Despite some consolidation in recent years, there are still more than 15 companies operating significant parcels networks in the UK. They fall into several different types including the Global integrators, European networks with strong continental road and/or air networks, Standalone UK operators and home delivery specialists

Operating Models, Segment Focus and Strategies

Different carriers have variations in their business models.
Key variations include use of self-employed couriers / owner-drivers, size of depots, use of franchised depots, automated vs manual handling processes, direct trunking vs hub and spoke, use of cage sort and parcel shops
These exist for a combination of historical reasons and to provide a better fit with the company's strategy and the requirements of the segments on which it wishes to focus. For example, the integrators tend to have larger depots than domestic players while franchised depots seem particularly appropriate for serving smaller customers
Key objectives of operating model features are often to improve consolidation of pick-up and delivery, align incentives or minimise handling of parcels

Carrier Profitability

The UK parcels sector continues to operate on narrow margins and, as an industry with significant fixed costs, is vulnerable to dip in volumes
Combined profitability across all the major operators fell from just under 3% (EBIT) in 2006 to a net overall loss in 2008, before recovering to a slim overall profit of 1.5% in 2010
The two most profitable operators are the Geopost business, DPD and Interlink. The two companies with the worst profitability record in recent years have been City Link and DHL
Factors such as compatibility of operations with market segment focus appear to be far more important than the effects of scale in determining operator profitability
Parcels carriers are generally not highly capital intensive operations and so, in general, enjoy relatively high returns on capital

Click for Report details:UK Express Parcels: Company Profile: City Link