Problem Definition
Nordwind Logistics is a parcel carrier based in Hamburg. It delivers online orders to homes in northern Germany. In 2025 it delivered about 175 million parcels, roughly 4% of the approximately 4.4 billion courier, express and parcel shipments in Germany that year. Most of its volume comes from large online retailers on multi-year contracts. As a result, its average revenue of €4.40 per parcel is well below the German market average of approximately €6.50 per shipment, which also includes express and business-to-business items. Nordwind's revenue is about €770 million (175M x €4.40).
Nordwind's margins are thin. Its total cost is €4.25 per parcel, which leaves an operating profit (EBIT) of €0.15 per parcel, or about €26 million (a 3.4% margin). Costs keep rising. Germany's statutory minimum wage rose by approximately 8.4% to €13.90 an hour in January 2026 and will rise by a further approximately 5% to €14.60 in January 2027. Diesel averaged approximately €2.22 per litre in August 2026. Meanwhile, the German parcel market is barely growing (approximately +1.8% in 2025), so Nordwind cannot rely on volume growth to cover its fixed costs.
Nordwind's largest client, an online fashion retailer that makes up 30% of its volume, has asked for an 8% price cut when its contract is renewed next year. The CEO has set a target: cut cost per parcel by 10% within 18 months without hurting delivery quality. She has asked your team where the savings should come from.
Exhibit 1Nordwind Cost per Parcel (2025)
| Cost block | € per parcel | Share of total |
|---|---|---|
| Line-haul and hub sorting | 1.05 | 25% |
| Last-mile delivery (driver, van, fuel) | 2.30 | 54% |
| Failed deliveries and returns handling | 0.25 | 6% |
| IT, customer service and overhead | 0.65 | 15% |
| Total | 4.25 | 100% |
Source: Nordwind Logistics case file
Additional InformationAsk for dataInterviewer’s data
If asked, please share that:
- Almost all Nordwind parcels are delivered to the customer's door. Nordwind has no parcel lockers of its own and only a small network of partner shops
- Drivers are Nordwind employees, paid slightly above the statutory minimum wage
- Nordwind uses about 4,500 delivery routes a day, each driven by one driver in one van
- About 8% of first delivery attempts fail, mostly because nobody is at home
Question 1Structuring
How would you structure the search for a 10% reduction in Nordwind's cost per parcel?
Hint · Structuring
Build 3–4 branches that are specific to this client and question, not a generic framework. Check they don't overlap and together cover the problem.
Additional InformationAsk for dataInterviewer’s data
- A 10% reduction equals approximately €0.43 per parcel, or approximately €74M a year at 2025 volumes
- Share Exhibit 1 if not already shared
Try it first, then checkCheck my answerModel answer
A strong structure follows the cost per parcel through the network:
1. Last-mile delivery (54%, €2.30)
- a) Cost per route-day: driver wage and hours, van lease and maintenance, fuel (distance, type of vehicle)
- b) Parcels per route-day: stops per hour, parcels per stop, route planning, share of parcels delivered to lockers or shops instead of doors
- c) Delivery quality: first-attempt success, which drives repeat trips
2. Line-haul and hub sorting (25%, €1.05)
- a) Hub automation and sorting throughput
- b) Truck fill rates between hubs and depots, number of depots
3. Failed deliveries and returns (6%, €0.25)
- a) Why deliveries fail (nobody at home, wrong address, time window)
- b) Cost of each repeat attempt or return to the depot
4. IT, customer service and overhead (15%, €0.65)
- a) Customer contacts per parcel (for example "where is my parcel?" calls)
- b) Administrative headcount and IT systems
Plus a revenue-side check: whether unusual parcels (heavy, bulky, rural) are priced to cover what they cost to deliver.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate splits cost per parcel into the cost blocks in Exhibit 1 and focuses on last-mile delivery, which is more than half of the total. A strong candidate breaks last-mile cost down into its drivers: cost per route-day divided by parcels delivered per route-day, and then parcels per stop, stops per hour and first-attempt success. An excellent candidate also asks where parcels are delivered (the door, a partner shop or a parcel locker), because this changes the maths of a route far more than squeezing the cost of a driver or a van.
If the candidate goes straight to "cut driver wages", point out that the minimum wage sets a floor and is rising, and ask what else drives cost per parcel.
