UK express parcels market dominated by TNT Express, DHL and UPS

Although the UK express parcels market, currently valued at approximately £7 billion, showed a return to profit in 2010, it once again experienced an overall loss in 2011 with carriers placing increasing dependence on home delivery to offset the decline in business parcel volumes since 2008.

With intense price competition and low levels of customer loyalty, many carriers have responded by attempting to cut costs through reduced staffing levels.

The fundamental market driver is economic growth, but increased just-in-time manufacturing (JIT), subcontracting of manufactures and online shopping are also important. It remains a very competitive market, with around 20 established operators.

The UK express parcels market suffered during the recession, as almost all markets did. Consumers turned to more cost effective digital alternatives during this time. In addition, fuel price increases have forced couriers to increase their surcharges. However, the recent fledgling recovery and relative stability in the economy has allowed couriers to grow, with acquisitions and new depots a feature of 2011.

The largest UK parcels companies by revenue are TNT Express, with 2010 revenue of £758 million, representing 15% of the total revenue of the leading players, followed by DHL and UPS with around 13% each.

Over the last four years, Yodel, DPD, APC, Interlink, FedEx, City Link, Parcelforce Worldwide and Tuffnells have all grown at a rate of more than 5% per year - due to a combination of organic growth and acquisition. During the same period, DHL, UK Mail, Nightfreight and DX have seen their parcels revenues decline.

Combined profitability across all the major operators fell from just under 3% (EBIT) in 2006 to a net overall loss in 2008, before recovering to a slim overall profit of 1.5% in 2010.

For more information on the UK express parcels market, see the latest research: UK Express Parcels Market

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