UK Parcels Market Worth Over 10 Billion by 2018 Despite Having Fallen During the 2009 Economic Downturn, 2009 -

DUBLIN--()--The "UK Parcels Market Insight Report 2018" report has been added to's offering.

This report reviews the UK parcels market encompassing the business-to-business, business-to-consumer and consumer / small business consigned segments. Having been refined, extended and improved over the last 14 years, it is the leading survey of the UK parcels market, used by many carriers, and other parties with interests in the industry.

The UK parcels industry has continued to evolve dynamically with

  • Continued overall volume growth
  • New investment in additional and upgraded facilities
  • Macro factors such as the trend growth of home shopping and the cyclical impact of the economy on volumes continuing to provide challenges and opportunities
  • Ongoing refinement of operating models and launch of new service features to enable evolving customer needs to be served profitably

The report is based on

  • Financial analysis of the accounts of companies in the industry
  • Discussions with our network of senior-level contacts in the market
  • In-depth analysis of the macroeconomic environment and relevant market drivers
  • Extensive desk research
  • Our own experience of advising both carriers and investors in the parcels industry

Market growth and drivers

The UK parcels market is now over 10bn in size. Having fallen during the 2009 economic downturn, the main drivers of growth have been home shopping and a somewhat patchy recovery in the UK economy. The recovery has frequently relied on consumer borrowing to compensate for the lack of consistent wage growth, which has resulted in ongoing but volatile retail sales growth

Key industry issues

  • An ongoing challenge for operators has been the development of a model to serve last mile home deliveries profitably, enabling them to exploit the growth segment without damaging their overall economics and service levels. To that end, most have invested in parcel shop networks to provide additional delivery options.
  • Customer retention remains a challenge in the B2C segment where large retail customers both negotiate a hard bargain and have a higher propensity to switch, creating greater instability within the market and more share mobility amongst carriers
  • Industry margins remain modest as powerful customers, such as the big retailers, have largely prevented price increases in what is a competitive market. However margins have improved over the last few years as carriers have been able to retain a portion of the benefits from automation and improvements in productivity.
  • Having fallen for many years, aggregated employee levels across all carriers has started to rise, possibly in response to concerns raised by HMRC and others regarding self-employment models used in the industry. Labour availability and costs are likely to become increasing concerns for carriers post-Brexit

Key Topics Covered:


  • About this report
  • Executive summary
  • About the author
  • Contents
  • List of charts and tables

Parcels market

  • The parcels market includes next day or deferred delivery of parcels from around 0.75-40kg in weight
  • Key features of the market include high operational gearing, low capital intensity, scale economies arising from consolidation and low customer retention
  • B2B, B2C and C2X segments have converged but retain distinct characteristics
  • Use of franchised and outsourced models has been widespread
  • The last mile for home delivery remains both a challenge and an area of innovation

Market Size and Growth

  • Our market size estimate is based on company revenues
  • Non-parcel activities of the main networks have been excluded and parcels activities of other operators have been included
  • The market has grown strongly since
  • Figures from Ofcom support our views of market size and growth
  • The B2B, B2C and C2X segments are impacted by different drivers hence have grown at different rates
  • The market is often segmented by speed of delivery, type of item and international/domestic delivery
  • Consumers are increasingly opting for premium delivery services
  • Growth of internet retail is supporting the shift towards more deferred/economy deliveries, although the picture is more complex
  • Domestic deliveries account for the majority of the market
  • Larger/heavier items are not compatible with highly automated parcels sortation processes
  • Price increases have remained below inflation for many years

Market drivers

  • The main drivers of the parcels market are online shopping and the overall level of economic activity
  • Pricing is largely driven by competition
  • UK GDP is slowing in the uncertainty preceding Brexit
  • B2B parcels has broadly tracked, but been lower than, movements in real GDP
  • Retail sales has continued to grow
  • Of the range of routes via which an online purchase can reach a consumer some, but not all, require a parcel delivery
  • Online retailing has grown considerably over the last decade.
  • Certain categories of online purchase do not lead to a parcel movement
  • The UK is a worldwide leader in internet shopping
  • International sales by UK e-retailers are growing more quickly than domestic sales
  • Internet shopping transaction values had been falling but this is no longer the case
  • Rates of returns - which are not captured by e-commerce statistics - are (slowly) rising

Competitive Landscape

  • UK parcels operators can be divided into several categories
  • The leading international groups have continued to gain share at the expense of UK-only players
  • There have been several long-term share movements over the last decade
  • The UK parcels market is moderately concentrated'
  • The fastest growing companies have been the newer players, followed by DPD (and DPD Local), and Hermes
  • DHL, TNT and DX have seen falling revenue over the last eight years while UK Mail's growth has been modest
  • Estimated volumes by carrier
  • Differences in average revenue per parcel reflect carrier focus
  • Features of carrier business models underpin both segment focus and profitability
  • Variations in revenue per depot reflect differences in business model
  • Tuffnells and Hermes have business models which reflect the requirements of their respective niches
  • Despite a reverse in 2017 margins have been higher in recent years
  • The overall industry picture masks some significant variations in profitability
  • Several of the more profitable companies have also been amongst the fastest-growing
  • Those with losses have specific factors explaining their performance
  • There is little relationship between pure scale and profitability
  • Carrier rankings suggest some winners - but care is needed in interpreting
  • Greater industry revenues are being generated with fewer workers


  • Our market forecast considers the three main segments (B2B, B2C and C2X) separately
  • GDP is expected to grow steadily and inflation to increase
  • Our forecast is based on the B2B parcels segment maintaining its recent historical relationship with GDP growth
  • We expect to see growth in retail sales continue at a similar rate
  • Forecasts for growth of click-and-collect have been scaled back
  • Growth in international internet retail sales is expected to continue to be faster than domestic sales
  • We expect to see further growth in home delivery, but at a slowing rate
  • Our forecasts combine the different dynamics from the B2B, B2C and C2X segments
  • Our market estimates and forecasts are supported by other available data
  • There are several potential market risks which could impact the forecast

For more information about this report visit

Laura Wood, Senior Press Manager
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

Laura Wood, Senior Press Manager
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900