This Annex particularly analyses the basic structure of the cross border segment that is the ultimate focus of this Impact Assessment. It provides an overview of the pricing developments in the CEP markets, as well as of the operational specificities that relate to the various segments of the CEP market.

It touches upon the social and environmental aspects of the CEP market and finally it provides a market outlook, with reference to recent evidence and studies.

Before we begin

In this Annex we will use the term EU CEP market. This refers to delivery services for any collection and delivery of documents and goods provided by any operator (national or private) active in the European Union (EU28) to national and international destinations. It excludes freight and logistics services 46 . However, the definitions related to the CEP markets as well as all estimated figures on important indicators related to this market vary greatly. This is mainly driven by the complexity of the sector, by the different nature of services offered in this market, by the absence of common definitions and by the difficulty in collecting comparable information. To the extent possible, we will provide explanations on the applied definitions that relate to estimates that we will refer to in the course of this presentation. We will present the assumptions taken for the production of the global and EU wide sector figures and we will try to explain the reasons for any conflicting information between studies.

The European E-Commerce Markets

It is clear that the boosting e-commerce activity has been one of the most influential factors that brought about changes in the structure of the CEP markets in Europe as well as globally, and has created new growth potential 47 for the sector. 

E-Commerce Europe 48  believes that the European e-commerce market amounted to € 420 billion in 2015 in value, and grew by 14% compared to 2014. Apex Insight (2015) using compound data from Ecommerce Europe, Eurostat, IMRG, as well as corporate information, estimates that the overall value of internet retailing in 2015 has doubled its size compared to 2009 and is over €370bilion. Europe is the second largest region in the world in terms of e-commerce value right after the Asia Pacific region which is worth more than 580bn Euros in 2015. E Commerce Europe estimate that there are more than 715.000 businesses active online in Europe, which are responsible for the circulation of more than 4 billion parcels annually. IPC 49 (2014) estimates that global e-commerce growth will lead to a 16, 6% annual global increase in revenue at least until 2018, a trend that in Europe will be reaching levels over 12%.

Three European counties account for nearly 60% of the e-commerce total value. As we see from the graph below the distribution of e-commerce activity is quite uneven in Europe. WIK(2014) confirm that the levels of buying and selling online varies considerably between Member States. This demonstrates different levels of development of the e-commerce markets across Europe.

Figure 1 – E-commerce Activity in Europe

Although some countries reportedly show low absolute e-commerce turnover, we do see that e-commerce activity overall is rising at impressive annual rates, not only in the developing ecommerce markets but also in the mature ecommerce markets (like the UK for example). The latter demonstrates that there is a hidden growth potential that still remains to be explored.

Figure 2 – E-commerce growth Rates per country

Although at its inception, e-commerce activity was predominantly a domestic business, WIK(2014) report that there is recent evidence that cross border e-commerce is gaining importance in Europe as well as globally. 15% of all European e consumers bought cross border in 2014, which is a significant increase (+25%) compared to 2013. However cross border online purchases still remain small if one compares it with 44% which is the equivalent figure for the online domestic purchases. IPC 50 (2014) estimates that e-commerce activity still remains immature since it accounted to less than 5% of global retail sales in value, in 2013.

Table 1 – cross border share in EU 28

E-commerce Europe concludes that those trends are sufficient to demonstrate that cross border ecommerce could alone be a sufficient driver to influence the development for the ecommerce business around the world. The European Commission estimates that the completion of the Digital Single Market could generate up to €340bn worth of additional growth over ten years and create hundreds of thousands of new jobs. It is estimated that EU consumers could save €11.7bn each year through e-commerce in goods thanks to lower prices and wider choice offered by online shopping 51 .

The links of e-commerce with the CEP delivery markets

Eurostat defines E-commerce as: The sale or purchase of goods or services between businesses whether between businesses, households or private organisations, through electronic transactions conducted via the Internet or other computer mediated networks 52 .

E-commerce Europe 53 defines e-commerce B2C activity as “Any B2C contract regarding the sale of goods and/or services, fully or partly concluded by a technique for distance communication.”

E-commerce markets are highly dependent on the delivery markets when the purchase requires physical delivery to the buyer and/ or allows physical return of the good purchased.

It is also clear that not all e-commerce purchases involving physical goods will lead to actual deliveries. Examples are groceries (supermarkets have naturally their own delivery operations to handle the demand) and two-man delivery (that involves heavy items that are naturally delivered through the freight and logistics sector). Click and Collect type of services bypass parcel statistics as parcels are normally delivered to the retailers distribution network for a direct pick up from the customer 54 .

However, in the cross border ecommerce delivery of physical goods tends to be even more important as overall, consumers seem to be more likely to buy products cross-border goods than services. In a survey among 4,135 European consumers 55 95.5% of experienced cross-border shoppers reported that they had bought a product compared to only 55.8% who reported that they had bought a service.

The figure below according to WIK (2014) provides a simplified illustration of the e-retailers supply chain and indicates the points where delivery requirements are involved in the ecommerce value chain.

Figure 3 – e-retailer's stylised supply chain

The World Bank highlights that the importance of good logistics performance for economic growth is now established 56 . E-commerce activity affects predominantly the B2C segment of the CEP sector, as it will be defined in the sections beelow. Pure B2B e-commerce also exists, but it is highly automated in nature, following perhaps the patterns of traditional B2B logistics operations and certainly without facing the challenges met in B2C e-commerce 57 , described in the section that follows 58 .

The IPC in their global postal industry report of 2014, believe that in the baseline of e-commerce developments postal operators are expected to benefit from the positive ecommerce trends. E-commerce flows in and around Europe should account for 25% of postal revenues in 2025.

The barriers to cross border e-commerce

Delivery related barriers are considered, amongst many others, an obstacle for both e-retailers and consumers, hindering their participation in e-commerce growth, particularly cross-border.

Retailers often complain about a lack of transparency in information about cross border delivery, the lack of inter-operability between the different operators typically involved and the excessive costs of low volume shipments. These problems make it difficult for e-retailers to offer to their final consumers a satisfying e-commerce experience. On cross-border prices, studies show that listed tariffs for cross-border parcel delivery charged by national postal operators are estimated to be two to five times higher than domestic prices 59 . University of St Louis, in a recent study commissioned for the European Commission also confirmed that cross border parcel list prices tend to be almost 5 times as high as their domestic equivalent 60 (for details see chapter 8). A recent Eurobarometer on obstacles to cross border e-commerce, found that out of all companies interviewed who currently do not sell online but are currently trying to do so, 62% find delivery costs an obstacle 61 .

To better interpret those results, one has to take into account that according to Eurostat data it is estimated that although over 296.631 62 enterprises are active in e-commerce and distance selling business in EU28 in 2012 only 220 of those companies are not SMEs.

Figure 4: Number of e-commerce and distance selling business per employment segment: SBS Statistics

Source: Eurostat: Distributive trades by employment size class (NACE Rev. 2, G) [sbs_sc_dt_r2]

Figure 5: Average turnover of e-commerce and distance selling business per employment segment: SBS Statistics

Source: Eurostat: Distributive trades by employment size class (NACE Rev. 2, G) [sbs_sc_dt_r2], own calculations

Non SMES retailers are often established in well-connected central European countries as illustrated in the map below.

Figure 5a: Where are the 220 non SME online and distance selling e-retailers established?

Source: Eurostat: Distributive trades by employment size class (NACE Rev. 2, G) (sbs_sc_dt_r2)

The recent survey of online consumers on DSM obstacles 63 indicates that indeed concerns with respect to various delivery aspects were amongst the top consumer concerns in relation to purchasing online cross-border (27% high delivery costs, 24% high return shipping costs, 23% long delivery times, 15% non-delivery). Amongst online buyers who reported their most recent problem(s) when purchasing a tangible good/offline service in the last 12 months cross border within the EU, long delivery times (the highest ranked consumer problem overall) was reported by 14% of respondents (by 24% of those shopping outside the EU), while non-delivery and delivery of the wrong product were reported by 13% and 12% of respondents respectively (by 25% and 13% of those shopping outside the EU respectively).

Copenhagen Economics. 64 (2013) found after conducting a survey among 3000 e-shoppers that problems related to delivery are a key reason for not buying online. Delivery related problems are responsible for 68% of the situations where e-shoppers have abandoned their shopping charts before finalizing their order. The primary problem, according to Copenhagen Economics is that e-shoppers face suddenly unexpectedly high delivery costs and that delivery times are considered to be too long. In general e-shoppers have reported dissatisfaction levels at a rate of 38%, fact that could influence their decisions to continue buying online.

ComScore (2014) in a survey conducted on behalf of UPS also highlighted the problems created by the delivery related barriers on the overall e-commerce activity. They also confirmed CE(2013) finding that more than 58% of consumers have abandoned their shopping carts due to high shipping costs and 50% was due to long delivery times. According to ComScore (2014) high shipping costs was the most common reason for abandoning the online purchase 65 .

Copenhagen Economics, in their report on E-commerce and delivery identified three layers of barriers that relate to delivery. A first set of inefficiencies are created by information gaps, in the sense that consumers and e-retailers do not have access to adequate information to inform their decisions on the online transactions (15% of the consumer have abandoned their shopping cars because information was not clear enough). Service gaps are the second problematic area in relation to delivery. Service gaps occur as the service offer from the delivery operators is not meeting users needs, especially as regards convenience of the delivery experience and returns, as well as the affordability of the delivery service. The last set of gaps related to the delivery are performance gaps in the sense that delivery operators and e-retailers do not always manage to fulfil their contractual obligations in terms of quality of service (delivery times, home delivery etc.), problems mainly resulting from operational inefficiencies in the delivery leg.

These barriers have already been highlighted by the European Commission in the Green Paper on an integrated delivery market to boost e-commerce in the EU 66 and in the Commission’s roadmap for completing the single market for parcel delivery 67 . In these documents, the Commission analyses the delivery related obstacles around five areas of potential inefficiency: lack of information, high costs for low volume cross border shipping, delivery services which do not meet the consumer needs, and lack of interoperability between the different delivery operators involved in cross-border delivery. Cross-border delivery has been also identified as a main priority in the Digital Single Market communication published on 6 May 2015 68 .

In the sections that follow we present the CEP sector in Europe, and give emphasis to the B2C and also the cross border segments of the sector as, according to the analysis above, those segments seem to be particularly dependent on and affected by the trends and the dynamics we observe in the e-commerce markets. We nevertheless do not ignore the B2B and the domestic part of the operations, as analysts agree that is still relevant also for both e-commerce operational activities, as well as for today's market reality of delivery operators.

