One of the toughest challenges for all logistics companies is creating a realistic parcel volume forecast. While operational costs continue to rise due to market dynamics and increasing shipping volumes, Hermes Germany decided to take a proactive approach. To tackle this major challenge, the company launched an important initiative aimed at optimizing capacity planning and reducing inefficiencies. By moving away from reliance on sales-provided estimates, which often included customer inputs and intuition, Hermes Germany sought a more data-driven and automated solution.
Challenges
Hermes Germany relied heavily on forecasts provided by their sales team. These forecasts were often inconsistent and based on customer estimates, incorporating a degree of subjective judgment. This led to a lack of precision in planning. Planning at a superficial level caused resource inefficiencies and significantly increased costs, especially when inaccurate forecasts required last-minute procurement of additional truck capacities. These adjustments were not only expensive but also disrupted overall operations. The growth in shipping volume, coupled with the COVID-19 pandemic, geopolitical events, and market inflation, further underscored the need for a robust and automated forecasting solution.
Solution
Hermes Germany partnered with paretos to implement an AI-powered forecasting system tailored to their needs. This system automated parcel volume forecasting for the next 12 weeks, using historical data and custom metadata, such as shipment direction and region. Additionally, date-related features — including day of the week, month of the year, and others — were incorporated to enhance accuracy. With these refinements, paretos delivered precise forecasts for both shipments and returns across Germany and Europe.Vaibhav Rajendra Deoghare, Business Analyst at Hermes, explained, “By partnering with paretos, we’ve transitioned to a system that not only increases accuracy but also saves time. This is a significant step towards a more strategic and competitive operational model.”
Results
Since implementing paretos’ solution, Hermes Germany has achieved significant improvements. The automation of forecasting processes decreased manual effort, allowing the team to focus on strategic initiatives. These results have transformed Hermes Germany’s planning approach, providing a reliable foundation for future growth. Over one quarter, forecast accuracy improved by 6 million parcels, a milestone that significantly impacted cost savings and operational efficiency.
With the successful implementation of paretos’ AI-driven solution, Hermes Germany is well-positioned to further enhance its forecasting capabilities. The company plans to integrate additional variables, such as public holidays and special promotions, to refine accuracy even further. As Hermes Germany continues its journey toward operational excellence, the partnership with paretos remains central to its strategic goals.