So What? cascade:
- Level 1: last-mile delivery is 54% of cost, so that is where to look
- Level 2: last-mile cost per parcel = cost per route ÷ parcels per route. Wages and fuel push the top of that fraction up. Nordwind controls the bottom (density)
- Level 3: the largest lever is changing where parcels are delivered, not how cheaply each door is reached
Question 2Numeracy
Using Exhibit 2, (a) how much will the January 2027 minimum-wage increase cost Nordwind, and (b) how much would Nordwind save by moving 15% of its parcels from door delivery to parcel lockers?
Hint · Numeracy
Write the formula before you plug in numbers, keep units and zeros explicit, and sanity-check the order of magnitude at the end.
Exhibit 2Route Economics per Day, Typical Suburban Route
| Item | Door-to-door route | Locker route |
|---|---|---|
| Driver (fully loaded) | €230 | €240 |
| Van (lease and maintenance) | €47 | €55 |
| Fuel (about 10 litres at approximately €2.20) | €22 | €25 |
| Total cost per route-day | €299 | €320 |
| Parcels delivered per route-day | 130 | 800 |
| Delivery cost per parcel | €2.30 | €0.40 |
Locker routes use a larger van and drive between lockers rather than doors. The 800 parcels a day is an average across the year, below the peak benchmark of about 1,500.
Source: Nordwind Logistics case file
Additional InformationAsk for dataInterviewer’s data
- Assume Nordwind's driver pay rises by 5% in January 2027, in line with the statutory minimum wage
- Driver cost makes up the same share of last-mile cost across the whole network as it does on the typical route in Exhibit 2
- A parcel locker with 100 compartments costs about €15,000 installed and is depreciated over 5 years. Site rent, power and maintenance cost about €2,400 a year. Each locker handles on average 120 parcels a day, 300 days a year
- Industry benchmark: couriers serving lockers can deliver up to 1,500 parcels a day at peak, compared with 150–250 parcels a day for door-to-door delivery
Try it first, then checkCheck my answerModel answer
Part (a): January 2027 minimum-wage increase
- Driver share of last-mile cost (Exhibit 2): €230 / €299 = 76.9%
- Driver cost per parcel across the network: €2.30 x 76.9% = €1.77
- 5% increase: €1.77 x 5% = €0.088 per parcel
- Annual cost: €0.088 x 175M = approximately €15.5M
(Exact: €0.0885 x 175M = €15.48M.)
So what: €15.5M is almost 60% of Nordwind's €26M EBIT (15.5 / 26.25 = 59%). Without action, the wage rise alone wipes out more than half of profit in 2027.
Part (b): shifting 15% of parcels to lockers
Step 1: Cost per locker parcel
- Driving to the locker: €320 / 800 = €0.40
- Locker cost per year: €15,000 / 5 + €2,400 = €3,000 + €2,400 = €5,400
- Parcels per locker per year: 120 x 300 = 36,000
- Locker cost per parcel: €5,400 / 36,000 = €0.15
- Total cost per locker parcel: €0.40 + €0.15 = €0.55
Step 2: Saving per parcel moved
- €2.30 − €0.55 = €1.75
Step 3: Annual saving
- Parcels moved: 175M x 15% = 26.25M
- Saving: 26.25M x €1.75 = approximately €45.9M a year
- That is 45.9 / 74.4 = approximately 62% of the €74M target
Step 4: What it takes
- Lockers needed: 26.25M / 36,000 = approximately 730 lockers
- Up-front investment: 730 x €15,000 = approximately €11M, paid back in about three months of savings
- Locker routes needed: 26.25M / (800 x 300) = approximately 110 routes
Sense check: Nordwind's door-to-door route delivers 130 parcels a day, below the 150–250 industry range. So route density is a second lever alongside lockers.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
This question tests multi-step maths and whether the candidate relates the result to the target and to profit. A good candidate gets both numbers right. A strong candidate expresses the wage increase as a share of EBIT (almost 60%) and the locker saving as a share of the €74M target. An excellent candidate notices that Nordwind's typical route (130 parcels) is below the 150–250 door-to-door benchmark, which suggests a density problem on top of the locker opportunity. They also check that the number of lockers needed is realistic.