The European Postal Sector

The CEP market is identified as a distinct segment that naturally belongs in the postal and courier activities sector (postal sector for this analysis) 69 . In EU28 in 2011, together with the letter post segment of the market they are responsible for a total of € 94bn of turnover, and 91 billion of shipments 70 and for a total employment that is estimated to reach 1.5m employees 71 .

Between 2007 and 2011 the value of the EU postal sector decreased slightly from EUR 94 billion to EUR 91 billion (now accounting for 0.71% of EU27 GDP). However this decline is mainly caused by the decline in the demand for letter post services. Therefore, according to WIK (2013) 72 , in 2011 it was already the turning point where the structure of the sector had changed. Today the CEP market is responsible for more than half of the postal sector's turnover in Europe.

Figure 6 - Changes in the Composition of the European postal sector (2007 and 2011)

Source: WIK-Consult, Main Developments in the Postal Sector (2010-2013), p163. Based on WIK survey and WIK-Consult and ITA Consulting, Evolution of the European Postal Market since 1997 and AT Kearney, Europe's CEP Market: Growth on New Terms.

According to data from Eurostat 73 , in Europe there are over 296.000 companies active in the postal and courier sector, the vast majority of those being SMEs, with less than 450 companies employing more than 250 persons.

Figure 7: Number of postal and courier companies per employment segment: SBS Statistics

Source: Eurostat: (NACE Rev. 2, h53) [sbs_sc_1b_se_r2], own calculation's

The European CEP Market

There is no commonly agreed definition among researchers for the CEP sector nor is there any standard way for measuring the sector's market size. Relevant market size estimates produce total market sizes ranging from 37-53.5 bn Euros.

A.T. Kearney (2015) 74  estimates the size of the CEP sector to be about 43.1bn Euros. They estimate that the total shipments related to the CEP market in 2011 account to 5.4 bn items 75 . WIK (2013) believes that the sector's market size is considerably less (37bn Euros) 76  in 2011 and that the sector is responsible for a total of 6.5bn shipments. La Poste (Annual Report, 2013) 77 estimates the CEP market to be 42.8bn Euros 78 . Apex Insight (2015) 79 believes that the European parcels market was over €53.5 billion in size in 2014 80 . CE (2013) 81 estimate that the European CEP market in in 2011 was valued at 46bn Euros. BCG 82 (2012) estimates that the total CEP market (domestic European and cross border combined) is 37bn using however data of 2010, and estimated this total to be responsible for the 20% of the global CEP market 83 . According to Apex Insight (2015), in most of the European counties, the parcels markets represents between 0, 3% and 0, 5% of GDP.

Effigy 84 (2013) identifies Germany UK, France, Italy and the Netherlands to be responsible for about 75% of the EU total CEP market (that according to their estimates reaches 42b Euros. The other countries follow with shares below 5%.

Figure 8 – European CEP Market in Value 85

WIK (2013) building up on AT Kearney (2012) estimations, presents the following distribution in the EU:

Figure 9 – Structure of the European Parcel and Express market by Country

Independently of the estimation of the absolute CEP market size (that of course it is largely dependent on the countries participating in the market definition and the scope of products each definition includes), all studies confirm that the total CEP market is experiencing a growth in the last years that ranges from 3.2% 86 - 5.7% 87 in value and 4.8% 88 - 6% 89 in volume. This continuous annual growth helped the market to restore the market size to levels prior to those before economic downturn already in 2010, and as from then, the sector maintains a positive outlook 90 . The three largest countries in terms of CEP turnover remain Germany the UK and France, followed by Spain, Italy and the Netherlands. According to WIK (2013) the Western European countries are responsible for 86% of CEP parcel volumes in the EU. A focused country by country presentation of the largest CEP countries will follow in the next sections.

Apex Insight (2015) reports the following growth rates for the EU28 as well as for the important national markets in the EU.

Figure 10: CAGR for the EU28 between 2009-2014

Source: Apex Insight, European Parcels: Market Insight Report 2015. Key shows CAGR 2009-2014.

The competitive landscape of the European CEP Market

The competitive landscape in the European CEP Market is quite fragmented and largely dependent on the business segment each operator focuses on. More information on which operators serve exactly what segment of the market will follow on the analytical country and operator presentation, in the sections that follow. However, in this introductory chapter, we can already identify the main categories of players (operators) of the European CEP markets:

1) International Integrators (DHL Express, TNT Express, UPS and FedEx): This term is meant to describe those delivery operators that are able to provide time/ day definite domestic and cross border end-to-end 91 delivery services mainly either through an owned (integrated) network or a network where the company has full operational control that (predominantly) uses air freight based transportation systems, but also complimentary ground operations.

2) National Postal operators (NPOs): This term describes the national (former incumbent) postal operators, that are offering letter as well as parcel services- (predominantly but not exclusively) in the country where they are operating (Royal Mail in the UK, La Poste in FR, Deutsche Post in DE, Correos in ES, Poste Italianne in IT etc.). Those companies are typically subject to universal service type of obligations (that are meant to ensure the provision of letter as well as parcel services to a certain quality standards at the national and cross border level). On top of this they often offer additional (value-added) services in their territory and/ or outside;

In the table below, we present the list of the 28 National Postal Operators established in the European Member states as well as in the EEA/ EFTA countries.

Table 2 – National Postal Operators in EU28 and EEA/ EFTA

Some of the biggest national postal operators have developed pan-European networks (either predominantly road based: Geopost, a subsidiary of La Poste- FR, GLS a subsidiary of Royal Mail -UK DHL Parcel, a business division of Deutsche Post-DHL -DE- or, predominantly air-freight based: DHL Express, a business division of Deutsche Post DHL- DE). Through these networks those operators are able to offer delivery services in Europe (and sometimes outside Europe).

Other national postal operators have built up regional networks that enable them to offer delivery services in this specific region. PostNord AB –SE&DK, through is business division Posten Logistic, offers services in Denmark, Finland, Norway and Sweden. PostNL–NL, offers delivery services directly in Belgium and the Netherlands. CTT Correios –PT, offer services in Portugal and Spain (via its subsidiary Tourline Express) and Eesti Post –EE, offers delivery services in the entire Baltic Region 92 .

Irrespectively of the direct international coverage they are able to offer, all national postal operators offer cross border delivery services within the framework of international or bilateral agreements with other partner national postal operators 93 .

Table below summarises the role of the national postal operator in the overall CEP markets in the EU. According to WIK(2013) the national postal operator accounts on average for about 20% of the corresponding national CEP markets. However this level is explained by their important role in the B2C segment of the mainly domestic market than by their role the B2B business segment (and B2B cross border segment in particular) where express operators draw their market power from.

Table 3 - _ Market Share of Universal Service Providers in Domestic Parcel and Express Markets (2011)

Source: WIK-Consult, Main Developments in the Postal Sector (2010-2013), p239

Although the NPOs where traditionally optimising their business operations to serve the letter mail segment, according to a survey conducted form BCG 94 using IPC data, it is expected that until 2017, the parcel business (after the NPOs having followed a targeted strategy) will outweigh (in terms of value) the letter mail business for most European national operators. From a predominately letter mail delivery business, as from 2107 all national postal operators are highly likely to be transformed into a parcel delivery business 95 .

Figure 11 – Reaching the parcels vs. the mail tipping point

Source: BCG (2012)

3) Express and Courier Operators with predominantly domestic presence: Apart from the operators above, we identify a number of medium-sized CEP operators (eg. Hermes - DE, Yodel – UK, Nightline –IE, MRW –ES etc.), who focus on the domestic and/ or cross border CEP services (but often not via their privately owned cross border delivery network). In addition to this, it needs to be noted that some alternative letter mail providers, traditionally optimising their networks to offer delivery letter mail services (eg. UniPost- ES, Sandd-NL) they are also expanding their business operations to cover parts of the CEP business 96 , exactly as NPOs do, as we explained in the previous paragraph.

4) Alternative business models

Now that e-commerce presents a growing importance, and the need for cheaper B2C Delivery solutions becames more obvious than ever, alternative business modes have been steadily developing integrating the delivery and e-retailer world, with the aim to offer tailor made delivery solutions at prices that are more affordable for both the e-retailer and the final consumer. Parcel consolidators offer an alternative business model to the CEP business. They have wholesale agreements with operators where the parcels originate (often with more than one operator ath the time) and offer to their customers (e-retailers in our case) the most appropriate solution what suites their individual needs. Parcel consolidators are present in the large CEP markets. FTI (2011) reports that they are not present in the Czech Republic, Slovenia, Slovakia, Malta and Luxembourg. Examples according to CE(2012) are: courier express, BTB Mailflight, IMX, my-ship.it etc., Parcel brokers are offering cheap delivery rates by re-buying slots in bulk and reselling them according to demand. Examples of parcel brokers in the EU are: Interparcel, , Parcelmonkey etc 97 . Fourth Party logistic providers offer to their customers full integration and logistics fulfilment services. Examples according to CE(2012) are PFS Europe, Katoennatie, CEVA Logsitics etc. Software Solution Provides provide e-retailers and delivery operators with software solutions that can improve efficiency, which can include EDI, tracing, labelling, push notifications to recipients etc. Examples of those service providers are MetaPack, GFS, EDI – soft etc 98 .

The competitive landscape of the Global CEP market

The global competitive landscape according to BCG(2012) using however 2010 market data, and excluding the growing DHL Parcel division of Deutsche Post and the equivalent one for Post NL, as well as ColiPost for the domestic FR market, when comparing Europe with the other geographical regions in other parts of the world gives a comparable, though not identical environment. In general, in Europe, National Postal Operators are stronger in their national CEP markets than their foreign counterparts (the global estimate is at 14%, yet in Europe, the figure raises to 25 99 %). Another observation is that in Europe, there is more pluralism, with more operators being active in number (and value) in the various CEP segments creating a complicated, therefore more fragmented, competitive landscape, that what we observe outside Europe.

Figure 12 – the global competitive landscape of the CEP market

Source BCG(2012)

Market Segmentation

As it is often mentioned in related research 100 , it is very difficult (often artificial) to segment the CEP market, given the heterogeneous nature of the sector and the observation that –especially nowadays- customer and product segments are often blurred due to the continuous transformation of the CEP competitive environment to meet the changing consumer preferences that in many instances converge.

Nonetheless, for the sake of the analysis we present segmentation that is relevant for our analysis, following the traditional way to study the CEP market.:

By product

A first criterion for segmentation is per product, which can divide the market into the following segments:

Standard- ordinary parcel services 101  

Ordinary parcels 102 are defined as items normally containing merchandise and sent by a standard/ordinary service, i.e. non-express and non-courier 103 , and are carried by the designated USP or other postal operators. An average delivery time of this service can be 24-72 hours, that can be longer for cross border shipments, however the delivery time is not guaranteed. Those services can be a part of universal service specifications.

