2023 – A year of disruptions, challenges and changes
by Paul Needham
For most courier, express, parcel and postal operators, 2023 proved a challenging year marked by supply chain disruptions, weak demand and high costs. There were several high-profile changes in management and brands along with numerous cost reduction and restructuring programmes. With ongoing conflicts around the world and mixed prospects for the world economy, international trade and private consumption, the outlook for 2024 looks uncertain at best.
This Review of 2023 looks back at some of the biggest news concerning the leading CEP companies in Europe, North America and Asia Pacific. The links refer to CEP-Research articles on the topics mentioned.
It was a year of new names at Deutsche Post DHL Group. Tobias Meyer took over as CEO from Frank Appel in May and quickly made his mark by re-branding the German postal and logistics company with a more international name – DHL Group. The rationale: more than 90% of the group’s revenue is generated by DHL-branded businesses while the Deutsche Post-branded domestic mail business only accounts for 10% of revenues.
In parallel, the group’s DHL eCommerce Solutions division re-branded in various countries from ‘DHL Parcel’ to ‘DHL eCommerce’, including in the Netherlands, Spain and the UK. The division also made a significant acquisition, buying Turkish parcels firm MNG Kargo, and partnered with Cainiao in Poland as well as with Italy’s Poste Italiane.
Meanwhile, despite lower volumes and revenues, the group’s most profitable business, DHL Express, kept up strategic investments in key markets, including in Hong Kong, South Korea, the USA (Cincinnati, Atlanta) and Europe (Helsinki, Barcelona).
In the USA, both FedEx and UPS had a turbulent year, marked by labour disputes, restructuring measures, disappointing financial results and managerial changes.
UPS was heavily impacted by the threat of a Teamsters strike before a last-minute deal was agreed in July and lost US parcel volumes to rival carriers, although some business was won back in the final months of the year. There were also numerous managerial changes in the USA and Asia Pacific, while nearly 200 pilots accepted voluntary retirement. In Europe, the company focused strongly on SMBs during the year.
But UPS also invested heavily, spending $1.3 billion in total on the acquisitions of MNX Global Logistics and Happy Returns, buying a French healthcare logistics company, and opening new facilities around the world (or announcing them), including in Pennsylvania, Louisville, Paris, Singapore, Hong Kong, the Philippines, Madrid and Giessen (Germany).
Job losses and restructuring
Arch-rival FedEx remained strongly focused on its wide-ranging restructuring programmes throughout 2023. In February, the company announced it would cut 10% of top management jobs as part of a 12,000-person workforce reduction. Then, in April, the company presented a major transformation from separate businesses into a streamlined ‘One FedEx’ organization, including the merger of the US express and ground operations by June 2024. In parallel, the airline was gradually downsized during the year and pilots were encouraged to take voluntary redundancy. In December, the company then announced a further restructuring of the airline into a three-tier ‘Tricolor’ network, with Purple for priority express shipments, Orange for deferred shipments, and White for additional third-party airlift.
Meanwhile, the US Postal Service saw parcel volumes decline last year and continued to make massive financial losses although it vigorously promoted its long-term turnaround strategy and network restructuring to focus on parcels growth.
Name changes and disposals
In Europe, 2023 also proved a challenging year for the major postal and parcel operators as B2C business declined due to falling private consumption in many countries while B2B demand remained subdued. Cost saving programmes, including job reductions, were introduced or intensified at many companies.
France’s La Poste Group, and its express parcels subsidiary Geopost, faced difficult conditions in many markets, although the group achieved resilient results for the first half of 2023. In March, the ‘DPDgroup’ brand was dropped and replaced with the existing divisional name ‘Geopost’ to simplify its corporate identity and gain a more global name for growth ambitions outside of Europe. In October, Geopost CEO Yves Delmas stressed the parcels operator was focusing on diversification activities to achieve growth.
However, the French group also sold off loss-making on-demand delivery subsidiary Stuart, announced a major restructuring at DPD Germany, and appointed a new Europe chief. Strategic partnerships with CEVA Logistics and China’s JD Logistics were agreed, and a joint venture in Argentina was launched.
Across the Channel, there were changes at the top of International Distributions Services plc (IDS) and its two divisions, Royal Mail and GLS. In May, Simon Thompson resigned as CEO of loss-making Royal Mail following strikes over the British postal operator’s restructuring plans that were ended with a pay and ‘no compulsory redundancies’ agreement. In July, GLS Group CEO Martin Seidenberg was promoted to CEO of IDS, with GLS Germany chief Karl Pfaff stepping up to replace him. A new CEO for Royal Mail, which remains heavily in the red, has yet to be appointed. More positively, GLS, which is growing profitably and investing internationally, made several acquisitions last year to broaden its services and network in Germany, Italy and Canada, and expanded into Serbia.
Among other major European CEP operators, PostNord continued to restructure its operations as volumes, revenues and profits declined, and announced a major reorganization in Denmark where the USO ended on January 1, 2024. Posti downscaled mail deliveries to just three days per week under Finland’s new USO.
Meanwhile, Norwegian postal group Posten Norge re-named as Posten Bring in June to reflect its international logistics growth while in a surprise move CEO Tone Wille announced she would step down during 2024.
In the Benelux region, business at bpost was overshadowed by a long-running legal investigation into a Belgian government newspaper delivery contract, there were several management changes and a new CEO was appointed. The Belgian group acquired full ownership of e-logistics firm Active Ants and continued to invest in e-commerce logistics and sustainable deliveries. For its part, Dutch group PostNL tackled a business slowdown with 300 job cuts and managed to generate low parcels growth during the second half of the year.
Despite declining profits, Swiss Post maintained its diversification strategy with numerous acquisitions of small transportation, logistics and digital companies. Neighbouring Austrian Post generated solid parcels growth during 2023, not least thanks to strong growth at Turkish subsidiary Aras Kargo which also acquired a company in Azerbaijan. A CEO handover will take place later this year.
In southern Europe, Poste Italiane performed strongly during 2023 and signed an e-commerce parcels agreement with DHL Group. Portugal’s CTT grew profitably last year, investing in more parcel lockers and its Spanish business. In stark contrast, Spain’s Correos remained heavily in the red and a new CEO was appointed.
Asia Pacific investments
There were also contrasting fortunes in the Asia Pacific region where economic growth slowed in many countries but e-commerce remained a growth driver in most markets. Among significant developments, Singapore Post made a financial turnaround, stepped up its diversification strategy by acquiring another Australian company and partnered with Pos Indonesia. Pos Malaysia reduced its losses and focused on its ongoing business transformation.
Despite dropping into the red, Australia Post continued to invest in parcels growth with several new facilities and successfully secured reform of the country’s postal USO, enabling it to downscale loss-making letter deliveries this year. Meanwhile, NZ Post saw profits drop back and announced job cuts but plans to boost its logistics activities with a strategic acquisition.