DPD to hike prices for parcel deliveries instead of parcel shops expansion

DPD has stopped the expansion of its parcel shops in Germany and is instead planning to increase prices for parcel deliveries to cope with the rising fuel costs, DPD CEO Arnold Schroven told the German newspaper Frankfurter Allgemeine Zeitung in an interview this week.

In the beginning of April, the company had announced that it would continue its strategic growth by opening another 1,500 parcel shops in Germany by the end of 2008 in addition to its existing 3,000 retail outlets. Meanwhile, DPD has surprisingly changed its strategy and is now planning to invest in the development of a new express delivery service and to concentrate on its international parcels business. In both segments, the company generates considerably higher profits than in the domestic parcels business, Arnold Schroven further explained. He added that the company was under pressure as it couldn’t fully implement the price increase of 4 pct for parcel deliveries planned for this year.

In view of the rising transport costs, further increases in parcel deliveries between business clients – the company’s core service – are unavoidable from 2009, Schroven said.

From October this year, the company plans to increase the prices for a single parcel by 3 cents due to the government plans to hike truck toll fees. As a result of the price increase, Schroven expects an annual revenue growth of 50% in the express sector. Currently, DPD’s express division accounts only for 5% of the total group revenues.

“A wider parcel shops network would have been useful for a possible entry into the mail market. But he added that La Poste, the French parent company of DPD, was no more interested in it. He rules out the possibility for entering the mail market.

Last year, the company’s sales grew more than 5 pct, exceeding EUR 1 billion revenues for the first time.