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Courier and Express Delivery (Industrial Report) - UK - March 2014

“While growth in new market entrants and the Royal Mail privatisation are expected to increase industry competition to a new intensity, the forecast for further expansion in online retail sales will ensure business-to-consumer demand grows in the short-term. Reliable and accessible customer-facing systems, combined with flexible delivery processes, are anticipated to be key to success in this sector of the market, while reducing the level of household deliveries in favour of collection points is key to improving express delivery margins.”

– Ben Harris, Industrial Analyst

This report addresses the following key issues in the market for courier and express delivery:

  • To what extent will online retail sales continue to be the engine of growth in the UK courier and express delivery market?
  • Will the privatisation of the Royal Mail increase the level of competition in the market and open new opportunities for delivery companies?
  • What are the prospects for improving margins in the courier and express delivery industry?
  • How important is the international delivery market and how do opportunities for growth in this sector compare with those in the internal market?
  • How can the business model for an express delivery firm adapt to reduce the costs of missed deliveries?

For the purposes of this report, the terminology of courier and express delivery is defined as delivery of documents and parcels up to a maximum of 50kg, including those to both households and to businesses, thereby excluding pallet and freight delivery.

Express delivery typically involves a time specific constraint, traditionally on a 24-hour, 48-hour or 72-hour basis, however, with growing demand from online retailers the target is increasingly based on a particular window of time that the customer chooses.

Courier delivery primarily involves same-day deliveries at very short notice over small distances, and commonly undertaken through distribution on pedal bikes, motorbikes or small vans.

The term UK market is used to describe turnover derived from the UK, and the market is segmented within the report to internal (within the UK), and international (packages originating in the UK but destined for delivery internationally). In order for the distribution to be included in the UK market assessment, the consignment has to originate in the UK.

Other forms of segmentation of the internal market undertaken in this report identify separate time specific deliveries. The definitions of these types of services are as follows:

Same-day delivery represents a relatively small element of the total market. Most express delivery carriers operate a same day service, but this is generally contracted out to couriers rather than undertaken by carrier fleets.

Next day is defined as a guaranteed delivery of a consignment within 24 hours. This is often conducted as an overnight service, and frequently now involves a further refinement attached, such as delivery within a specified time window.

Guaranteed time covers other time specific guaranteed deliveries in excess of 24 hours. Within the UK internal market this typically comprises either a two day or three day delivery service, whilst internationally, the timescales can vary far more significantly. For international deliveries, timescales are not only dependent upon travel times and freight schedules, but also upon the infrastructure available in the country of destination.

Liqueurs - UK - January 2012

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Table of contents

  1. Executive Summary

      • The market
        • Delivery revenues climb as online spending grows despite economic downturn
          • Figure 1: UK market for courier and express delivery services, 2009-13
        • Domestic sales grow beyond international sales from 2012
          • Figure 2: Segmentation of UK market for courier and express delivery services, by value, 2009-13
        • Retail and consumer goods expand as a share of goods delivered
          • Figure 3: Segmentation of UK market for courier and express delivery services, by end-use sector, 2009-13
        • Market factors
          • Royal Mail privatisation paves way for expansion into parcels market
            • Courier market prices slide downwards
              • Figure 4: UK courier services price index, 2010-13
            • Travel hub networks present chance to further eliminate costs of failed deliveries
              • Companies
                • DPD approach leads the way for GeoPost
                  • Hermes Parcelnet pursues aggressive expansion of parcel shop network
                    • What we think
                    • Introduction

                      • Definitions
                        • Methodology
                          • Abbreviations
                            • Issues in the market
                              • Market positioning
                                • The UK market context
                                  • The supplier
                                    • The customer
                                      • UK economy
                                        • Inflation
                                          • Consumer spending
                                            • Interest rates
                                              • Business investment
                                                • Exports
                                                  • Imports
                                                    • Market factors
                                                      • Economic environment
                                                        • Technological development
                                                          • Barriers to entry
                                                            • Market legislation and regulation
                                                              • International trade levels
                                                                • End-use sector trends
                                                                  • Petroleum prices
                                                                  • Market Size and Trends

                                                                    • Chapter summary
                                                                      • Market size
                                                                          • Figure 5: UK market for courier and express delivery services, 2009-13
                                                                        • Market segmentation
                                                                          • Domestic market exceeds international sales growth through 2012 and 2013
                                                                              • Figure 6: Segmentation of the UK courier and express delivery services market, by value, 200913
                                                                            • Price competition ensures volume growth in the market exceeds value development
                                                                              • Figure 7: Segmentation of the UK courier and express delivery services market, by volume, 200913
                                                                            • Next day and guaranteed deliveries expand as focus shifts to time window slots
                                                                                • Figure 8: Value segmentation of the UK internal courier and express delivery market, by time sensitivity, 2009-13
                                                                              • Internal next day delivery volumes expanded by more than a third in the five years to 2013
                                                                                • Figure 9: Volume segmentation of the UK internal courier and express delivery market, by time sensitivity, 2009-13
                                                                              • Eurozone economic difficulties limit continental delivery market expansion
                                                                                  • Figure 10: Segmentation of the UK international express delivery market, by consignment destination, 2009-13
                                                                                • Consumer goods demand increases dominance of express delivery sector
                                                                                  • Figure 11: Segmentation of the UK market for courier and express delivery services, by end use sector, 2013
                                                                                • Market trends
                                                                                  • Price competition intensifies in courier sector
                                                                                    • Figure 12: UK courier services price index, 2010-13
                                                                                  • Growth in network drop-off locations and parcel carrier partnerships
                                                                                    • Fuel price increases add further pressure to cost base
                                                                                      • Figure 13: Average annual retail prices of petrol in the UK, 2000-13
                                                                                    • Royal Mail privatisation
                                                                                      • Versatility of travel hubs present opportunity to decrease the costs of missed deliveries
                                                                                      • Industry Structure

