GeoPost plans to develop a network of alternative delivery points in Europe for B2C parcels and isgearing up for greater competition with integrators in domestic markets, according to senior
executives.In its home French market, however, La Poste’s express parcels subsidiary has no plans tocombine the diverse B2B and B2C businesses into a single operator to avoid a potentially“catastrophic” merger of different networks and cultures, they stressed at a press conference inParis yesterday.
The comments came at the presentation of GeoPost’s strategy up to 2020 which focuses ongrowing its business outside Europe to develop into a ‘global player’, with potential investment of€1-1.5 billion. The group currently sees itself as number four worldwide in volume terms, with onebillion parcels a year, and number five in terms of express parcels revenues, behind UPS, FedEx,DHL and USPS but ahead of TNT Express.
President and CEO Paul-Marie Chavanne highlighted the increasing ‘convergence’ of the B2Band B2C and the express and deferred market segments in Europe in recent years that had resulted inmore direct competition between companies offering a broader portfolio of parcel delivery services.At the same time, the trend towards smaller shipments was benefitting the “specialist” parceloperators compared to traditional “generalist” freight transport firms, he said.
“You can say that today there is a true express parcels market in which postal companies andexpress operators compete,” he commented. “This convergence of B2B and B2C, and of parcels andexpress, is a fundamental development in our business and is changing the way we operate.”
According to GeoPost figures, the traditional B2B business has only grown about 2-3 per centa year on average in Europe and North America between 2000 and 2012 and is expected to grow at most2 per cent a year up to 2020. In contrast, B2C has grown twice as fast with 4-6 per cent growth andis expected to accelerate further with 6-8 per cent growth over the rest of this decade.
The global express parcel market is now worth an estimated €130 billion, with North Americaaccounting for €55 billion, Europe a further €37 billion and the rest of the world €38 billion,Chavanne said. In Europe, domestic markets account for €25.2 billion, or 68 per cent,intra-European deliveries generate about €8.6 billion, or 23 per cent, while intercontinentalshipments to and from Europe represent revenues of €3.2 billion, or 9 per cent, according toGeoPost figures for 2011.
With €26 billion in revenues, B2B still accounts for 70 per cent of the European marketdespite the low growth over the last decade. Domestic B2B revenues dropped slightly to €15.6billion in 2011 but GeoPost remained the market leader, slightly increasing its market share to16.3 per cent.
In the fast-growing European B2C market, GeoPost, with revenues of €2.2 billion, is numbertwo with a 20 per cent market share behind DHL, whose €2.9 billion revenues give it a 27 per centshare of the €11 billion market. In 2011, domestic B2C market revenues grew by 13 per cent to €9.5billion and intra-European B2C revenues increased strongly by 20 per cent to €1.2 billion,according to GeoPost figures.
Outlining GeoPost’s plans to profit from this fast growth of B2C parcels, Christian Emery,Chief Operating Officer Europe, highlighted innovative services such as the Predict deliverynotification service currently being rolled out in various markets and the gradual expansion of‘alternative delivery’ points for parcel collection or drop-off.
In France, GeoPost bought in 2009 the Pickup network of shop-in-shop parcel collectionpoints, which now covers some 5,600 locations and is due to reach 7,000 outlets by the end of thisyear. In 2012, some 12 million parcels were delivered through the network, an 80 per cent increaseon the previous year. “I think we have the best network in France with high quality,” Emery said.Chronopost accounts for about 80 per cent of the volumes in the Pickup network.
GeoPost is now establishing alternative delivery points networks in other countries, Emerysaid. DPD will have 6,000 ParcelShops in Germany by the end of this year and about 8,000 in themedium-term, while there will 1,000 outlets in the Netherlands by end-2013. The next market wouldbe Switzerland and possibly the UK at a later stage, GeoPost’s Europe chief said.
“The aim is to have a true European network of collection/drop-off points for the years tocome,” he stated. “In 2-3 years’ time we will have a network that is an alternative to homedeliveries.”
Various parcel companies, including UPS, Hermes and GLS, are currently expanding such ‘alternative delivery’ networks, which avoid the need for costly and complex last-mile deliveries toprivate homes by allowing recipients to collect their parcels from network partners, includingretailers such as newsagents, laundries, petrol stations and other shops with long opening hours.DHL is taking a different approach by investing in its Packstation self-service terminals.
CEO Paul-Marie Chavanne told journalists that GeoPost will inevitably face more competitionfrom integrators in domestic markets in Europe in future. FedEx, for example, had acquired deliverycompanies in France and Poland, and UPS was already strong in various domestic markets, he noted.“In the years to come I think we will have integrators as domestic competitors in Europe. Thequestion is whether the integrators will invest in domestic B2C networks.”
Both the integrators and GeoPost would also build up their B2C international air businessesas this small business segment grew, Chavanne predicted. “Integrators will enter this market. Wewill try to enter ‘air B2C’ with a freight forwarder with whom we have scale. We will offersolutions that allow us to compete without investing in our own fleet,” he said.
In response to a CEP-Research question, both Chavanne and Emery stressed there were no plansin France to merge the currently separate domestic express business (Chronopost), domestic deferredparcel operations (Exapaq) and La Poste’s B2C unit ColiPoste despite the convergence of marketsegments and services.
“It would be a catastrophe to merge the two (Chronopost and Exapaq) networks,” Chavanneemphasised. “The (customer) demands are different. Having two independent companies is better thanmerging two networks.” Emery added: “Each company has its own culture. We have three firms withdifferent businesses and different cultures. It would be a big mistake to merge them.” Theexecutives also cited the problems experienced by several competitors, including DHL, when theytried to merge different networks.
Express operator Chronopost, with 3,500 staff, delivered some 84 million parcels last year,including 25 per cent to international destinations and 30 per cent B2C parcels. Deferred parcelsfirm Exapaq, with 1,800 staff, delivered 52 million parcels last year, the bulk of them B2Bshipments. The two firms have combined revenues of about €1 billion, representing one quarter ofGeoPost’s €4 billion revenues.
ColiPoste, which is not part of GeoPost but a separate unit within La Poste’s express parcelsdivision, has its own sorting and urban delivery network, and uses the postal network fordeliveries in rural areas. In 2012 it had operating profits of €117 million, revenues of €1.5billion, delivered 271 million parcels and had about 60 per cent of the French B2C/C2C market. Itsvolumes have grown only slightly in recent years due to the replacement of traditional mail-orderparcels by e-commerce parcels but its revenues have increased about 5-6 per cent a year due to itshigher value core product Colissimo, offering 48-hour delivery, online tracking and other features.