If the candidate stalls, suggest working out cost per parcel on each type of route first.
Question 3Judgement & Insights
Exhibit 3 splits Nordwind's network by area type. Where should Nordwind roll out lockers first, and what could stop the savings from materialising?
Hint · Judgement & Insights
Read the exhibit title, axes and units first. Lead with the ‘so what’, then back it with one or two numbers.
Exhibit 3Nordwind Network by Area Type (2025)
| Area type | Share of parcels | Parcels per route-day | Parcels per stop | Last-mile cost per parcel | First-attempt failure rate | Customers within 500 m of a possible locker site |
|---|---|---|---|---|---|---|
| Urban core | 40% | 180 | 1.4 | €1.66 | 12% | 85% |
| Suburban | 35% | 130 | 1.2 | €2.30 | 7% | 55% |
| Rural | 25% | 90 | 1.1 | €3.32 | 3% | 15% |
| Network (weighted) | 100% | — | — | €2.30 | 8% | — |
Cost per parcel = €299 ÷ parcels per route-day. Weighted: 0.40 x 1.66 + 0.35 x 2.30 + 0.25 x 3.32 = €2.30.
Source: Nordwind Logistics case file
Additional InformationAsk for dataInterviewer’s data
- Share Exhibit 3
- For simplicity, route cost is assumed to be €299 a day in every area type
- Industry estimates put the cost of a failed home delivery in Germany at over €14 per failure, once repeat trips, customer contacts and returns are included
Try it first, then checkCheck my answerModel answer
1. Saving per parcel moved to a locker (at €0.55 per locker parcel)
| Area | Door cost | Saving per parcel | Reach | Assessment |
|---|---|---|---|---|
| Urban core | €1.66 | €1.11 | 85% | High reach, and removes the most failed deliveries (12%) |
| Suburban | €2.30 | €1.75 | 55% | Best balance: start here |
| Rural | €3.32 | €2.77 | 15% | Biggest saving per parcel, but few customers can reach a locker and lockers would fill slowly |
2. Sequencing
- Suburban first: supermarket car parks, railway stations and petrol stations, where lockers are easy to reach and the saving per parcel is €1.75
- Urban second: the saving per parcel is lower, but the 12% failure rate means each avoided failure is worth much more than the delivery saving (industry cost over €14 per failed delivery)
- Rural: use partner shops (village stores, kiosks) instead of lockers, because a locker only pays off at high use, and consider sharing rural routes with another carrier
3. What could stop the savings: the density trap
- If 15% of suburban parcels move to lockers but the same routes keep running, a route drops from 130 to 110.5 parcels a day
- Cost per remaining door parcel: €299 / 110.5 = €2.71, up from €2.30 (+18%)
- The saving only happens if Nordwind cuts about 15% of its door-to-door routes and re-plans the rest
4. Other risks
- Customer uptake: customers must choose the locker. Retailers decide what options appear at checkout, so Nordwind needs its clients on board
- Locker use: at 60 parcels a day instead of 120, locker cost per parcel doubles to €0.30 and the saving per parcel falls by €0.15
- Competition for sites: the largest German carrier plans to double its lockers from approximately 15,000 to 30,000 by 2030, so the best sites will go fast
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate spots the trade-off: the cost saving per parcel is highest where density is lowest (rural), but that is also where fewest customers live near a possible locker. A strong candidate picks suburban areas first (a large saving per parcel and reasonable reach), then urban areas, where reach is highest and failed deliveries are most common. An excellent candidate spots the density trap: if 15% of parcels leave door-to-door routes but the number of routes stays the same, the remaining door parcels become more expensive. The savings only happen if routes are cut and re-planned.
So What? cascade:
- Level 1: rural parcels cost twice as much to deliver as urban ones
- Level 2: lockers save most per parcel in rural areas but reach fewest customers there, so the best first target is suburban
- Level 3: the saving is only real if Nordwind removes routes. Otherwise it just spreads the same fixed route cost over fewer parcels
Question 4Creativity
Beyond lockers, what other ideas could reduce Nordwind's cost per parcel? Brainstorm broadly.
Hint · Creativity
Brainstorm in buckets (e.g. internal vs external, short vs long term) so ideas stay structured and you can see gaps.
