UK parcel firms are investing heavily in expanding capacity to meet growing demand from the onlineretail boom and the peak-season needs of customers, with more than €300 million announced in the
last two weeks alone, including today’s news of a £175m (€218 million) spend by DPD.DPD said it will invest £175m (€218 million) to expand its UK capacity, including a £100mpurpose-built parcel-sorting hub planned for the East Midlands – said to be one of the largest ofits kind in Europe – along with a £20m refurbishment of two existing hubs and a £12m investment tobuild 10 new depots over the next 15 months. It is also replacing all the handheld devices used bydrivers for route optimisation and parcel administration, plus undertaking security and ITupgrades.
The investment is expected to create 1,500 new jobs at the UK’s fastest-growing parcelcompany and follows a period of “unprecedented growth”, spearheaded by the company’s Predictservice, which was launched in March 2010. DPD said the product had generated over £70m of newbusiness to date and over 1,000 new full-time jobs in the past 12 months, “as a flood of majorretailers switched to DPD”. It said more than 97 per cent of the millions of parcels delivered eachyear with Predict are delivered ‘right first time’.
Dwain McDonald, DPD CEO, said: “I’m delighted to announce this very significant investment innew jobs and infrastructure. DPD has been expanding year on year and is now the fastest growingmajor carrier in the UK. This investment will allow us to expand our network capacity further tomeet the demands from our customers and maintain our very high service standards.
“The online retail market is expanding rapidly with consumers now prepared to buy a muchwider range of goods online. With Predict we have a product that gives retailers greater confidencethat their goods can be delivered both on time and straight into the hands of their customers. Thathelps them improve their customer service and helps encourage more repeat purchases.”
DPD last month also announced it was opening three more depots in the UK to increase sortingcapacity ahead of the end-of-year peak season, investing £4.3m in state-of-the art depots inLondon, Southampton and Dundee. The new depots are expected to create up to 150 new jobs, including70 in London with the opening of a new £1.5 million, 4,500 sqm new depot in Southwark.
Last week, Royal Mail Group announced a £75 million (€93 million), four-year investmentprogramme for its UK express parcels business, Parcelforce Worldwide (PFW), as part of the group’sstrategy to expand its parcels businesses in the UK and overseas to take advantage of the growth ine-commerce. The investment includes the opening of a new parcel-processing centre in northwestEngland next autumn, which will complement Parcelforce’s existing hub in the West Midlands region.
The investment is expected to create around 1,000 jobs, boosting Parcelforce’s workforce byalmost 20 per cent, and will include two new depots plus the development of a further nine existingdepots over the next four years, along with a significant investment in IT as legacy systems arereplaced.
Just two months ago, Hermes UK announced it was increasing sorting capacity by more than 20per cent at its national hub in Nuneaton, central England, to cope with rising volumes. A newconveyor system is expected to increase capacity to 6,000 parcels per hour at the 7,900 sqmnational hub, which is forecast to handle more than 55 million parcels this year, an increase ofmore than 15 per cent compared to the previous twelve months. In addition to the Nuneaton hubexpansion, the company is investing in new depots to increase its network to 25 locations and plansto expand its northern England hub at Warrington in 2013. It also launched a network of more than500 parcel shops for collections and returns this year.
Royal Mail and UK express parcel carrier City Link this week also announced major investmentsin preparation for this year’s Christmas peak season.
Royal Mail said it was opening eight parcel-sorting centres for the Christmas period tohandle the major rise in parcel volumes due to the growing number of online shoppers. The dedicatedfacilities will be located in Edinburgh, Glasgow, Swansea, Bolton, Tamworth, Peterborough, Swindonand Greenford, opening on a phased basis from this week onwards.
Meanwhile, City Link has ordered 56 new tractor units as it gears up for the peak Christmasperiod. The new vehicles are part of the measures taken by City Link to cope with the challenges ofwhat is expected to be the busiest Christmas ever as online shopping is set to beat allrecords.Although the new vehicles are primarily replacements for those within the company’sexisting 500-strong fleet during most of the year, the existing vehicles will be kept to ensurefleet availability over the peak period.
Tim Brown, sales and marketing director at City Link, commented: “Maintaining our servicelevels for both our B2B and B2C customers throughout the peak period is at the top of our agenda.Over the past few months, we have developed a robust plan and are making a substantial investmentin manpower, vehicles and additional sites to ensure that we are ready to deal with the level ofincreased volumes we are expecting this Christmas.”
The latest figures from the IMRG Capgemini e-Retail Sales Index indicate that the UK’s onlineretail market grew by 16 per cent year on year in September. IMRG and Capgemini are nowforecasting 15 per cent growth for Q4 and have raised their annual growth estimate one percentagepoint to 14 per cent for 2012.
