UK Carrier Profiles 2022
The UK Carrier Profiles 2022 report profiles the 15 main operators in 11 groups which serve the UK parcels market.
The profiles include background information on the companies, historical developments and recent news, analysis of their financial performance and benchmarking against their peers, as well as our considered and evidenced views on the prospects for each.
Despite some consolidation in recent years, there are still 11 groups operating significant parcels networks in the UK, with several others also involved.
– The largest UK parcels groups by revenue are the Royal Mail / Parcelforce, with latest parcels revenue of £3.337bn, DHL (£1.121bn including UK Mail), DPD Group (£1.179bn) and FedEx (£970m including TNT)
– In the last 4 years, Amazon Logistics, DPD / DPD Local Hermes, Tuffnells, APC, UPS, DHL and UK Mail have all grown at a rate of more than 5% per year. During the same period, TNT and DX/Nightfreight have seen their parcels revenues decrease.
Different carriers have variations in their market focus (eg international vs domestic, B2B/B2C/C2X, large/heavy items, etc) and their business models (eg use of self-employed couriers / owner-drivers, size of depots, use of franchised depots, automated vs manual handling processes, direct trunking vs hub and spoke, use of cage sort and parcel shops).
– Business model variations exist for both historical reasons and to provide a better fit with the company’s strategy and the requirements of the segments on which it wishes to focus. For example, the integrators tend to have larger depots than domestic players, while franchised depots can work well in serving smaller customers at the local level and self-employed couriers are widely used for home delivery.
– Key objectives of operating model features are often to improve consolidation of pick-up and delivery, align incentives or minimise handling of parcels
The operators with high exposure to e-retail deliveries and those with international networks have increased their overall share of revenues at the expense of standalone UK players with a traditional B2B focus. However the picture is more complex and there have been winners and losers across the segments
Further change in market share is likely in the coming year as the networks continue to compete and growth between segments varies. Also, there is potential for the FedEx / TNT and DHL / UK Mail mergers to lead to other changes in the marketplace.
Other potentially significant trends include:
– Additional network capacity put in by carriers including DPD and Hermes to enable their growth to continue
– Potential for the rapid growth of Amazon Logistics to continue, with deliveries for non-marketplace customers (‘Shipping with Amazon’) expected to be a growth area.
– The continued growth of parcel shop and locker networks and other last mile delivery solutions
– Developments in international B2C, where specialists such as wnDirect and P2P Mailing, and also Hermes, have grown rapidly driven by cross-border e-commerce trends, but where Brexit has created uncertainty
– The increasing importance of same day deliveries in the B2C segment.
This report is based on:
– A comprehensive review of published information on the sector
– Financial analysis of the accounts of companies in the industry
– Input from senior-level contacts in the market
– Our own past experience of advising both companies and investors in the express parcels industry (subject to confidentiality constraints)
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions