Expressions of change

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The past few weeks have seen some significant developments in the express parcels market. The proposed UPS takeover of TNT Express highlights the trend towards consolidation in the market internationally. Perhaps less high profile, but equally significant have been the moves by FedEx to expand its network in Europe.

It has signed an agreement to buy Polish courier company Opek and is in talks to take over Tatex, the French express transport operator. Tatex handles more than 19 million parcels a year in France. DHL, the other big global player, has been rationalising its network – selling off some of the less profitable national delivery networks to focus on the profitable core business.

There is also the impact of e-commerce on express operations – that has become increasingly evident in the UK. Yodel has set out plans to move to a six day a week service to meet the needs of the growing online shopping market.

As well as moving to a standard six day a week operation, Yodel will increase this to seven days during December, with the removal of premium charges for weekend deliveries, and standard pricing across the UK, including highlands and islands. But Yodel’s chief executive Jonathan Smith has made it clear that these changes will come at a price.

“We must pass on our reasonable costs. We believe that all parties, once they recognise the benefits that this will provide, will accept the changes as a necessary shift for all involved.”

While Yodel is focusing on getting its price structure right, Dave Smith, City Link’s new chief executive, has made it clear that he is looking for improvements in delivery efficiency.

The pressure on operators to change will continue, but it would also be foolish to rule out the idea of new players moving into the market. There are plenty of precedents for mail order companies owning delivery operations. For example, Hermes is part of the Otto Group, which owns the Freemans and Grattan home shopping businesses. We might yet see one of the emerging e-tail giants coming to the conclusion that it makes sense to take full control of its route to the customer.

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