Other services

Deferred delivery services: in the boundaries between a typical ordinary parcel and a value added parcel, we can find the deferred parcel product. Usually transferred through a ground based network, a deferred parcel is usually picked up before 6pm for delivery in principle by the next working day before 6 pm for a domestic delivery, however, delivery times are not guaranteed.

Express delivery service:

According to La Poste Annual Report (2013) an express product is picked-up before 6 pm for delivery the next day before noon or 1 pm, in the national territory. This service is subject to various levels of guarantees depending on the operator and on the specific service/ product offered.

According to a report commissioned by the Express Delivery Association for Oxford Economics (2010) the express services include value-added, door-to-door transport and deliveries of next day or time-definite shipments across the globe 104 . Time definite shipments normally incur a transit time of less than 1 day within Europe, and between 2 to 5 days for extra-EU shipments, depending on distance.

According to the Glossary for Postal statistics 105  express services are services featuring, in addition to greater speed and reliability in the collection, distribution, and delivery of items, all or some of the following supplementary facilities: guarantee of delivery by a fixed date; collection from point of origin; personal delivery to addressee; possibility of changing the destination and address in transit; confirmation to sender of receipt of the item dispatched; monitoring and tracking of items dispatched; personalised service for customers and provision of an à la carte service, as and when required. Customers are in principle prepared to pay a higher price for this service. It can contain any postal item (the distinction with freight transportation is made in consideration of the upper limits for parcels).

According to CE (2012) 106 the express segment of the market represents roughly a 14% of deliveries in the total CEP market. It usually focuses on B2B shipments (and notably the international ones). According to AT Kearney 107 (2012), the express segment is normally stronger in countries with poor quality of standard services, in remote areas, as well as in areas with high share of volumes originating from non-EU countries.

Courier services:

A specific categorisation of the CEP market is courier services. According to the DHL Logbook 108 "Courier services transport spontaneously sent shipments that are highly valuable - e.g., watches, jewellery, and high-quality replacement parts. Characteristic features are permanent personal supervision of the shipment and the courier’s access to the shipment at any time in order to make arrangements. Another feature is that couriers provide seamless transport and delivery documentation. The shipments usually weigh an average of 1.5 kilograms. For national shipments, delivery is usually made on the same day or by 10 a.m. on the following day. The market consists of many small companies. Courier services are available both nationally and internationally". Courier services are not necessarily regarded as postal services in some MS and are often excluded from the legal act 109 .

According to ERGP (2015) "Report on the Courier, Express and Parcels Market" most countries in their regulatory framework define weight thresholds to distinguish the postal, the CEP and the freight sector; however these weight steps are not always aligned nor consistent across countries. In addition, the legal definitions of the CEP products -inspired by the regulatory framework of each country- also vary.

By Customer

A second level breakdown for market segmentation is the nature of the sender and recipient. This breaking down the market according to the nature of the parcel flow:

from business to a private individual (B2C);

from business to another business (B2B);

from private individuals to private individuals (C2C);

from private individuals to professionals (C2B).

The segmentation presented above is of course relevant in the sense that the volumes related to specific customer groups as well as the prices each consumer group is likely to pay is closely dependent on the customer category. Other categorisations involve additional breakdowns (like C2G, i.e. citizen to governments, and vice versa) which however are not directly relevant to the analysis with which this Annex is engaged.

According to Effigy Consulting (2013) 110 the B2B vs.B2C balance per country is mapped as follows:

Figure 13- European CEP Market in Value: B2B and B2C overview 111

According to La Poste (2014) B2B continues to account for the major share with 70% in relation to B2C in terms of value. According to CE (2012) 112 however, in terms of volumes the picture is reversed: B2B shipments are responsible for nearly 30% of the total shipments in Europe when B2C volumes are about 60% of the total. C2X volumes account for the remainder.

Table 4 - Main alternative operators active in domestic and cross-border B2C delivery

Although within the B2C segment external competition has developed throughout the years, the national postal operator (especially in the largest European CEP markets) continues to play a very important role in this segment. Exploiting the domestic national coverage and the combined delivery networks for letter and parcels in the rural areas (co-production), the former incumbents reach market shares in the B2C segment which exceed 50% in many European countries. Characteristic examples of this observation are Austrian Post, Post NL holds over 70% of the domestic B2C market, Deutsche Post-DE over 50% and French La Poste about 60%. Of course this dominance is not global, and the geographical location plays a role. WIK(2013) observes that although in the western part of Europe, former incumbents are strong in the national B2C market, in the southern and eastern EU countries, not only is the presence of the NPO in the B2C segment small but also that the B2C segment itself is small in relative and absolute terms. CE (2012) estimates that on average the market share of NPOs in the B2C segment is 35% (compared to a total of 27% in the total CEP market). An analytical presentation of the national postal operators' competitive position in the countries' competitive landscape will be presented in the sections that follow. In any event Copenhagen Economics reveal that out of all those shipments, roughly 35% fall under the Universal Service Area where certain requirements apply 113 .

Regarding the type of products the B2C segment covers, it is generally acknowledged that B2C types of deliveries involve the standard (deferred) type of shipments at levels that reach about 90% in total, when the express related deliveries (in the meaning of time definite) in the B2C segment are confined to only 10% of the total 114 .

According to Effigy (2013) the top 10 European operators covering the B2C segment are the following, in terms of value and volume respectively. They either draw their power from the domestic segment and/ or the international segment.

Figure –14 European CEP Market in Value: Top 10 B2C Players across Europe – Relative Size 115

Apex insight (2015) reports that the CEP market leaders are the postal operators of the largest three countries (i.e. Germany France and the UK), including their express subsidiaries. The integrators follow with FedEx being the weakest of all. The total market owned by this leading group accounts for two thirds of the total CEP market in Europe leaving a non-negligible 1/3 to the smaller national operators and the independent carriers.

Statista (2012) reports that the share of the NPOs in the total B2C market reaches a maximum of 10% of the total segment in terms of volumes.

Figure 15: B2C market share of parcel services in Europe (by number of packages delivered in 2011) 116

Source: Statista (2012)

By Geographic Area

On that basis, the geographical segmentation can divide the market into the following areas:

Domestic CEP service

This describes the situation when both the sending operator and the receiving customer (individual or business) are based in the same country (individual or business).

Cross border CEP Service

In this segment one could envisage a further breakdown – relevant for an EU type of analysis- into intra and extra EU. It describes a situation when the sending operator and the final recipient customer (individual or business) are not residing in the same country.

According to CE (2012) 117 cross border deliveries account for 15% of total volumes, 80% of which are shipments within the EU.

The international market is concentrated. According to AT Kearney (2012) 118 the integrators alone (DHL Express, TNT Express, FedEX, and UPS account for 87% of the international express markets), a trend that is likely to continue in view of the announcement of the potential merger between TNT and FedEx 119 . The share of network players in international standard is estimated at 52% in 2012 120 .

Figure 16 – Breakdown of Europe's CEP market by country

WIK(2013) 121 also stipulate that although express services only account for one quarter of domestic shipments in cross-border market segments, express accounts for more than half of the shipments.

In small countries cross border parcel & express services are more important than in large countries (e.g. in the Netherlands and Belgium compared to Germany and U.K.).

In terms of volumes, international express shipments, according to WIK(2013) outperformed domestic parcel & express business 122 , although regarding the total CEP market, domestic shipments still account for approximately 70 % of total revenues and approximately 90 % of volume in the total European parcel & express market.

Figure 17 – Domestic vs. cross border parcel and express services (2011)

Cross-border parcel & express services are still dominated by B2B shipments. A.T. Kearney estimated that B2C accounted for more than 90 % of domestic volumes but only 10 % of cross-border volumes in 2010. The B2C segment however is experiencing a tangible and steady growth overall which we will further explore in the sections that follow. However, this relatively low share of cross-border B2C volume reflects the comparatively lower importance of cross-border distance selling (ecommerce + catalogue) compared to its role in national markets 123 , a trend however that it is expected to change if one takes into account the developments in ecommerce activity presented briefly in the introductory chapter of this Annex and explained in the section that follows 124 .

Trends

There is nothing more constant than change and this particularly true for the global CEP markets. In the last years European delivery operators have experienced a constant pressure to transform their operations, to meet the changing consumer needs, to better respond to the pressure for efficiency and technological improvements, and of course to adapt in the global economic and commercial context. In this environment a key role has been playing the take up of ecommerce which created in turn a need for efficient, better, cheaper and more accessible B2C delivery services, both domestically and cross border. The B2C high-cost low-margin cross border parcel, from an unattractive business segment became the focus in the operational transformations of national postal operators and network operators alike.

There are three main observable trends that most analysts highlight in their recent studies on the European CEP (as well as global) markets:

A trend towards transforming business operations to target the B2C segment 

An increase in the demand for cross border CEP delivery services (both B2B and B2C)

An increase in the demand for lower value (standard and/ or deferred) and an equivalent shift of the focus from the express segment of the market equally for the B2B and for the B2C segment.

According to CE (2012) 125 60% of all B2C volumes (and about 2bn items in 2011 126 ) are related to Ecommerce, a percentage that increases to 68% when we zoom in on the best ecommerce performing countries, i.e. Denmark, Finland, France, Sweden, UK, Germany, and the Netherlands.

According to AT Kearney 127 the cross border segment showed growth figures higher than the domestic CEP one (8% in volume and 6% in revenue vs. 6% in volume and 3% in revenue) between 2009 and 2011. In addition, emerging markets (like the Polish market) show bigger growth rates and growth potentials compared to the more mature CEP ones (UK/ DE/ FR) both domestically as well as internationally.

Figure 18 – Domestic versus International revenue growth by country

Source: AT Keyrney (2013)

In addition, according to the same study, most European countries are experiencing stronger growth in the non-express segment of the market than in the express one (in particular in the domestic segment but also cross border). Cross border B2C shipments are expected to grow by an average of 12% per year (although in 2011 they accounted for only about 10% of the total CEP market in terms of volumes). Network players (FedEx, TNT Express, DHL, UPS) have managed in view of this evolution to rise their combined market share in the international standard (deferred) segment to 52%.

