The rise and fall of parcel delivery companies?

Investors in the parcel delivery business are cautious. Royal Mail lost 15 percent of its value in one month, Belgian Bpost lost 18 percent. UPS and FedEx losing 7 to 9 percent. With a 5 percent drop in the AEX last week, is Dutch PostNL the next loser?

Dutch PostNL sent 11 percent more parcels in the second quarter of 2021 than the same quarter in 2020: 95 million. This is 12 percent less than in the first quarter of 2021. Revenue only improved by 6 percent. Was it really a strong second-quarter 2021 for PostNL?

It seems that PostNL’s market share and rates in the parcels market are under pressure. To cope with the strong growth in e-commerce, PostNL also needs to invest another 950 million euros in network expansion, parcel locker stations, and sustainability until 2024.

PostNL’s current logistics infrastructure was conceived more than 10 years ago. It doesn’t fit omnichannel retailers who want to deliver to their customers and stores ever faster from local distribution centers. Large logistics companies execute better with hybrid networks from producers to consumers than the traditional parcel delivery companies in Europe.

Does that shift power to the supply chain companies like DHL, Bleckmann, and GXO? Yes. Integration of e-fulfillment will soon go all the way to the store floor; first mile, last mile, inventories, handling, and returns. The ‘last mile’ parcel delivery company will be second-tier and maybe even third-tier partners. Will parcel delivery companies end up like a pack donkey for the online platforms?

Traditional, former postal, parcel companies have not gained traction in same-day deliveries, B2B deliveries, local for local deliveries, two-person deliveries, cross border deliveries, and omnichannel deliveries from micro fulfillment centers? And they completely missed the market for meal deliveries and flash deliveries.

New innovative and local companies such as Local Heroes, Redjepakketje, Budbee, and Fietskoeriers are overtaking PostNL left and right with solutions that bring value to customers. In the meantime, Amazon is coming with its own network in the Netherlands after Coolblue already did so.

The European parcel market is showing declining growth. Earlier, Bpost reported disappointing growth in the second quarter partly due to declining rates. Royal Mail warned against too much optimism. However, DHL did present solid quarterly results, thanks to its commitment to global omnichannel e-fulfillment.

Maersk, the world’s largest container shipping company, wants to acquire parcel service provider B2C Europe. Dutch B2C Europe is an intermediary between large webshops and parcel delivery companies, including DHL, PostNL, and DPD. Among B2C’s clients are Amazon, eBay and L’Oréal. This is going to lead to even more price pressure in the market.

Was it really a strong second-quarter 2021 for PostNL? I doubt it with a declining market share, lower rates in the parcel market, high investments, and strong competition in the omnichannel logistics market. There is work to be done!

Walther Ploos van Amstel.

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