Absence of a national post code makes the consumer side of the package delivery industry problematic.

The growing number of consumers ordering goods online is proving to be a double-edged sword for parcel delivery firms. Yes - there are plenty of parcels to be delivered, but misleading private addresses and the proliferation of apartment blocks have turned this task into a logistical nightmare.

"When it doesn't go smoothly, which is nine times out of 10, it eats up any profit," says Sharon Kavanagh of Shooting Star Worldwide Express Parcels. Gaining access to apartment buildings is a major problem, she says, as the majority of people are not at home during work hours.

In many cases, Shooting Star has to revert to the internet business to try to obtain a contact phone number or a work address for the customer. But as this information is not mandatory on most website ordering forms, it is commonly not provided. The entire delivery process can take weeks, which inevitably makes customers irate.

Deliveries outside urban areas are also fraught with difficulty as a detailed knowledge of the locality is often necessary to track down private addresses. The Republic is one of the few remaining countries in the world which does not have a nationwide postal code system.

A code is due to be introduced in 2008 and while this is being hailed by some delivery firms as the panacea to all their woes, Brendan O'Neill, chief executive with Interlink Ireland, is more circumspect. "Even if the code came in tomorrow, it would take 10 years to be effective," he says. "It took a long, long time in England to become universal."

Interlink Ireland, which recently opened an €18 million state-of-the-art sorting depot in Athlone, is in the process of rolling out a new system based on district electoral divisions, which will enable them to map every address in the country.

Interlink's network of 35 locally-owned depots dotted around the State means that they already offer "very good local knowledge", O'Neill says, and provide greater "depth of coverage" than many of their competitors. Interlink operates primarily in the business-to-business (B2B) market, but the home delivery side of their operation is growing rapidly and now makes up almost 20 per cent of all deliveries. Business-to-customer (B2C) deliveries of goods purchased online require a "different response", O'Neill observes, adding that Interlink will soon implement strategies to address the challenges presented.

Aidan McCollum, national sales manager at TNT Express Ireland, says deliveries to businesses run far more smoothly than those to private individuals, as business addresses are easier to find and there will be someone there to collect the deliveries during working hours. "We tend to prefer B2B rather than B2C," he says.

McCollum highlights what he sees as even bigger challenge for the parcel delivery industry. "While Ireland still has a booming economy, it's very much concentrated in the areas of R&D and call centres," he says, explaining that delivery firms thrive on low-end manufacturing operations.

"That part of Ireland's economy has shrunk . . . Basic manufacturing and distribution is moving out of this country." A number of TNT's large customers have relocated from the Republic to eastern Europe.

However, TNT is taking a "glass half full" view of these shifts in the market, McCollum says. "To combat that, we are offering import services to companies who are sourcing materials in eastern Europe and the Far East," he says.

McCollum adds that many Irish companies who would previously have imported raw materials from Britain are now looking further east for cheaper alternatives. "We have to move with the times. The world is getting smaller. The high-tech and life science sectors are the main areas of development," he says.

He also notes that TNT Express has several big competitors in this country, all chasing this market. "Being a small country and an island, this market is more competitive than in other European countries."

"On the domestic scene, it's a hugely competitive market, and always has been," says Noel Byrne, marketing and sales director at DHL Express Ireland, which has been involved in Ryder Cup deliveries.

Byrne expects that the parcel delivery market will undergo "some element of consolidation" in the near future, and predicted that there will be "some level of reduction in the number of providers".

One provider that has already dropped out of the market was An Post's SDS parcel delivery arm, which was reintegrated into the main company two years ago after racking up unsustainable losses. While An Post secured a considerable portion of SDS's trade, firms such as Interlink have noticed a boost in business.

O'Neill says the firm experienced "very, very strong growth last year and the year before", due in part to the demise of SDS.