What is parcel delivery?
Over the last few decades, transportation needs have changed. The rise and growth of e-commerce has led to an increase in international trade flows. At the same time, many companies have decided to relocate their production or to reduce their stocks in order to lower their costs. This just-in-time approach has led to an increase in the demand for transport, and in particular for parcel delivery services, which provide fast delivery.
Parcel delivery is a transport service that moves parcels or goods from the sender to the recipient within a short period of time. It requires the carrier to make at least one stop at a platform for the goods to be sorted before being delivered. Mostly used in the context of traditional distribution, mass distribution or mass production, parcel delivery transport is based on the notion of speed of execution.
The terms “parcel delivery” are used to describe all parcels with:
- A total weight under than 3 tons
- A delivery time under 48 hours
Different types of parcel delivery are available to meet the different customer requirements.
The different types of parcel delivery
The conventional parcel delivery
The conventional parcel delivery is specifically designed for heavy, grouped or standardized parcel shipments with longer delivery times and higher average weights:
- Delivery times exceed 24 hours and reach up to 48 hours in France.
- Shipments generally weigh between 30kg and 3 tons.
- There are no restrictions on the weight, size or number of parcels sent.
Different companies provide conventional parcel delivery services in France: Geodis, Schenker, Dachser or Kuehne + Nagel.
Single parcel delivery
Introduced at the end of the 1970s, the single parcel delivery expanded in Europe in the 1990s. This method has the characteristic of handling only one parcel per shipment. Unlike the multi-parcel system, where the carrier can handle several parcels for the same delivery slip and send them to the recipient at the same time, the single-parcel carrier only accepts one parcel. Invoicing is then done per parcel and not per shipment.
The features of the single-parcel delivery are based on:
- Delivery times ranging from 24 to 48 hours.
- An average weight per shipment of less than 30kg with standardized dimensions.
- Parcel tracking similar to express delivery.
The challenge for single-parcel delivery companies, such as DPD and GLS, is to handle parcels that can be processed by machines in sorting centers in order to offer the most attractive rates. By focusing on large, standardized and regular volumes, they can offer their customers both low prices and a high quality service thanks to the efficient tracking of their parcels.
Fast and express parcel delivery
Fast parcel delivery can be integrated with conventional or express parcel delivery services. They allow for the delivery of one or more parcels within 24 hours maximum. Picking up a parcel before 6pm results in a delivery before 6pm the next day.
Express parcel delivery, on the other hand, ensures a delivery in less than 24 hours (delivery the next day before noon for a pickup before 6pm). This service is 4 to 5 times more expensive than conventional parcel delivery and ensures that customers receive their goods on time. If these deadlines are not met, some carriers even refund the transport costs.
Express parcel delivery is defined by other complementary elements:
- Parcels usually under 30kg and with limited dimensions.
- Live tracking of the delivery.
Express deliveries are generally made for products with high added value. The products sent can be very diverse: business mail and documents, spare parts, food products… all industries can use express delivery. As the food industry sometimes requires the handling of perishable goods, some parcel delivery players have turned to temperature-controlled transport (as well as for certain pharmaceutical products).
Unlike the previous types of parcel delivery, which mainly use road transport, express parcel delivery companies can use multiple transport methods, especially air transport, to deliver their parcels internationally.
Given the significant investments needed (vehicles and sorting centers), few companies are able to offer this service, creating a market oligopoly, unlike the conventional parcel delivery industry, which has many local or regional players. Chronopost, DHL, FedEx / TNT Express and UPS are among the world’s leading express parcel delivery companies.
For urgent shipments, urban courier services can deliver in record time, usually within an hour or half a day (usually within a city). It is done door to door and without load disruption, significantly reducing the risk of theft or loss. However, this type of delivery is not part of the parcel delivery service.
A globalized industry with a few leading organizations
The increase in international trade and the enactment of economic partnerships such as free trade agreements are increasing and diversifying the transportation needs of companies. Carriers, and in particular parcel delivery companies, must therefore expand their distribution network. Through alliances, acquisitions or internal developments, they are able to cover the national territory first and then the European zone. This leads to a situation where 10 companies account for almost 60% of the turnover in 2018 of the industry.
Yet, almost all (92%) of the companies in the parcel delivery industry are small businesses (less than 250 employees). But companies with more than 250 employees generate more than 72% of the industry’s revenue in France. Smaller companies are more likely to go bankrupt or be acquired by larger groups. Postal groups are perfect examples of the industry’s concentration. The opening of the postal market to competition has pushed the players concerned to diversify their activities, in particular by developing their parcel business. They then naturally turned to the parcel delivery market via the creation or acquisition of subsidiaries: DPD (single parcel delivery) and Chronopost (express delivery) for the La Poste Group, DHL (express delivery) for Deutsche Post in Germany…
At the same time, polarization is also happening geographically, with a high concentration of activity in the Paris region. Particularly well connected to other regions, the Ile-de-France region accounts for nearly a quarter of the industry’s workforce (2018). The majority of the Greater Paris metropolitan area’s flows are inbound: shipments account for one-third, deliveries two-thirds, which creates imbalances with the other regions. The Auvergne-Rhône-Alpes and New Aquitaine regions also capture national and international flows thanks to their borders with Switzerland, Italy or Spain.
Parcel delivery is therefore a booming industry that has been structured around the transport needs of the shipping industry. It has also become centered around a few major players (American or European) who hold a monopoly on the market. Faced with this tough competition, the development of an extensive national and international network is essential, especially with the increasing speed of global flows. As customer requirements become more and more demanding, express delivery is gradually overtaking conventional delivery services. The concept of speed, which is at the heart of parcel delivery services, requires a special organization based on the construction of an optimized infrastructure network.