BCG (2012) 128 in their study confirm that the cross border, B2C standard (low cost) part of the market is increasing, being the focus of the strategy of many national postal operators and also alternative delivery operators. As a result, the projected growth in the total value of parcel delivery business attributed to ecommerce only is 7% at a compound average rate, and is estimated to grow until 2020, with the same pace. It is also highlighted that the revenue from relatively higher weight parcels (above 2 kg) is expected to grow in the expense of the revenue generated form parcels below 2kg. WIK (2013) quoting GeoPost related research 129 also states that the B2C segment is expected to grow at higher rates than the B2B segments (6-8% vs. 2% respectively) estimating that by 2020 30% of total B2C parcel trips will be across the borders.

Figure 19 – e-commerce reacted parcel revenue per weight category

Source: BCG (2012)

According to the same analysis, the B2C segment of the market is 25% of the total CEP value [but 56% in terms of volume according to CE (2012)], leaving the remaining 75% of total value to the (still growing) B2B segment (which is less than 30% of the total in terms of volume according to CE (2012 130 ) a segment that still shows growth however at a slower pace (of 4% of annual growth).

The same study shows that the low value B2B segment holds a share of 55% within the total B2B segment. That means that part of the B2B market, traditionally served by the high-value express operations, could instead be served by a slower and lower value but equally reliable delivery service.

Network operators (integrators) have developed their offer of international low(er) value services to reach a combined market share of 52%, as previously stated. BCG (2012) considers that a traditional postal operator business might be better placed to service this "new" low-value B2B segment of the market, due to its network structure and existing product offer.

Effigy (2013) reports that the domestic CEP market has been growing faster in volume (+4.5%) than in value (+3.1%). This is mostly due to the B2C development with a lower profit margin. This effect is even stronger on the International Intra EU segment with a volume growth of +7.2% versus a value growth of 4.6% due to expanding cross-border e-commerce activities (that produce standard/ deferred type of shipments).

Market Response to changing consumer needs

Against this background of continuous ecommerce growth, operators are trying to respond to the changes in the market conditions and in consumer preferences. Total internet retailing nas now reached 400bn in value, showing growth rates of 15% 131 , which create in turn a growing demand for delivery services. According to Ecommerce Europe's statistics, the value of e-commerce in Europe in 2015 accounts for 430bn Euros in Europe and is translated to over 4 billion parcel items annually 132 .

Operators are designing new delivery services and creating innovative strategies to cover the B2C market segment with an aim to improve the delivery experience for the final individual consumers. Two general trends illustrate this trend:

The creation of innovative services and targeted marketing strategies to meet the needs of the B2C segment, especially with respect to the delivery (and return) experience.

A trend towards optimising network operations (through mergers and strategic alliances) on the cross border deferred segment in particular, with an aim to cut down costs.

In the paragraphs below we will be presenting very briefly some illustrative examples of the trends mentioned above:

Innovative Products

UPS launches MyChoice 133  

In 2013 UPS launched the innovative service “My choice” enabling users to stay up to date with proactive Delivery Alerts (text, email, and voice) and to know when parcels will arrive, and in most instances, providing an estimated delivery time. “MyChoice” offers apart from delivery real time information the possibility to reroute the shipment to a new destination or to a UPS delivery point.

DPD launches “Follow My Parcel” 134

With this service DPD is able to provide parcel recipients with a one hour delivery window, notified by SMS and email. It also includes a re-routing option en-route. if the customer prefers to receive the consignment in an alternative delivery date, if they opt for delivery to a nominated neighbour, if they prefer to have the parcel left in a specified place or even collect the parcel from a local DPD Pick up Shop.

Royal Mail & text messaging 135

Royal Mail has launched a free-of-charge mail and SMS delivery notification services to help online retailers keep their shoppers updated on the delivery of their goods to contract customers or on items delivered via tracked services 136 .

Industry Initiative taken by the National Postal Operators

In response to the requirements of the EC Green paper “An integrated parcel delivery market for the growth of e-commerce in the EU”, and also in an attempt to accelerate the development of new services and solutions for cross-border delivery in the context of e-commerce, NPOs (within the collaborative platform of IPC and with Post Europe 137 ), have developed a set of lightweight parcel products and improved delivery services addressing the cross border segment of the market. This project is currently work-in-progress and will be covered separately in this Impact Assessment.

Alternative delivery streams

In an effort to improve delivery experience and provide more convenient solutions to consumer and reduce the instances of unsuccessful delivery, operators elaborated on the concept of alternative delivery streams. In most of the cases operators invest in building delivery networks in their domestic territory although several of them have been expanding in other countries.

DHL’s Packstation network:

This network established by Deutsche post/ DHL provides automated booths for self-service collection of parcels and oversize letters as well as self-service dispatch of parcels 24 hours a day, seven days a week. Packstation started as a pilot project in 2001 and was quickly expanded. By November 2011 there were 2500 Packstation machines in Germany 138 .

Austrian Post's Post24-Station 139  

The Austrian Postal Service introduced a virtually identical service called Post.24-Station in November 2006. In Vienna, Stations have been installed in supermarkets, petrol stations, and post offices that can easily be reached by public transport. WIK (2013) report that in 2010 there were 24 parcel stations in Vienna.

Smartpost’s self-service parcel terminals in Finland 140  

A company called SmartPOST runs a network of self-service parcel terminals in Finland and Estonia. The terminals are located in shopping centres and other public premises. They enable clients to send and receive parcels and pay for them at the collection point.

Network Rail’s Doddle service in the UK

Doddle is a new parcel service with stores based in railway stations and major hubs across Britain. Currently there are 32 train station locations and the number is still growing 141 .

In Post Network of Lockers (Poland)

InPost parcel lockers are currently the biggest network in the world enabling its clients to send and collect parcels 24/7. So far, over 3 500 parcel lockers have been launched in Poland and on global markets 142 .

Homepaq’ and ‘Citypaq’ (Spain)

‘Homepaq’ is a new service rolled put by Correos Group in Spain that aims to provide more convenient parcel delivery services by providing free installation of an automated terminal in resident communities, for sending and receiving packages 24 hours a day, seven days a week. In 2015, Correos intends to install the first ‘Citypaq’ boxes (similar to ‘Homepaq’ boxes but with a greater capacity) in underground and train stations, transport interchanges and other highly frequented public places facilitating the collection of packages.

According to WIK (2013) apart from delivery operators parcel lockers are also being rolled out by several retailers (the most prominent of which being Amazon).

Table 5 - Number of Parcel stations per operator

Source: WIK desk research, 2013.

Consigned delivery of GeoPost (France)

According to the Annual Report of LaPost (2014) in January 2014, GeoPost signed an agreement with Neopost ID to set up and operate an automatic and secure consigned delivery network for delivering and returning parcels in France. An initial rollout of 1,500 consignment points has been scheduled up for 2016, followed by the installation of 3,000 consignment points over the longer term. The agreement provides for setting up a joint venture, Packcity France, which will be jointly owned by GeoPost and Neopost, while the consignment points will be operated under the Packcity brand.

DPD Parcel Network in UK

According to IPC Flash Report, DPD will launch a UK parcel shop network with up to 2,500 locations under the PickUp brand in June 2015 to step up its expansion in the fast-growing B2C market, highlighting the companiy's corporate strategy to expand in the Pick Up and drop-off business model that already includes 7,000 outlets in France, 5,000 in Germany and nearly 2,000 in other countries.

PiggyBee 143  

An interesting marketing development is the newly established business model that promises to deliver cross border shipments who travellers willing to transport something to the country of their destination. Collaborative shipping is a newly developed concept that follows the logic of crowdsourcing the impact of which in the structure of the market needs to be further analysied in the future 144 .

Mergers, Acquisitions and Strategic Alliances

The B2C segment of the market, and especially the cross border one, is difficult and costly to serve as it usually demands big network investments that handle low volume shipments (per delivery) in the final mile. Operators respond to the need for network optimisation for capacity on parcel business (and notably in the cross border sector) either by concluding with strategic alliances with affiliate operators, by announcing mergers and acquisitions, or by creating new delivery networks in Europe. Examples of these are provided below.

UPS’s acquisition of Kiala

In an effort to transform operations to meet the needs of the B2C consumer segment, an reposition it brand image from a primarily B2B express logistics provider to a parcel (cross border) business, UPS has acquired Kiala in 2012 – a technological platform that allows customers to choose a convenient retail store as delivery location. The Kiala network is comprised of more than 7,000 “Kiala Points” that handle up to 145,000 parcels per day, with more than 300 retail companies, including H&M, Esprit, and BrandAlley, among others, using its services 145 . Kiala was active in 5 European countries (BE, FR, ES, LU, NL). UPS is now combining Kiala points with its own network and rebranding all outlets as UPS access points.

Cross Border Growth Strategy for DPD and GLS

According to WIK(2013) DPD and GLS, the subsidiaries of La Poste and Royal Mail respectively, offering cross border services through a ground based logistics network, implement a strategy of establishing partnerships with companies already organised at the local level, to be able to utilize a delivery network in the countries wishing to operate in.

GLS partnering with Mondial Relay

Following a similar strategy with UPS, GLS collaborated with Mondial Relay in order to improve their delivery quotes and the delivery experience for the final consumers. Mondial Relay points are on average a 12 minute drive away of all households in France; therefore they offer a wide and valuable B2C network coverage, facilitating the expansion of GLS in their domestic market 146 . Modial relay offers an easy delivery alternative in case of failure of first delivery attempt, reducing delivery costs and increasing efficiency for GLS offering a network of 4300 points collect in 2013. Mondial Relay has collection points also in Belgium. DHL, in order to facilitate their expansion strategy in France, has also concluded in a partnership agreement with Mondial Relay in the end of 2013 147 .

DPD – implementing an organic growth strategy

DPD pursues a growth strategy, according to WIK (2013), by planning a gradual expansion of access points with a focus on emerging parcel markets. DPD Poland took over courier company Siódemka and this acquisition brought DPD to be the leading provider in the country. DPD UK started building Europe’s largest parcel hub in Leicestershire. GeoPost took control of the British logistics provider WinDirect, which allows it to develop its position in the international market with dedicated solutions for e-retailers 148 .

Failed merger of UPS and TNT

In March 2012 UPS and TNT announced their intention to establish a global express and logistics company 149 . The Commission expressed serious doubts as to its compatibility with the internal market. The European Commission finally decided to block the 5.4bn merger on the grounds that it would seriously affect competition in the express small package segment of the markets within the EEA and 15 MS 150 .

FedEx to aquire TNT

Following the failed merger ot TNT with UPS, FedEx has requested EU's approval for its 4,4bn € bid for TNT 151 . FedEx has made strategic investments to strengthen their position in the European market. WIK (2013) report that FedEX has acquired in Tatex-FR and Opek –PL, to build up its own facilities and slightly repositioned its brand image to cover the deferred B2B segment of the market (in response to the changing market needs).