Additional InformationAsk for dataInterviewer’s data
- Since January 2025, German law requires parcels over 10 kg to carry a weight label, and parcels over 20 kg must be delivered by two people unless the driver has suitable lifting equipment
- About 44% of European online shoppers choose out-of-home delivery (locker or shop), and in Poland about half of all parcels go out-of-home. In Germany, about 86% of shipments are still delivered to the home
- Germany has approximately 1,050 out-of-home pickup points per million residents
Try it first, then checkCheck my answerModel answer
1. Delivery point (where)
- Own lockers in suburban areas (Question 2)
- Join an open, multi-carrier locker network rather than building every locker, to fill lockers faster and reduce capital needs
- Partner shops in rural areas; delivery to workplaces for office-heavy districts
2. Route density (how many per route)
- Dynamic route planning each day; merge several parcels to the same address into one stop
- Offer customers cheaper or greener delivery days so parcels bunch together on fewer routes
- Share rural routes with another carrier (co-loading), paying per parcel instead of running a half-empty van
3. Cost per route (how expensive each route is)
- Electric vans on urban and suburban routes, where daily distances are short, to reduce exposure to diesel at approximately €2.20 per litre
- Better driver scheduling to cut paid idle time at depots; faster van loading through pre-sorting by route
4. Fewer failed deliveries
- Precise delivery time slots sent by app; option to redirect the parcel to a locker or neighbour before the driver arrives
- Photo or safe-place delivery where the customer agrees
5. Commercial terms (charge for what costs more)
- Surcharge for parcels over 20 kg, which now require two people or lifting equipment
- Price discounts for clients who make the locker the default choice at checkout
- Rural delivery surcharge or a longer delivery time promise for remote postcodes
6. Hub and overhead
- Automate sorting in the main hub; improve truck fill between hubs and depots
- Proactive tracking messages to reduce "where is my parcel?" calls
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate produces a range of ideas organised in buckets. A strong candidate covers the network, the customer and commercial terms, not only operations. An excellent candidate ranks ideas by impact and feasibility and links some back to numbers already calculated, for example that raising door-to-door density from 130 to the benchmark of 150 or more parcels a day is worth more than most small savings.
Question 5Synthesis
The CEO wants a recommendation she can take to the board. What should Nordwind do, and what will it deliver?
Hint · Synthesis
Answer first: the recommendation, two or three reasons with numbers, then risks and next steps.
Additional InformationAsk for dataInterviewer’s data
- Share the following estimates prepared by the team:
- Route re-planning can raise parcels per door-to-door route by 5%
- Sharing routes with another carrier could cut cost from €3.32 to €2.80 per parcel on 40% of rural parcels
- Heavy-parcel surcharges and overhead savings are worth about €5M a year
- Remind the candidate of the client's request for an 8% price cut on 30% of volume
Try it first, then checkCheck my answerModel answer
Recommendation: "Fewer doors, fuller routes". Move 15% of parcels to lockers and partner shops, re-plan every route, and share rural routes. This delivers approximately €76M a year, just above the 10% target.
1. Savings by lever
| Lever | Calculation | Annual saving |
|---|---|---|
| Lockers and partner shops for 15% of parcels | 26.25M x €1.75 | €45.9M |
| Route re-planning, +5% parcels per door-to-door route | Door volume 148.75M x (€2.30 − €2.30 / 1.05 = €0.11) | €16.3M |
| Rural route sharing | 25% x 175M x 40% = 17.5M parcels x (€3.32 − €2.80 = €0.52) | €9.1M |
| Heavy-parcel surcharge and overhead | Team estimate | €5.0M |
| Total | approximately €76.3M |
- New cost per parcel: €4.25 − (€76.3M / 175M = €0.44) = approximately €3.81, a 10.3% reduction
- One-off investment: approximately €11M for 730 lockers, plus route-planning software
2. EBIT bridge (annual, once fully implemented)
| Item | EBIT |
|---|---|
| 2025 EBIT | €26.3M |
| January 2027 wage increase | −€15.5M |
| Client price cut, if conceded in full (52.5M parcels x €4.40 x 8%) | −€18.5M |
| Savings programme | +€76.3M |
| EBIT after programme | approximately €68.6M |
The programme more than offsets the wage rise and the full client price cut. But the client should not get the full 8% for free. Offer about 5%, tied to the client making the locker option the default at its checkout, which is what makes the €45.9M possible.
