Ofcom report: Parcel revenues and volumes are up, but price competition is increasing

Ofcom report: Parcel revenues and volumes are up, but price competition is increasing

Ofcom’s latest annual monitoring update shows that the UK parcels market is continuing to grow, but average revenues per unit are declining as the competition between carriers has driven prices down.

According to the Ofcom report: “In 2015-16, average unit revenue for a domestic parcel was £3.39. The average unit revenue for a domestic parcel of £3.21 in 2016-17 therefore represents a 5% decrease in last year’s figure. This is the second consecutive year of decline in average unit revenue and may reflect, at least in part, growing price competition among parcel operators.

“The average unit revenue for an international outbound parcel decreased in 2016-17 by 1% from £11.77 in 2015-16 to £11.62 in 2016-17.”

The increasing competition among carriers was a feature that was also highlighted in Triangle Management Services’ 2017UK Domestic Express Parcels Distribution Survey’.

Commenting on the new Ofcom report, Saeed Mumtaz, Director of Research and Consultancy at Triangle Management Services, said: “The Ofcom work shows how our survey benchmarks price changes in the market and confirms the trends we saw earlier in the year.”

“The UK remains ultra competitive when it comes to price, with average domestic and outbound unit prices continuing to fall. With the market growth potentially slowing, Brexit coming into focus and integrators indicating international price rises, it will be interesting to see how the parcel market continues to develop. We have to ask if the industry will continue to drive efficiencies, provide service enhancements or look for new niche services?  Or will we see new partnerships and/or further consolidation?”

In terms of overall revenue and volumes, the total UK parcels market is still on the up – boosted by e-commerce. According to Ofcom: “Total measured national volumes increased in 2016-17 by 7% to 2.1 billion items and revenue increased by 3% to £8.7 billion.” However, the rate of growth was slower than in 2015-16.

Ofcom also noted that the speed at which consumers expect their parcels to arrive is rising, reflecting slight growth in the proportion of parcels delivered next day, which make up the majority of volumes and revenues in the UK’s parcel market. More than half of UK adults (55%) said they had used a next day delivery service in February 2017.

Turning to the letters market, Ofcom noted that in 2016-17 total addressed letters volumes fell by 5%, to 11.7 billion items. This was an increase in the rate of decline in recent years of roughly 4% per annum. Total addressed letters revenue stood at £4.2 billion in 2016-17, a decrease of 5% in real terms on the previous year.

On the plus side. Royal Mail’s quality of service (QoS) performance in 2016-17 improved compared to the prior year. Its performance was the same as, or better than, 2015-16 against seven of the eight QoS measures.

Relevant Directory Listings

Listing image

KEBA

Since 2001, KePol parcel lockers from innovation leader KEBA ensure easy automating of the first and last mile of parcel logistics processes. First-class quality and outstanding reliability make KePol the world’s best locker solution available. Thanks to its modularity, the flexibility is high and customizing […]

Find out more

Other Directory Listings

News Archive

Advertisement

Advertisement

MER Magazine


The Mail & Express Review (MER) Magazine is our quarterly print publication. Packed with original content and thought-provoking features, MER is a must-read for those who want the inside track on the industry.

 

P&P Poll

Loading

Which PUDO technology supplier is most familiar to you?

Thank you for voting
You have already voted on this poll!
Please select an option!






Pin It on Pinterest

Share This