International Strategy of NPOs

In order for national postal operators to organise their international strategies they have the opportunity to conclude (apart from the bilateral agreements briefly described above) international agreements. One opportunity is the e-Parcel Group (EPG), a cooperation of 29 European NPOs plus USPS (the USA counterpart). Another possibility is to directly use the framework of the UPU agreement (which is particularly the case for the cross border services outside the territory of the EU).

Country-Specific CEP Markets

In this section we will present the 8 largest CEP markets in Europe. According to E-Commerce Europe 152 the UK, Germany and France, account for 61% of the total ecommerce sales in Europe. At the same time the Netherlands, Austria, Spain Italy and Poland are also identified as big (or emerging) e-commerce markets. According to Effigy (2013) Germany, the UK, France, Italy and the Netherlands are responsible for about 75% of the EU total CEP market.

WIK(2013) gives the following estimations on the per capita volume distribution in Europe in 2011:

Figure 20 – Parcels per capita in EU28

The international integrators (namely DHL, UPS, TNT Express, FedEx) as well as the main pan-European operators (namely GLS, DPD and Hermes) have been established in nearly all 8 countries of reference. For the purposes of this analysis, however, and since those operators base their business model in offering CEP and logistics services across European and non-European countries, we will analytically present them in section 8 below.

Germany

Market Size

Germany is the largest CEP market in Europe. The volumes generated in the country account for 28% of the European total according to WIK (2013). AT Kearney estimates the figure to be 23% and Effigy (2013) calculates the total at 26% in volume and at 36% in value. According to the same study the market is still growing in value at a rate of around 5% internationally and 4% domestically. According to Deutsche Post Annual Report (2013) the German parcel market increased by nearly 5,1 % compared to the prior year and was estimated to be more than 8 billion Euros. According to Apex insight (2015) the size of the DE market is reflecting its extensive manufacturing base and advanced logistics infrastructure. As in most of the large CEP markets, also for Germany, e-commerce was an important driver of growth, although the size of the market is also linked to the characteristics of the country's economy in general. The volume in the German parcel business rose sharply in 2014, according to the 2014 Annual Report of Deutsche post surpassing the prior-year figure by 7.0%. According to Apex Insight (2015) the German market has a positive outlook with a compound annual growth rate of 2.9% from 2015 to 2019.

Competitive Environment

Deutsche post

Deutsche Post AG is a listed corporation headquartered in Bonn. The company is the provider of the Universal Service Obligation in Germany. In the CEP Market they operate through their Post – eCommerce - Parcel division inside and outside Germany. Outside the country, in particular, the company offers domestic parcel services in other markets and is constantly expanding their portfolio of cross-border parcel and goods shipping services. The main offer with respect to the ecommerce - Parcel segment, as described in Deutsche Post Annual Report, is concentrated on the following product categories: domestic parcel services, cross-border shipment of goods, fulfilment services and special services.

Through their Express division the company offers time-definite courier and express services to business and private customers in more than 220 countries. In the domestic parcel market, Deutsche Post/ DHL holds around 43% of market share in the domestic market (in terms of value). In the European International Express Market DHL Express holds a 41% of market share. The Cross border Markets will be covered in the next sections.

The Group uses two main brands to communicate their products Deutsche post and DHL:

Figure 21 – Brand architecture of Deutsche Post/ DHL

Source: Deutsche Post DHL annual report (2014)

Worldwide online retailing continues to have a positive impact on the company's parcel business. In 2013 revenue in the ecommerce - parcel business unit was €5,6 billion, presenting an increase of 6.5 % compared to the previous year. The volume in the German parcel business rose in 2014, by 7.0 %. Revenue exceeded the 2013 figure by an even wider margin due to changes in the product mix.

Table 6 – Parcel Volumes

Source: Deutsche Post DHL annual report (2014)

The other domestic parcel business in Europe performed equally well, according to the 2014 Annual Report of Deutsche post. The worldwide e-commerce activities continue to expand. Revenue increased in 2013 year, mainly due to the growth identified outside Europe.

Hermes Logistik Gruppe 153  

Hermes Logistik Gruppe (HLG) specializes in the B2C segment of the market offering CEP services in Germany and outside. Due to the fact that the company offers cross national delivery services, we will present it in the section that follows. On the domestic German market however, Hermes Germany has very recently bought a 28.5% stake in start-up Liefer Factory GmbH, which offers same-day and time definite delivery through its Liefery service. The objective was, to expand its portfolio with a same-day delivery option for e-retailers and other shippers. The company's network comprises around 50 metropolitan areas in Germany where more than 2,500 couriers deliver shipments to recipients. Hermes intention is to focus on offering the “Same Day Service powered by Liefery” increasingly to business shippers and online retailers. By the end of 2015, Liefery aims to cover 100 German towns and cities. 154 .

Other Operators

All operators with pan European presence are established in the German Market (namely UPS, GLS, DPD, FedEX and TNT). However we will present their business model and their basic business information in a separate section that follows.

UK

Market Size

According to PWC 155 , in 2012 the UK total (inland) parcel market amounted to about 1.7 billion items. Effigy (2013) estimates that the UK market is about 14% in terms of turnover of the total EU market. According to Effigy (2013) UK's international parcel growth reaches a growth rate of 10% compared to a 5% of domestic growth. B2C and C2C segments represent two thirds of the total CEP market in the UK and these segments are expected to grow at approximately 4.5-5.5% in the medium run 156 . All large European parcel operators have a presence in the UK market in order to profit from its size and growth potential. In this market we also observe a series of interesting developments in relation to delivery (notably the decision of Amazon to pilot its own delivery network).

The UK's e-retail market is one of the largest in the world. It is said to account for 13% of all retail sales fulfilled online and is expected to grow by a further 16% by 2019 157 . Although the UK's e-commerce market is thriving, resulting in tangible growth rates in volumes, we observe a competitive pressure that is transforming the landscape of the delivery business in the country. As we will explain below, some companies have had to transform their operations to meet consumer needs in view of the increasing competition. This pressure is also reflected in some recent e-retailers decisions with respect to the administration of their online retail streams 158 . According to Apex Insight (2015) the UK parcel delivery market is expected to continue to grow in the next 5 years, to exceed 13bn by 2019.

Competitive Environment

Royal Mail plc 159  

Royal Mail plc is UK's national postal operator. Royal Mail, when handling parcels, utilises a composite business model: Royal Mail's core network (UKPIL), ParcelForce Worldwide (a dedicated parcel division) and GLS (RM's subsidiary, which we will cover separately). According to Royal Mail's Annual Report, in 2014, the parcels handled by Royal Mail's network exceed in number 1 billion items (991m handled by the core network and 77m through Parcelforce). This is equal to a 14% share of the total CEP market in Europe, in terms of volumes. In the domestic market, Royal Mail (together with Parcelforce) holds a 52% share (in terms of volume) and 38 % in terms of value 160 . Although total volumes continue to experience a steady growth, revenues from parcels are flat (grew by only 1%) reflecting, according to Royal Mail analysis, a change of mix (towards B2C vs. B2B) and pricing (volumetric based pricing vs. weight based pricing). Out of the 77m parcels handled by ParcelForce, almost 7m ( a rough 10%) cover the international segment. In Europe Royal Mail is present using the brand name GLS. GLS will be covered separately in the sections that follow.

Table 7- Summary trading results, Royal Mail 2014

Source: Royal Mail Annual Report (2014)

Yodel

Yodel is a delivery operator targeting businesses and individuals sending parcels to the UK, Ireland or internationally (Europe and abroad) that weigh up to 25 kg. Similar to GLS, it also operates in the deferred (standard) parcel segment, i.e. international delivery times 3-5 days, times not being guaranteed, and with optional insurance coverage. Yodel was launched in 2010, following the merger of Home Delivery Network Ltd and the domestic B2B and B2C businesses of DHL UK. However, Yodel has been focusing their efforts to integrate the two networks formerly distinct networks. Its £535m annual revenue is split currently into 30% B2B and 70% B2C 161 . It currently cooperates with some of the UK's large retailers (including Amazon, Argos, Boots and Tesco Direct).

Yodel's recent joint venture with Paypoint, Collect+ is a parcel collection, delivery and returns service which is available from 5,800 stores in the UK. The number of Collect+ parcel transactions has risen from 7.7 million in 2012/13 to 13.6 million in 2013/14 to 18.8 million in 2014/15. 162  

CityLink

City Link, a private equity parcel company that has been in the competitive landscape of the UK market since 1969, with the parcels contributing about 60% of its profits and 40% of its revenues was declared bankruptcy on Christmas Day, 2014. The company was at the time going through a period of change, trying to overcome administrative problems initially motivated by the IT incompatibility following the merger with Target Express in 2007. Although the sector and the company experienced a volume growth 163 , they could not cope with the extra costs of dealing with the Christmas deliveries, so the equity holders decided to put the company into administration. A part of their market share was absorbed by Royal Mail Group 164 .

Hermes UK

Hermes as explained above, owned by a DE-based distance selling company (Otto Group), operates in the UK primarily in the B2C segment (e-commerce focused). In 2012 it reportedly handled 165m parcels 165 . As from 2012 the company improved their network capacity (expanding its network of Parcel Shops form 2000 to 3000, including additional hubs) in order to accommodate the increase in volumes and facilitate the consumer needs. Hermes secured a four-year contract extension with the fashion retailer Next in one of the biggest ever home delivery deals in the UK.

UK Mail

UK Mail, one of the competitors of Royal Mail in the traditional letter mail segment, is currently active in four segments: Mail, Parcel, Courier and freight. On the parcel segment, they focus equally on the B2B, B2C segment 166 . The company, originally called Business Post, was founded during a postal strike in 1971.

Whistl

Whistl, is former TNT post UK, is a fully owned subsidiary of PostNL, former TNT Group. In 2011, the group split to form TNT Express and PostNL . TNT Post UK became a subsidiary of PostNL, and was rebranded as Whistl in September 2014. They reportedly handle 60m parcels each year 167 168 169 . 

Amazon Logistics 170

Amazon, the online retailer, currently delivering their parcels in the UK through the networks of Royal Mail, Yodel and Whistl has recently implemented an own-delivery strategy. According to the Financial Times 171 Amazon is believed to have already absorbed 3 % of the UK parcel delivery market, accounting for about 70m parcels annually. According to the 2014 Annual Report of Royal Mail, the growth of e-commerce related delivery market will largely depend on the extent of Amazon's rolling-out of the own-delivery network and its commercial success. The company recently announced a Same day Delivery service (under the brand "Pass my Parcel") 172 utilising a network of delivery locations, using Connect Group (a newspaper distributor). It has recently announced an innovative one-hour delivery service, however available for free only for customers under subscription, and only in a specific postal codes in London Metropolitan area 173 for the moment. Financial Press, published information of the company's intention to take stake in Yodel's capital through an option which offered a considerable discount form Yodel's market value 174 .