3. Timeline
- Months 0–6: route re-planning across the network; sign the client deal with the locker default; install the first 250 suburban lockers
- Months 6–12: 250 more lockers in suburban and urban areas; cut door-to-door routes as volume moves; sign a rural route-sharing partner
- Months 12–18: the remaining 230 lockers; introduce heavy-parcel and rural surcharges
4. Risks and mitigants
- Density trap: savings only happen if routes are removed. Track the number of routes each week, not only the share of parcels going to lockers
- Overlaps: route re-planning and rural sharing both affect rural door routes. Keep a buffer of about €5M in the plan
- Customer uptake below 15%: start with the largest client, add incentives at checkout, and join an open locker network to grow faster
- Competitor locker build-out: secure the best suburban sites in the first six months
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate gives a clear recommendation with a total saving against the €74M target. A strong candidate calculates each lever, adds them up, and mentions overlaps between levers and the wage increase that eats part of the savings. An excellent candidate also advises on the client negotiation: share part of the savings in exchange for making lockers the default at checkout, rather than giving the full 8% up front.
Data Sources
Market facts in this case come from the public sources below. Nordwind Logistics, its clients and its internal figures (volumes, cost per parcel, route economics, locker costs) are fictional and illustrative, set to be consistent with these benchmarks.
| Fact used in the case | Publisher, title, year | URL |
|---|---|---|
| 4.37bn courier, express and parcel shipments in Germany in 2025 (+1.8%); market revenue €28.4bn; average revenue approximately €6.50 per shipment; 86% of shipments delivered to the home; approximately 1,050 out-of-home pickup points per million residents; forecast 5.08bn shipments by 2030 | BPEX (Bundesverband Paket und Expresslogistik), KEP-Studie 2026, published via Hermes Germany newsroom, 2026 | https://newsroom.hermesworld.com/logistik-kep-studie-2026-leichtes-wachstum-bei-den-sendungsmengen-c2c-mit-den-grossten-potentialen-34465/ |
| German statutory minimum wage €13.90 per hour from 1 January 2026 (+8.42%) and €14.60 from 1 January 2027 (+5.04%) | Bundesregierung (German Federal Government), "Mindestlohn 2026 auf 13,90 Euro erhöht", 2025 | https://www.bundesregierung.de/breg-de/aktuelles/mindestlohn-steigt-2391010 |
| Average diesel price in Germany €2.223 per litre in August 2026 (ADAC monthly average) | retail-news.de, "Kraftstoffpreise steigen kräftig – ADAC hinterfragt aktuelles Preisniveau", 2026 | https://retail-news.de/super-e10-diesel-kraftstoffpreise-august-2026-adac/ |
| Couriers serving lockers deliver up to 1,500 parcels a day at peak vs 150–250 for door-to-door; failed home deliveries cost over €14 per failure in Germany; up to 25% of first attempts fail in some countries | Last Mile Experts, "Out-of-Home Delivery in Europe 2025" (report teaser), 2025 | https://lastmileexperts.com/wp-content/uploads/2025/06/OOH-REPORT-2025-TEASER.pdf |
| 44% of European shoppers choose out-of-home delivery; about half of parcels in Poland go out-of-home; Germany's largest carrier plans to double its parcel lockers from approximately 15,000 to 30,000 by 2030 | nShift, "EU parcel locker growth in 2025: What it means for retailers", 2025 | https://nshift.com/blog/eu-parcel-locker-growth-in-2025-what-it-means-for-retailers |
| Parcels over 20 kg must be delivered by two people unless suitable technical aids are available; weight labels for parcels over 10 kg and over 20 kg, in force since 1 January 2025 | Bundesministerium der Justiz, Postgesetz (PostG) § 73 "Vorgaben für Pakete mit erhöhtem Gewicht"; Händlerbund, "Zwei-Personenzustellung für schwere Pakete", 2025 | https://www.gesetze-im-internet.de/postg_2024/__73.html ; https://ohn.haendlerbund.de/recht/politik-gesetze/zwei-personenzustellung-schwere-pakete-lieferkosten |
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