                                                                                        • Chapter summary
                                                                                          • Industry development
                                                                                            • Liquidations and administrations have declined since 2008
                                                                                              • Figure 14: Corporate liquidations and insolvency procedures in post and telecommunications sector, 2009-13
                                                                                            • Industry recovery underway as new firms enter market from 2010 onwards
                                                                                              • Figure 15: Analysis of the changes in the structure of the licensed/unlicensed carrier industry, 2009-13
                                                                                            • Structure by turnover
                                                                                              • Figure 16: Analysis of the financial structure of the licensed/unlicensed carrier industry, 2012 and 2013
                                                                                            • Structure by employment
                                                                                              • Figure 17: Analysis of the employment structure of the licensed/unlicensed carrier industry, 2012 and 2013
                                                                                            • Innovations
                                                                                              • One-hour window slots
                                                                                                • Live parcel tracking
                                                                                                  • Sunday delivery services
                                                                                                    • Pin-protected delivery
                                                                                                      • Pick-up points and 24/7 access
                                                                                                        • Company profiles
                                                                                                          • City Link
                                                                                                              • Figure 18: Financial analysis of City Link, 2008-12
                                                                                                            • City Sprint
                                                                                                              • Figure 19: Financial analysis of CitySprint, 2008-12
                                                                                                            • DHL Express UK
                                                                                                                • Figure 20: Financial analysis of DHL Express (UK), 2008-12
                                                                                                              • DX Group
                                                                                                                  • Figure 21: Financial analysis of DX Group, 2009-13
                                                                                                                  • Figure 22: Financial segment analysis of DX Group, 2009-13
                                                                                                                • FedEx UK
                                                                                                                    • Figure 23: Financial analysis of FedEx UK 2009-13
                                                                                                                  • Geopost UK
                                                                                                                      • Figure 24: Financial analysis of GeoPost UK, 2008-12
                                                                                                                    • Hermes Parcelnet
                                                                                                                        • Figure 25: Financial analysis of Hermes Parcelnet, 2009-13
                                                                                                                      • TNT UK
                                                                                                                          • Figure 26: Financial analysis of TNT UK, 2008-12
                                                                                                                        • Tufnells Parcels Express
                                                                                                                            • Figure 27: Financial analysis of Tuffnells Parcels Express, 2008-12
                                                                                                                          • UK Mail
                                                                                                                              • Figure 28: Financial analysis of UK Mail, 2009-13
                                                                                                                              • Figure 29: Financial segment analysis of UK Mail, 2009-13
                                                                                                                            • UPS UK
                                                                                                                              • Figure 30: Financial analysis of UPS, 2008-12
                                                                                                                            • Yodel
                                                                                                                                • Figure 31: Financial analysis of Yodel, 2008-12
                                                                                                                            • Demand Structure

                                                                                                                              • Chapter summary
                                                                                                                                • B2B sector
                                                                                                                                  • GDP demonstrates positive development through each quarter of 2013
                                                                                                                                    • Figure 32: UK GDP growth rate, 2009-13
                                                                                                                                  • Services sector output increases ahead of aggregate GDP
                                                                                                                                    • Figure 33: UK services sector output growth rate, 2009-13
                                                                                                                                  • Production output fluctuates significantly post-recession
                                                                                                                                    • Figure 34: UK production sector output growth rate, 2009-13
                                                                                                                                  • B2C sector
                                                                                                                                    • Online sales boom through economic downturn
                                                                                                                                      • Figure 35: UK online retail sales, 2009-13
                                                                                                                                    • Consumer confidence reaches highest level since 2007
                                                                                                                                      • Figure 36: UK consumer confidence barometer, 2013-14
                                                                                                                                  • Forecast

                                                                                                                                    • Chapter summary
                                                                                                                                      • Market size
                                                                                                                                          • Figure 37: Forecast UK market for express delivery services, 2014-18
                                                                                                                                        • Market segmentation
                                                                                                                                          • Underlying boost for international market expected from currency and export trends
                                                                                                                                            • Online sales growth will continue to drive domestic market
                                                                                                                                              • Figure 38: Forecast segmentation of the UK express delivery services market, 2014-18
                                                                                                                                            • Guaranteed time window deliveries to become the norm
                                                                                                                                              • Figure 39: Forecast value segmentation of the UK internal courier and express delivery market, by time sensitivity, 2009-13
                                                                                                                                            • Industry
                                                                                                                                              • Technology investment is due
                                                                                                                                                • Home deliveries to increasingly be substituted for pick-up locations
                                                                                                                                                  • Larger retailers bringing distribution services in-house
                                                                                                                                                    • Consolidation at each end of the market
                                                                                                                                                    • Further Sources and Contacts

                                                                                                                                                      • Trade associations
                                                                                                                                                        • Trade magazines

                                                                                                                                                        Companies Covered

                                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                                        Courier and Express Delivery (Industrial Report) - UK - March 2014

                                                                                                                                                        £995.00 (Excl.Tax)