Other Operators

All main operators with pan European presence are established in the UK Market (namely UPS, DHL, DPD, Fedex, Hermes and TNT). However we will present the different operator's business model and their basic business information in a separate section that follows.

France

Market Size

According to Effigy (2013) the delivery market in France accounts for 14% in terms of value and 12% in terms of volumes in the European total. According to the same study the CEP market in France grows more internationally than domestically in terms of revenue, however, as in most of the Western Member States, the market has grown in volume in both segments. As in all large CEP markets, all integrators (DHL, FedEx, TNT, UPS) as well as GLS are established in the country and compete with domestic couriers to deliver parcel and express services from, to and within the country in order to profit from its size and growth potentials. The French 175 ecommerce market is the second largest market in Europe, and was expected to grow to 54bn Euros, according to the forecasts of ecommerce Europe of 2013. More recent data show that E-Commerce in France grew by 11% to spending of €57bn in 2014 and is predicted to break through the €60bn barrier in 2015, according to new figures from the country’s e-Commerce association Fevad 176 .

1.1.1.Competitive Environment

La Poste (Coliposte, Chronopost, Geopost, Exapaq)

La Poste is a public limited company responsible for the provision of the Universal Service Obligation in France. Operating since 1984 it was the first (incumbent) postal operator to enter the express market 177 . Currently it operates in the Parcels and Express Markets through the following divisions: ColiPoste, (its Parcels division) and through GeoPost’s Exapaq, Chronopost and Pickup subsidiaries (in the express and pick-up point markets respectively). In the international market the company is present through GeoPost (branded as DPD in most of the cases), a fully-owned subsidiary that operates all parcel and express subsidiaries in Europe and worldwide. Geopost/ DPD division will be covered separately in the sections that follow. The parcels and express segment accounts for about 26% of the groups' revenue and according to the Group's annual Report, the group has collectively handled about 1 billion items in 2014 178 . The results that were published in 2015 claim that the increased revenue generated by the activities in the CEP market offset partially the decline in the Group's profits that were mainly caused by the decline in the letter mail volumes.

Coliposte specialises in delivering parcels within 48 hours to private individuals (BtoC and CtoC segments) in France (domestic), with home delivery services six days a week. It reportedly delivered over 277 million parcels in 2013.

GeoPost implements a combined model: it is primarily positioned on the BtoB express market, but is also expanding on the BtoC segment, to profit from its rapid growth. GeoPost generated revenue of €4.5 billion in 2013; 26% of its revenue is generated in France and 74% outside France. International (incoming or outgoing) parcels account for roughly 20% of GeoPost’s revenue. GeoPost delivered 814 million parcels in 2013, an increase of 12% compared to 2012.

GeoPost operates in the French market via three subsidiaries:

Chronopost International, focuses on premium express services, for parcels both in the BtoB and BtoC segments. Chronopost is the only express service provider offering coverage throughout metropolitan France for next day home delivery before 1:00 p.m. Chronopost delivered 102 million parcels in 2013. International express delivery accounted for 25% of its revenue. The share of BtoC deliveries represented 33% of its flows. It includes the Chrono Relais service.

Exapaq, focuses on express service. Exapaq was founded by 19 independent French freight and express delivery companies in 1995 and was acquired by GeoPost in 2006; the company delivers parcels primarily to the BtoB segment. Exapaq delivered 55 million parcels on behalf of over 100,000 business and private individuals in 2013.

Pickup, experts in PickUp and DropOff delivery: The PickUp and DropOff network in France expanded significantly in 2013, with parcel traffic up between 80 and 100% compared with 2012, and new e-commerce players, who wanted to enable their customers to benefit from this service

La Poste (GeoPost) is structured as follows as regards their parcels operations:

Figure 22 – La Poste's CEP brand architecture and operating division

Source: La Poste Annual report (2014)

Geopost Operations as regards the international segment of the market will be covered analytically in the sections that follow

SNCF Geodis

SNCF Geodis is a French logistics operator, owned by SNCF rail operator delivering parcels in the CEP Market, with a focus on the B2B segment. According to Apex Insight (2015) it holds third place among the parcel delivery companies present in the country. It is an important logistics provider in France and it is ranked among the 4 most important ones in the rest of Europe 179 . It has a direct presence in 67 countries and covers indirectly 160 countries 180 .

Mory Global

Mory Global is an independent company providing a range of transport, logistics and CEP services through a network of 49 branches in France. In 2015 the company published the following information 181 :

49 sites

11 international hubs

1 national hub

11 regional platforms

35,000 daily shipments

According to Apex Insight (2015) the company ceased trading on 30 April 2015 and is currently on liquidation process.

Heppner Transport and Logistics Group 182  

Heppner Transport, a company specialised in logistics, operates as well in the CEP market targeting mainly the B2B segment, in France and internationally, by offering transit times 24-48h throughout France and 24-72 hr internationally. According to Apex insight (2015) the company has one of the biggest networks in France.

Colis Privé

A CEP operator targeting the B2C (ecommerce driven) segment, has reportedly delivered in 2015 over 35 million parcels offering flexible delivery solutions and innovative product offer. Established in 1993, the company now comprises of 2 independent national platforms and 18 regional agencies covering the territory of France 183 . It offers express 24 h and 48 h delivery services using, according to Apex Insight, 1700 subcontracted couriers and a network of lockers. According to Apex Insight and to recent publications in the economic press 184 in 2014 Amazon acquired 25% of Colis Prive.

Other Operators

All main operators with pan European presence are established in the French Market (namely UPS, DHL, GLS, FedEX and TNT). However we will present their business model and their basic business information in a separate section that follows.

1.1.Spain

Market Size

According to Effigy (2013) the Spanish CEP market represents about 5% of the total European total in volume and 8% in value, after France. Although the country presents a non-negligible decline in its domestic CEP market (of about 3%), the Spanish market still grows internationally (about 2%). According to the same study the B2B segment is exceptionally big compared to the B2C segment (91% vs. 9% respectively). As in all big markets, we also observe most of the important delivery providers present in the market, offering domestic and cross border delivery services. E-commerce Europe identifies Spain as one of the main emerging ecommerce markets (with a total turnover attributed to ecommerce of 15 bn Euros in 2014. According to Correos Grupo Annual Report (2014) e-commerce market in Spain represents an 18% annual increase in 2015.

Competitive Environment

Grupo Correos

The Group comprised of four companies: Correos, Chronoexpres (the express division), Nexea and Correos Telecom.

According to the group's Annual Report (2014) the economic recovery in 2014, the growth of’ international activity and the growth in e-commerce reversed the declining trend in the parcel market.at least in terms of volumes. The development of new business models such as private shopping clubs, the launching of online shops by major Spanish companies or public support for the development of the sector, have all contributed to this recent growth. The response of Correos Group in this growth came in 2014, when it branded its parcel service under the name Paq, with five products aimed at responding to customers’ needs in terms of speed and flexibility: ‘Paq 48’ and ‘Paq 72’ provided by Correos, and ‘Paq 10’, ‘Paq 14’ and ‘Paq 24’, supplied by Correos Express. Chronoexpress offers international services, mainly through agreements with other express operators 185 .

(a)Correos Express

Correos Express is the subsidiary of Correos dedicated to advanced express delivery mainly in the Iberian Peninsula, offering time and day definite delivery services. It is responsible for the delivery of the ‘Paq 14’ and ‘Paq 24’ products described above.

MRW 186

MRW is a parcel delivery network that works through franchising. Apart from Spain it maintains operations in Portugal and Andorra and Gibraltar. Apex Insight (2015) reports that it delivers around 50 m parcels per year, and it estimates that it produces revenues of about 140m.

Transporte Integral De Paquetería, S.A. (TIPSA) 187  

TIPSA uses a franchised network to transport and deliver parcels across all regions of Spain, including destinations in Portugal and Andorra. Apex insight reports that it generated revenues if 215million Euros in 2013.

Tourline Express 188

The Portuguese NPO CTT, which owns Tourline Express which has headquarters in Spain and is specialised in courier services.

REDUR 189

REDUR is an operator specialised in e-commerce B2C, B2B, and C2C with headquarters in Spain and deliveries in Portugal and Andorra with its own logistics network.

Unipost 190

Unipost is the private mail operator providing mainly direct letter mail services within Spain and across Spanish borders. However, according to WIK 191 (2013), due to the growing importance of the CEP parcels market in Spain and given the network that the company had already established in the country, the Unipost has lately invested in the parcels segment as well, mainly in the small package segment.

Other Operators

All main operators with pan European presence are established in the Spanish Market (namely UPS, DHL, GLS, FedEX, SEUR (DPD) and TNT). However we will present their business model and their basic business information in a separate section that follows.

Italy

Market Size

According to Effigy (2013) the Italian CEP market accounts for 7% in terms of value and 5% in terms of volume of the European Total. The Italian market, always according to the same study, presents a marginal growth in both the domestic and international segment, of a level of below 2%. The B2B segment is considerably bigger in absolute and relative terms (in relation to other European countries) compared to the B2C segment with the first representing nearly 90% of the market.

Competitive Environment

Poste Italiane

Poste Italiane is the country's national postal operator that holds a non-negligible position in the express delivery and parcels segment of the national market. The business relating to express delivery products to retail and SME customers is offered by Poste Italiane SpA and the segment targeting business customers is offered by its subsidiary SDA Express Courier SpA. The provision of standard parcel services falls under the Universal Service obligation (USO).

Table 8- Universal Service volumes of Poste Italiane

Source: Poste Italianne Group Annual Report (2014)

Poste Italiane, in fact, only uses SDA Express Courier (through Consorzio Logistica Pacchi ScpA) for the distribution of all domestic and international Paccocelere, and Paccocelere J+3 products.

The Italian government has recently announced that about a stake of about 38% would be offered for sale which could raise up to €3.8bn euros, excluding fees and other costs 192 .

Table 9 – CEP Volumes for 2014 for Poste Italiane

(b)SDA Express Courier

Posta Italiane's Subsidiary, SDA Express Courier SpA, contributed positively in the group's results as it grew (according to the Annual Report of 2014) both in revenues and in volumes by 12.8% and 6.1%, respectively, compared with 2013 (deliveries increased by 6.9 million, and revenue by €22.8 million). Those improvements reflect the positive developments in the B2C segment and e-commerce. The international Express Delivery segment also performed well (volumes increased by 2.4 million, and revenue by €7.9 million), benefitting from the partnership agreements with UPS and Network Eurodis.

