The parcels market has seen a convergence of B2B, B2C and C2C services as the growth in home shopping has made consumers increasingly attractive to serve, according to a study be Apex Insight.
The report, UK Express Parcels: Market Insight Report 2013, points out that these segments (business-to-business, business-to-consumer and consumer/small business-consigned parcels) have traditionally been seen as separate markets, served by different providers but the growth of home shopping has drawn in business carriers such as UPS, City Link and UK Mail to increase their focus on the area where they believe they can serve it profitably.
At the same time, consumer-focused carriers like Yodel have invested in systems and sought business customers. New services have been developed by both carriers and third parties, such as internet brokers and parcel shop networks, to give consumers and small businesses access to a much wider range of services.
Growth fell in the aftermath of the 2009 economic downturn, but is now speeding up as carriers develop better models to meet home shopping and consumer demand.
“Home shopping has fuelled growth in the business-to-consumer segment throughout the last decade as penetration of broadband, smart phones and tablet computers have risen,” said FrankProud, author of the report.
“The challenge for operators has been to develop a model to serve home deliveries profitably, so they can obtain exposure to this growth segment – which now represents almost a quarter of the market – without damaging their overall economics and impacting service levels for premium business-to-business customers. Latest data confirms that the economy has now started to recover, although later and more slowly than previously forecast, suggesting stronger performance can be expected in business-to-business parcels than in the recent past.”
The study is based on Apex Insight’s model of the market which was first developed in 2004 and regularly updated since.
It highlights the fact that the UK market remains relatively fragmented with consolidation occurring at a slow pace. The only significant merger in the last year has been the incorporation of Nightfreight into DX Group.
Overall industry profitability remains low. Several operators earn healthy margins but the overall picture is distorted by on-going turnarounds at City Link and the old DHL Domestic business, now owned by Yodel.