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EXECUTIVE SUMMARY

It is estimated that the total value of courier and express services in 1999 was £4.21bn, compared with an estimated £2.92bn in 1995. During this period, the importance of express services for logistical purposes grew rapidly, as more large organisations in the UK contracted out their administrative and supply chain management functions to specialist companies which, in turn, made huge investments in providing a dedicated service to their clients. The courier and express industry includes Parcelforce, the state-owned subsidiary of the Post Office, which competes commercially in the open market with the numerous independents in the industry (over 4,000 are offically listed). The industry’s collections and deliveries are fundamentally based on road transport for the domestic market and on air transport for the European and overseas markets. Rail transport is beginning to assume a greater importance for some companies but is generally regarded as being most suitable only for longer distances, uninterrupted journeys and deliveries to continental European destinations using the Eurotunnel link. Only Red Star makes extensive use of the rail network for parcel deliveries. Express deliveries by logistics companies tend be of large, heavy parcels and light and heavy freight. Most of the companies supplying the heavier express delivery services were originally road haulage companies and they continue to depend largely on road transport, as well as on air transport. Their contribution to the total courier and express industry is growing rapidly. All own large fleets of vehicles but the revenues from transport are only part of their total revenues, which include fees for many other services rendered, such as management of the post room, inventory control, re-ordering stock, maintaining records, warehousing, packing and shipping, low-tech assembly, etc. Air transport is another key element that is vital to the industry because of the globalisation of the economy, as well as the sourcing of industrial components and consumer goods from a wide range of countries. Electronic equipment has been developed specifically for the courier and express industry that enables service providers to continuously monitor, track and trace the whereabouts of every consignment. Without these electronic facilities, the service provider would be unable to operate the new systems effectively. Key Note anticipates that the total value of courier and express services will increase from around £4.37bn in 2000 to £5.28bn in 2004. The courier service is not expected to grow significantly in value terms because intense competition in a static market will limit the scope for price increases, and electronic transmission of mail, documents and data will be used more intensively by its potential customers. Demand for express services, however, is expected to increase steeply, due to the requirement for fast responses to customer orders.

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Text © 2000 Key Note

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Last updated by Jacob van Eldik 24th Auust 2000