Table 10 – CEP volumes for SDA Express Courier

Source: Poste Italianne Group Annual Report (2014)

Nexive 193 .

Nexive, the Italian private delivery operator, owned by Post NL, covering 80% of households in the country, is also active in the CEP e-commerce delivery market. According to the company figures Nexive distributed in 2014 more than 750.000 parcels in the country 194 ..

BRT SpA 195  

Bartolini, or BRT SpA, is the Italian express provider, offering CEP services within and outside the country. After its initial expansion that included several European markets it currently serves 25 countries, and implements a strategic partnership together with DPD and EuroExpress Courier services 196 . According to corporate information, it delivers more than 80 million parcels per year, domestically and internationally.

Other Operators

All main operators with pan European presence are established in the Italian Market (namely UPS, DHL, GLS, FedEX, TNT and Hermes). In particular TNT has a strong presence in Italy as, according to Apex Insight (2015) it is one of the company's largest markets for express parcels. However we will present the operator's business model and their basic business information in a separate section that follows.

Netherlands

Market Size

According to Effigy (2013) the Dutch delivery market, independently or the relatively small size of the country's population, is among the 6 biggest in Europe both in volume and in value, accounting for 4% and 5% of the European total respectively. Both segments of the market (domestic and international) are experiencing a moderate growth, although the increase in the international CEP market is more intense, reaching levels of 5% in 2013. Contrary to the situation of Italy and Spain, the B2C segment in the country is more developed (accounting for a total of 37% vs. 63% compared to the B2B segment) illustrating the impact that the developed e-commerce activity exercises in the structure of the sector in the country. According to E-Commerce Europe the Netherlands is the 5th more mature market in Europe, even in absolute terms, with an estimated total market for 10, 5 billion Euros. According to Apex insight (2015) the Dutch market is expected to experience a moderate growth of 2.5% in the coming years.

Competitive Environment

PostNL

Post NL is the National Postal Operator in the Netherlands. The PostNL Group operates mail and parcel networks also in other countries namely in the UK (Whistl), Germany (PostCon), Italy (Nexive) and also cross border (Spring Global Mail). According to corporate information published in the Annual Report of 2014, the PostNL delivered in the Netherlands only over 142 million parcels fact that contributed with over 854 million Euros turnover to the company's bottom line. The company invested in early morning pick-up points, in evening and Sunday delivery, and in launching ‘before 10am’ and ‘before noon’ delivery options for their business customers. As explained in the county's assessment, also for PostNL E-commerce volumes continued to grow strongly in 2014, expanding by around 10 percent. According to the Annual Report fo 2014, B2C parcels volume growth was slightly lower, at between 6 percent and 8 percent, due to a decline in non-e-commerce volumes, digitisation and bundling of shipments. In this changing market environment, PostNL managed to maintain its market share in the B2C market, and grew its B2B market share. In recent press release the company announced a 7,1% increase in their parcels volumes, confirming the positive outlook for year 2015 197 .

TNT Express Netherland B.V.

TNT Express N.V., the Dutch express operator, formerly owned by the national operator (formerly known as TNT Post) is the third largest express delivery operator across Europe, operating in about 200 countries around the world. The split-up of TNT N.V. which was announced in December 2010, took place in May 2011 when TNT Express and PostNL were separately listed on the Amsterdam Stock Exchange. Due to the international nature of TNT Express operations, it will be analysed in the next section of this presentation.

Other Operators

All main operators with pan European presence are established in the Dutch Market (namely UPS, DHL, GLS, FedEX DPD and TNT). However we will present their business model and their basic business information in a separate section that follows.

Belgium

Market Size

According to Apex (2015) the Belgian CEP market completes the list of the most important European country segments since it concentrates that altogether are responsible for 75% of the European total parcel volumes and 79% of the total European parcel revenues. According to ecommerce Europe Belgian e-commerce has been rising steadily these past few years. In 2014, there were 6.0 million e-shoppers in Belgium. On average they each spent about €722 online that year, which amounts to a total B2C e-commerce turnover of €4.3bn. This represents an increase of 14.3% in comparison with 2013. Apex Insoght (2015) forecasts a compound average annual growth rate of 3,5% for the Belgian Parcels market until 2019.

Competitive Environment

Bpost

BPost, the Belgian national postal operator is a strong player in the national CEP market. Regarding its share in the CEP market and according to the annual report of 2014, parcels grew by EUR 57.6 million in 2014, to EUR 307.2 million, changes mainly driven by the performance of its international parcels, due to the increase in parcels volumes generated from the universal and the parcels activities from exporting ecommerce activity. In terms of volumes BPost reported that there is an identifiable and solid domestic parcels volumes growth of 7.0%, which was mainly attributable to increased volumes in B2C as a consequence of the further development of e-retailing activities.

To accommodate the needs of ecommerce users, since November 2014 Bpost launched Saturday parcels’ delivery, delivery to parcels lockers, online parcel preparation (labelling, payment) and direct drop-off and pick-up in one of its 1,250 parcel points, hoping to improve the delivery experience for its users. As regards the international activities Bpost has integrated its different operations into one combined structure hoping to better serve the parcels’ distribution needs of the global e-commerce marketplace. The new organisation operates under the brand name “Landmark Global, a Bpost company”.

Landmark Global 198

Bpost owns a subsidiary named Landmark Global, which is the European and international network for its cross-border operations.

PostNL

As explained in the previous section, PostNL through its section PostNL Benelux provides directly parcel delivery services in the Belgium territory using its own private distribution network.

Other Operators

All main operators with pan European presence are established in the Belgian Market (namely UPS, DHL, GLS, FedEX and TNT). However we will present their business model and their basic business information in a separate section that follows.

Poland

Market Size

Poland perhaps is the most interesting country example of the Eastern European countries. Given the size of the country and its nature of economy has managed to be considered among the top seven in size among the European total. Effigy (2013) estimates it to be about 4% in volume (but 2% in value) of the European total. However, the country shows impressive growth rates and growth potentials. The rates presented in Effigy (2013) show a domestic increase of about 8% and an international increase of more than 12%. Those growth potentials are reflected in the report of Ecommerce Europe which indicates Poland as one of the top five emerging ecommerce countries with a total e-commerce related turnover of 5.2 billion Euros in 2013., showing (according to Posta Polczta Annual Report) growth rates of more than 20%. According to a local delivery operator (Inpost), the e-commerce industry in Poland generates about 155m shipments a year, for around PLN 4.4bn (€ 1.06bn) a year in revenue for shipping firms 199 .

Apex Insight (2015) forecasts that the market is expected to experience growth rates above 3% in the coming years.

Figure 23- Poland's e-commerce growth

Source: Poczta Polska Groupo, Annual Reprot (2014)

Competitive Environment

Poczta Polska S.A.

Poczta Polska S.A. is the National Postal Operator in the country. Its primary concern is the provision of postal (letter and parcel) services as well as the provision of domestic courier and EMS international courier services through Pocztex. According to the corporate information published in the Annual Report there has been a 12% increase in sales of parcels and courier shipments serviced by the Poczta Polska S.A., despite slower than expected market growth and greater price pressure from competitors which lowered profit margins. The highest increases were achieved in the case of Pocztex courier shipments (volume growth of 60%). According to the latest annual report the company delivered over 44 million parcels and courier shipments in 2014.

InPost Nowoczesna Poczta sp. z.o.o. 200

As previously described, the company, part of Integer.pl Group, had predominately provided parcel collections via its self-service locker terminals. On the 1/6/2015 it announced that the launching of courier services to deliver parcels either to the door or to parcel lockers across Poland. Services include guaranteed next day delivery before 12pm and 5pm, tracking and a free returns option. InPost claims that its new offerings are particularly suitable for e-commerce retailers, with major Polish e-commerce platform Allegro already on board. InPost said it will be making use of its 8,300 customer service points throughout the country, including 1,300 parcel locker terminals, and 10,000 couriers in providing nationwide courier services. According to corporate information the company's parcel lockers handled in 2014 90% more volume than the year before. 201

K Ex Sp z.o.o 202 .

WIK(2014) report that K-EX is an independent delivery operator providing national mainly delivery services mainly targeting in the express and day definite segment of the market.

Conclusion 203

According to Apex Inside, the Competitive landscape of the EU CEP parcels market can be summarized to the following:

Figure 24- Europe's Competitive Landscape

Source: Apex insight (2015)

Of course, not all operators are equally competing with each other in all segments of the market (as identified in section 3 of this Annex). The higher the degree of segmentation the more different the mapping and the market shares one can identify in each country. However the level of analysis of this Annex does not require additional level of detail on the competitive landscape that has been developing during the recent years.

The Cross Border Segment

Market Size

According to CE (2012) 204 cross border deliveries account for up to 15% of total volumes, 80% of which refer to shipments within the EU. WIK(2013) 205 stipulate cross border shipments account for 30% of total revenues and approximately 10 % of volumes in Europe.

Within this sub-segment we can also identify the standard product/ customer segmentation that applies to the overall CEP market i.e. B2B, B2C, C2X, and standard vs. deferred and express product categories (for definitions see section 4 above).

In this section, we will present the most important operators that we identify in the cross border CEP market and we will briefly present some basic figures on their relative importance in the European CEP total market.

In the express segment of the cross border market there are 4 main players in a combined market share of more than 90% 206 . Other operators who can be considered to offer services in this segment according to a report of Research and Markets (2015) 207 are: Aramex, BTA Transport, Burns Express, Cargo Express Delivery, DPEX Europe, Express Transport, GeoPost (DPD), GLS, Hermes Group, Interlink Express, Manston Express, Transport SDA Express, Simpex Express and Tuffnells Parcels Express. According to AT Kearney, network players (FedEx, TNT Express, UPS and DHL Express) appear to have a have a combined market share of 52% in the international standard (deferred) segment.

Finally all national postal operators are active in the cross border segment of the market, most of them by establishing a collaborative model of cooperation for the fulfilment of the cross border delivery.

Competitive Landscape of the Cross Border Segment

World Wide Integrators

As we described earlier, this term is meant to describe those delivery operators that are committed to provide time/ day definite (express) domestic and cross border end-to-end delivery services mainly through an owned (integrated) network (or a network where they maintain 100% of operational control) that use air freight based transportation systems as well as ground/ sea networks to fulfil international shipping.

