News / FedEx eyes Europe expansion via parcel locker tie-up

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FedEx has taken an uncharacteristic approach to the European market by acquiring a stake in a parcel locker operator.

In an all-cash deal worth about $9.2bn, the integrator and private equity firm Advent International are each taking a 37% stake in Poland-based InPost, with company founder/CEO Rafał Brzoska to retain 16% and Czech investment firm PPF the remaining 10%.

The transaction is expected to close in the second half of this year.

InPost, which built its business around automated parcel lockers and added some final-mile services, will continue to operate independently, under its existing management. It is also active in eight other European markets, including the UK, France, Italy, and Spain,  and its network comprises some 61,000 lockers, supplemented by services to PUDO locations and doorstep delivery options.

Horst Manner-Romberg, principal of parcel research and consulting firm M-R-U, observed that the company still relied heavily on the Polish market, which accounts for more than half of its business. Outside, it has reported red figures, he added.

Mr Brzoska said the deal would open the door to further international expansion. And he did not rule out a move into Germany, where InPost has no presence so far.

To Mr Manner-Romberg this would be a logical move, as the German market is the largest in the EU. On the other hand, InPost faces an entrenched market champion in Deutsche Post, with its network of 17,000 parcel lockers and intention to boost this to 35,000, he added.

Parcel lockers have been on the advance in Europe, notably in Poland (where InPost works with Allegro, described as the ‘Amazon of the Polish e-commerce market’) the UK, and the Netherlands, Mr Manner-Romberg noted.

Demographics – notably single households – are a major driver, besides the performance of the national mail carrier, he said. Geographically, peripheries of large urban conurbations, where service is often sub-optimal, are fertile ground for parcel lockers.

However, expansion is facing some headwinds, he noted. The four largest urban centres in the Netherlands are talking of imposing restrictions on parcel locker locations.

While the deal paves the way for InPost to grow across Europe, Mr Manner-Romberg questioned the benefit to FedEx. According to the integrator, it allows it to tap into the European firm’s network.

“This partnership will provide our customers access to InPost’s last-mile B2C capabilities,” said Raj Subramaniam, president and CEO of FedEx Corp.

InPost and other parcel locker providers make agreements with merchants and e-commerce platforms, but not with carriers, Mr Manner-Romberg said. FedEx and InPost could try to develop joint offerings to e-commerce shippers, which would conceivably translate into an option for consumers to select delivery to a locker or another address.

Given the challenges the integrators are facing in the B2C segment, and their inability to match the costs of competitors using crowd-sourced final-mile solutions, parcel lockers would seem a less costly option. Still, Mr Manner-Romberg questioned the match of an express operator and mailboxes.

“If I use an expensive express provider, I want to get my parcel delivered direct to me, not to a locker,” he said. “What experience does FedEx have with parcel lockers? Where does this fit in their structure, their route schedule?” he asked.

He also had a strategic question.

“TNT was a flop for FedEx. They got rid of people and closed branches. Why try the domestic business in Europe again at a time when Amazon keeps growing in Europe?”

And investors were less than impressed with the deal. After it was announced, FedEx’s share price slipped, Mr Manner-Romberg noted.

Read The Loadstar Leader: “The Bridge” for more on the FedEx deal