Hermes Logistik Gruppe is building up a European parcel network using group-owned companies andother carriers including TNT and DPD for local delivery, managing director Hanjo Schneider
(pictured) told CEP-Research. The German parcel firm aims to transport one million EU parcels inthe first year of its new service.The Otto Group subsidiary has announced that it will launch its first European distributionservice on September 4 targeted at consumers and small businesses. Customers will be able to handin parcels weighing up to 25 kg at the 12,000 Hermes PaketShops across Germany. Hermes is offeringdelivery to 22 European countries, including all major markets.
“The parcels will be delivered by our partners in the respective countries. We arecooperating with companies such as TNT and DPD as well as the Otto Group subsidiaries Parcelnet inthe UK and Mondial Relay in France,” Schneider said.
“At first only outbound traffic is planned. We are planning to offer inbound andinner-European transport at a later date,” he added. “In the first year, we plan to carry about onemillion shipments.” Parcels will generally be delivered within four working days.
Schneider stressed that the Hermes prices are well below those of German market leader DHLExpress for comparable products. “With Hermes, an S-Paket weighing up to 25kg can be sent for€13.90, including insurance coverage up to €500. The comparable cheapest European parcel productfrom DHL costs €17. If you take the maximum weight into account, you save even more. The HermesS-Paket price stays the same; with DHL parcels up to 20kg cost €32,” he pointed out. Hermes hasthree basic prices for all European destinations: €13.90 (small parcels), €18.90 (medim-sizeditems) and €28.90 (large parcels).
According to Hermes, about 70% of the estimated 1.5 billion annual European consumer parcelsare generated by the three major markets of Germany, Britain and France. An overwhelming 90% aredomestic parcels, and there are about 150 million cross-border shipments. In Germany, Hermesgenerated revenues of €908 million and transported 213 million domestic shipments in the yearending February 2006. It claims a domestic B2C market share of 35% and a 22% share of the domesticC2C market.
In Britain, Parcelnet, the delivery unit of Otto UK, delivers about 85 million parcels ayear, mostly B2C shipments from large retailers, through a network of 5,000 couriers. In June, itlaunched a new service branded “Homecall” in cooperation with B2B operator Parceline, the Britishsubsidiary of GeoPost and the DPD UK franchisee, to target smaller businesses.
The French delivery partner Mondial Relay, with 180,000 daily parcels and a network of 22regional bases, delivers to homes through 500 local transport companies across France. It also usesKiala’s network of 3,500 “Points Relais” retail outlets (shop-in-shop services) as drop-off andcollection points.
By using TNT as a delivery partner, Hermes gains access to one of Europe’s largest expressdistribution networks. The two companies already cooperate in Germany in several areas, includingthe recent trial launch of express product sales through Hermes’ PaketShops.
TNT is itself planning to launch consumer parcel services in selected European markets,including Britain, France and the Benelux region. TNT Express France announced in July that it nowoffers a choice of home delivery or drop-off at one of 3,800 “Relais Colis” parcel collectionpoints across the country. In the UK, it has bought the JD Williams home delivery network as thebase for a new delivery service.
