Ti: A comparison of parcel yields in the US and Germany

© Lynn Bystrom

Transport Intelligence‘s Andy Ralls writes:

The express and parcels market has witnessed explosive growth in shipments over the past decade. This has been caused by the shift in shopping preferences towards e-commerce and away from physical stores. Whilst this has been a positive for the global market, the increasing mix of B2C parcels has brought about its own challenges, and in some markets, growth in parcel yields (revenue/shipment) has been stagnant.

United States

Pioneers UPS and FedEx are considered to be some of the most successful shipping companies anywhere in the world. They have dominated the US parcels landscape for decades, with only the Postal Service rivalling their networks. Achieving such network scale is vital to a successful national parcel operation and creating a viable model is no small feat. DHL notably tried unsuccessfully to penetrate the US market, but effectively ended domestic operations in 2009. A number of regional players also exist, but none have expanded to match the service offerings available from UPS, FedEx and to an extent the USPS. However, Amazon’s growing logistics network is challenging the incumbents. Whilst it remains a key customer for UPS and the USPS, it effectively operates its own in-house parcels network, whilst increasingly making use of its Delivery Service Partners and (to a lesser extent) Flex schemes to provide last mile services.

With only four major providers in the market, the incumbents have been able to justify price rises over the past decade. The data below is taken from a US Postal Regulatory Commission report. It indicates that the major players in the market have been able to increase prices substantially in recent years.

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Germany

Competition in Germany is much more fierce than in the United States. Although national hero DHL dominates in terms of market share (>40% by its own estimates), a number of other players are present in the field. For UPS, Germany provides the next largest revenue source outside of its home market. The same can be said for the UK’s Royal Mail subsidiary, GLS. Hermes, part of e-commerce behemoth Otto Group, is also a significant player and claims to deliver around one third of B2C parcel deliveries in the country. DPD claims to be the second largest provider in the German parcels market. FedEx, in part through its TNT acquisition, has a significant presence in the country, whilst Amazon is growing its last mile network. Its recent moves saw DHL close a parcel centre in anticipation of a newly opened Amazon sorting centre, only to backtrack later. The company operates its Delivery Service Partners scheme in Germany, but has recently begun recruiting drivers directly for last mile deliveries in some cities…

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