UK Parcel Market Hits Speed Bump: Growth Slows Down, Says Apex Insight

UK parcel market growth slowing, Apex Insight says

UK parcel market growth slowing, Apex Insight says

Date: 2024-10-30

Source: China Post Express

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Recently, retail value chain research organization Apex Insight released the latest research report on the UK parcel market. The report shows that although the size of the UK parcel market has declined in recent years, its profitability remains high. The UK parcel market studied in the report includes B2B, B2C and C2X products. Parcel products include next-day or delayed delivery parcels weighing 0.75 to 40 kg.

The study found that due to the impact of the previous COVID-19 epidemic, the UK parcel market size exceeded 15 billion pounds in both 2020 and 2021, and fell slightly in 2022 and 2023. In the past three years, the average annual parcel volume has been close to 4 billion pieces. This is mainly due to the rapid growth in the number of parcels from platforms such as Temu and Vinted, which tend to be smaller and cheaper.

Currently, B2C is the largest parcel segment in the UK and is growing rapidly. The report predicts that by 2028, B2C will account for 65% of the parcel market value and 80% of the business volume.

According to the report, the UK parcel market is showing some new development characteristics.

Parcel carriers in the UK have been exploring how to make profits in the end-of-line distribution chain, that is, to achieve business growth while maintaining overall economic benefits and service levels. To this end, most carriers are investing in a network of parcel stores, including lockers, to provide users with more delivery options. Although the popularity of lockers in the UK is not as high as in other European regions, it has established 60,000 parcel shops and locker outlets, and is growing at a rate of more than 30% every year.

After the COVID-19 epidemic, how to retain customers has become a challenge for B2C parcel companies. For example, some large retailers often change parcel carriers because of their strong bargaining power. In addition, with the investment of more production capacity in the parcel market and the slowdown in consumer demand, the profit margin of the parcel market has fallen slightly from the high point during the epidemic period. The total profit margin of carriers with profit data is only 7%, which is lower than the level during the epidemic, but the profit margin of the entire industry is still the highest level in 20 years.

UK parcel operators have performed mixedly in a volatile market environment.

The market share of major UK parcel carriers such as Amazon, Evri and DPD has increased. Amazon Logistics has now expanded to about 50 warehouses in the UK, delivering the vast majority of packages for itself and for sellers on the platform. Evri excels in the B2C space with its cost-competitive business model. The company provides cost-effective core transportation services to large retailers through continued investment in improving services and increasing capacity, while also expanding into market segments. DPD has won more customers with its services and system upgrades. DPD’s market share has stabilized over the past few years, and its profit margins are much higher than those of other parcel carriers. Other emerging companies that can quickly meet customer needs, such as agency companies (Parcel2Go, ParcelHero), parcel network companies (Collect+, InPost) and international B2C professional companies (P2P Mailing), have performed well in the B2C market.

In contrast, Royal Mail’s market share has declined due to the impact of Amazon’s logistics and employee strikes in late 2023. FedEx is performing well in the B2B market, but is not progressing well in the high-growth B2C market. UPS has a place in the UK B2C market, but its growth rate is slow.

Looking ahead, the UK parcel market is growing in size, but growth is slowing significantly.

The UK parcel market still faces development opportunities. Although the share of the parcel market from large retailers, international B2C export companies and individuals is lower than in the past, as an important new customer group for parcel carriers, business volume from consumer-oriented market platforms is growing rapidly.

The report predicts that the UK’s GDP growth will be relatively stable and retail sales will also grow at a lower rate. With the growth of online ordering and offline pickup business, the demand for home delivery is not expected to increase significantly.

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