Acquisitions in the express industry: A sign of things to come?

e-commerce continues to dominate the strategic thinking of many express companies and Post Offices globally. The rapid growth in e-commerce sales is not only impacting parcel companies’ strategies but also their operations.

For example, as reported by Ti, the purchase of UK Mail by Deutsche Post represents a change in strategy for the Bonn giant. Previously Deutsche Post DHL Express had an extensive home-delivery parcel business in the UK but sold it, choosing not to be part of a cutthroat market segment where profits were scarce. Rather it pursued a strategy of focussing on higher margin business, serving international business e-commerce supply chains who were willing to pay a premium. It reduced its exposure to last mile delivery by relying on sub-contractors when needed. The purchase of UK Mail appears to have reversed this, driven it appears by the need to better serve the ‘B2C’ e-commerce market.

Most of the providers in the express parcel industry originally developed around the needs of B2B customers. The sharp growth of e-commerce, however, has seen consumers switching from conventional retail shopping. Subsequently, the growth of the B2C segment over the past ten years has created new challenges, such as undertaking deliveries to residential addresses. The B2B model of using in-house uniformed drivers works well for deliveries of large consignments to industrial sites, but is not well suited to single parcel drops to houses where there is no certainty that a householder will be at home.

Ti’s new report, Global Express and Small Parcels 2016, includes the latest research on the changing parcel sector. It examines the composition of the sector over time, highlighting the recent strategic decisions that have been made to accommodate changing customer expectations, as well as analysing the sustainability of these choices.

This report will be published at the end of October. To be one of the first to read it, register your interest by contacting Michael Clover.

Source: Transport Intelligence, October 14, 2016

Author: Staff writer