades ago. UPS and USPS monopolized the package delivery supply chain in the mid-1970s. Before transportation deregulation began in 1977 and was finalized in 1994, small carriers were limited to specific regions and products they could transport. Prior to deregulation, a package delivery supply chain looked like this: products were picked up by a truck and transported to a distribution center. At the center, goods were then sorted by the retailer. Once sorted, goods were moved again to a store where consumers would purchase them.
“The lifecycle of a package has shifted dramatically since the 1970s when the market was dominated by UPS and USPS,” says Dan Sullivan, former CEO and founder of FedEx Ground. “Deregulation completely shifted the distribution system. We were no longer tied to a small set of regions or particular goods. We could move more product and in greater distances than ever before.”
Sullivan saw an opportunity to optimize transportation deregulation and better meet the demand of consumers who were ordering smaller goods. He recognized how technology could automate package logistics in a way that had never been done before. “To find innovation, we looked outside of the transportation industries,” says Sullivan. “We closely monitored other industries to evaluate new technologies that could make the delivery process faster and more efficient. During that due diligence we recognized the abilities that barcode scanning could provide.”
The power to effectively, quickly and easily track every single package through its entire lifestyle proved to be the game changer. By enabling automation, package sorting, distribution, tracking and consumer notification is completed in mere seconds. Now, small deliveries are coming from everywhere. According to Statista.com, there are more than 17,300 distribution centers nationwide, and the number is growing. Both Amazon and Walmart are currently building new distribution centers in Denver and D.C., respectively. And it isn’t just enhanced logistics and the proliferation of distribution centers that are changing the landscape of package delivery. Retailers, like Target and Whole Foods, and a variety of small carriers, such as UberRush, Lyft and Shipt, are entering the delivery game as well.
The new evolution Multifamily never intended to be in supply chain logistics and does not want to be, says Banks. “But yet, we find ourselves in the epicenter due to the housing density of our product, the profile of our residents and the reality of e-commerce. This has forced our industry to allocate resources - space, people and capital - to address the growing issues.” Square feet are precious in real estate. Common area amenity space is limited and expensive to build and/or acquire. The combination of finite space for package storage and an ever-growing demand for that space as a response to e-commerce activity could be a recipe for disaster.
Given the dynamics associated with e-commerce and the tsunami of complexity coming - residents buying directly from retailers, the availability of world-wide goods distribution, the influx of small carriers and limited onsite storage space - the only viable answer, according to Banks, is a software-based logistics solution that efficiently handles the space limitations and unburdens leasing staffs.
“Every process that allows leasing staff to spend more hours on leasing improves asset valuations. It’s the highest-value time and effort of the leasing staff,” says Banks. “Any package management system providing more leasing hours accomplishes this objective. However, any systems resulting in package overflow back to the leasing office are missing the mark and hindering return potential.”
Hardware is static, while software is dynamic, explains Sullivan. As the supply chain dramatically changed after deregulation, it became apparent that technology was the only way to effectively handle a high-transaction environment at super speed.
“The buying habits of today’s consumer will only continue to grow, and it is imperative to find solutions that are easily adaptable, says Sullivan. “Without the use of software that can continually adjust to and handle the growing numbers of shipments coming in and shipments going out of a property, apartment owners will never be able to relieve the chaos.”
For a comprehensive guide on package management, check out the "How to Effectively Manage Package Acceptance" white paper from NAA. The paper tackles the pros and cons of various package management systems, including tips that could save administrative time, protect properties from liability, bring in potential additional revenue and, above all else, enhance the resident experience.