1.1.1.1.DHL Express

DHL Express brand is a division of Deutsche Post AG. The Group progressively acquired DHL as global air express service provider from 1998 to 2002 and expanded its presence in the express segment by purchasing other leading logistics companies, e.g. 1999 acquisition of Danzas, 2004/2005 acquisition of a majority stake of Indian express company Blue Dart (75% stake currently held), end of 2005 acquisition of Exel 208 . DHL’s family of divisions offers an portfolio of logistics services ranging from national and international parcel delivery, international express, road, air and ocean transport to industrial supply chain management. With a presence in over 220 countries and territories worldwide, it provides solutions for markets and industries including ecommerce, technology, life sciences and healthcare, energy, automotive and retail. The main product offered by this stream in the CEP segment is International Time definite, Day Definite and Same Day delivery services (targeting mainly business customers). The company is also targeting SMEs by providing custom support and personal services. In 2015 the company published the following statistics:

220 countries and territories

500 airports

3 main global hubs

45,000 Service Points

250 dedicated airplanes

32,800 vehicles

2.5 million customers

In the European Express Market DHL is the most strong express alternative representing 40-50% of the market in value 209 .

Figure 25-International Express Market Share in Europe

Source: Deutsche Post, DHL annual Report (2014)

1.1.1.2.UPS

UPS, the American based provider, which links with its operations around 220 countries in the world, is, according to all estimates, the second largest express provider in the Time Definite Express segment in Europe, following DHL Express. According to Effigy (2013) it holds between 30-40% of the market share in value in 2013, according to Deutsche Post/ DHL Group annual report (2014) it holds 30% of market share.

According to its own annual report (2014) its international package segment represents 22% of the company’s total revenue globally. Europe, the second largest region globally is responsible for roughly half of the international revenues in the package (CEP) segment and it's the main driver for growth.

Figure – 26: UPS Revenue Shares by Segment

Source: UPS annual Report (2014

In the International package (CEP) segment the company offers both express (time definite) and deferred delivery services (day definite). According to UPS Annual Report (2014), several factors provide significant additional opportunities in Europe, including the highly fragmented nature of the market and the fact that exports make up a significant part of Europe’s GDP. The company believes that there is a strong potential for growth in small package exports in Germany, the U.K., France, Italy, Spain and the Netherlands. To accommodate this strong growth, the company will continue investing in its air hub in Cologne (to develop the capacity to to process 190,000 packages per hour).

Traditionally, as all international integrators, the company was serving the B2B segment of the market. As we already discussed, the company refocused their operations to better serve the B2C e-commerce driven segment of the market. According to Apex Insight (2015) in 2005 when it had established operations in most major markets, it extended its focus to include the larger domestic markets, through acquisitions (for example Lynx in the UK and Stolica in Poland). According to its annual report, UPS is expected to have more than 20,000 locations worldwide to facilitate their customers, who can opt to pick up or drop off their parcels at convenient retail locations. In Europe, the acquisition of Kiala S.A. (rebranded later as UPS Access Point) was intended to serve as a platform to enable e-commerce retailers to offer consumers the option of having goods delivered to a convenient retail location.

(a)Yamato Holdings

Yamato Holdings is the main Japanese operator and a new global player. Its cross-border flows are mainly deferred services and operational between Asian countries, yet it already has presence in the EU. Their express deliveries are performed in agreement with UPS 210 . According to the Statistica database it reaches a global market share of 4% in the total express and courier market in 2014.

TNT Express

TNT Express N.V., the Dutch express operator, formerly owned by the national postal provider (formerly known as TNT Post) is the third largest express delivery operator across Europe, operating in about 200 countries around the world. The split-up of TNT N.V. which was announced in December 2010, took place in May 2011 when TNT Express and PostNL were separately listed on the Amsterdam Stock Exchange.

TNT operates in B2B segment of the market offering services addressed also to the B2C sub segment as well offering day definite and time definite services.

The International Europe segment comprises of all TNT operations in Europe with the exception of the domestic businesses in France, Italy and the United Kingdom. These operations provide TNT with a strong position in the European international express market. According to the Annual report of Deutsche Post/ DHL (2014) the market share in value attributed to TNT Express amounts to 12%.

According to WIK(2013) the failure of UPS and TNT Express merger in 2011 has seriously affected the market position of TNT express, who has been trying to recover ever since. The uncertainty caused about the future of the business environment, has led many customers to switch to DHL Express who say its revenues increased by 9.3% in 2013.

Table 11 – TNT's Express International Performance in 2014

Source: TNT annual Report (2014)

For the time being TNT is implementing a multiannual business strategy (initially called "Deliver!" And later "Outlook") focusing mainly on improving profitability. According to this strategy TNT Express, the company should focus on the areas where it has a strong position and can demonstrate tangible growth, improve efficiency and optimise its administrative structure. Recently TNT and FedEx announced their intention to combine forces. With an announcement on 30/6/2015, FedEx has reportedly requested EU's approval for its 4,4bn Euro bid for TNT 211 .. The case is currently under examination from the European Commission and the Merger Procedure Regulation.

FedEx

FedEx, a global logistics provider, offers an air, ground and sea network to link more than 220 countries and territories around the world. The company provides a broad portfolio of transportation, e-commerce and business services through companies operating independently under the FedEx brand. According to Effigy (2013), FedEx is strong in the B2B segment of the market. As all international integrators, FexEx provides three main product lines: Freight, Ground and Express services. Although FedEx presence is very important worldwide, in Europe its relative market share in the international express category is 10% according to the annual report of Deutsche Post/ DHL 2014. However, the company is determined to increase its presence in the European Market. According to the Annual Report 2014 FedEx Express has opened 100 stations across 11 European countries since 2011.

As we already discussed, FedEx plans to acquire TNT Express, offering a 4,4 bn€ bid in order to profit from the latter’s developed European ground delivery network and strong knowledge of the European market 212 . This strategy is aligned with FedEx intention to strengthen its presence in the European market.

Operators with Pan-European Presence

GLS

GLS is the Royal Mail's Group European parcels business. GLS, founded in 1999, is established as a pan-European parcel network service, offering delivery services in 37 countries. Through acquisitions and partnerships and as well as direct investments the GLS network was created which currently covers directly 18 countries 213 and indirectly (through partners) 214 the rest of the Europe. It covers equally the B2B and the B2C segment, both domestically (within each country where it operates) and internationally (across Europe). It fulfils its deliveries through a road based network, offering deferred (less time sensitive) delivery services.

In 2014 the company reported the following figures:

Table 12 – GLS Facts and Figures

Source:

According to the Royal Mail Annual Report (2014) GLS experienced a growth in revenues and in volume (8%), and value (of 7%) balancing the Groups bottom-line in 2015 (estimated figures). According to Apex insight the total parcel volume circulated through the network of GLS was 404 million parcels in 2014.

GeoPost (DPD)

DPD, the international "brand" for Geopost, offers deferred and express services internationally covering Europe and 220 countries around the world. In the deferred segment they offer services with delivery times 1-4 days in Europe, and within 7 days in the rest of the world.

In the Express segment they offer next day delivery in Europe, and express services in the rest of the world. Both segments are served through a range of different products each of which including different characteristics.

GeoPost is operating under the brands "Chronopost" in France and Portugal, "Exapaq" in France, "SEUR" in Spain, "Interlink" and "DPD" in UK and "DPD" in the rest of Europe

According to La Poste Annual Report (2014), GeoPost's broader international strategy aims at copying the company's national strategy, internationally; therefore, it strengthens a road network in Eastern Europe and Asia and develops a network in South-East Asia and in Africa.

DPD reportedly delivers 215 3 million parcels a day which gives a rough estimation of 700m parcels per annum.

Figure 28 – DPD strategic Development

Source: DPD website

DHL Parcel

As we explained above Deutsche Post/ DHL Group provides through their Post - eCommerce - Parcel division, cross border parcel services 216 . Apex Insight (2015) report that in November 2013 Deutsche Post announced their plans to expand their German division beginning with its takeover of its parcel delivery operations in other European Countries. Deutsche Post transferred its existing parcel delivery operations in Belgium, Netherlands, Luxembourg the Czech Republic and Poland and lately, Austria 217 , from DHL to the Mail and Parcels division. The Mail division which in the past was focusing only to Germany is committed to focus on B2C delivery. Pursuing a 4 year strategy to target growth in the world’s emerging markets and by tapping the global e-commerce boom the company focuses to become the “number one provider” of cross-border logistics for the e-commerce sector on key international trade lanes, and gradually export its German e-commerce parcel “success model” to other countries in Europe, (including Asia and the American continent).

Hermes Logistik Gruppe (HLG)

Hermes Logistik Gruppe (HLG) specializes in the B2C segment of the market offering CEP services in Germany and outside. It operates 14,000 ParcelShops in Germany offers alternative B2C solutions nationwide by relying in convenient opening hours and delivery times. According to the information published on the corporate website one in three B2C parcels in Germany are delivered by the Hermes Logistik Gruppe while the company offers a range of customer-oriented services such as three-hour delivery time slot, text messages for direct deliveries to a ParcelShop, Saturday deliveries, deliveries left with neighbours, holiday storage etc, through an owned information system "Shipping history". The company's network relies on a system of self-employed (life style) local couriers but has also approximately 11.000 employees, including the Hermes OTTO staff 218 .

The company has published in 2015 the following information in their website:

Daily customer contacts > 1 million

Shipments per year > 500 million

Revenue EUR 840 million (net for the fiscal year 2009/10)

6 HUBs

57 subsidiaries

500 depots and local branches

Over 14000 ParcelShops across Germany

Through its subsidiary BorderGuru it helps SMEs and e-retailres to ship their parcels across borders.

Hermes is present in the UK 219 , Austria 220 , France, Italia 221 , Great Britain, and Russia and a partner in Switzerland and Benelux. According to the corporate website, In Hermes UK delivers more than 200 million parcels per year through a network of 5.000 parcel shops and 10.000 self-employed couriers. In Austria the company offers 1.600 packet shops and a nationwide pick up drop off possibility. In Italy it owns a network of more than 1.000 drivers.

National Postal Operators

As we explained National Postal operators are also active in the CEP segment of the market, offering a quite diverse product portfolio, which ranges from a pure ordinary parcel to a more sophisticated service that depending on the Operator could be positioned either on the deferred or the pure express segment of the market.

The volumes and the market shares that each operator possesses depend on the relative strength of the Operator and on its penetration in each segment of the market. National Postal operators of the bigger markets often have stronger market position also in the cross border market segment than smaller ones do.

We now present the data from the Postal Statistics Data base (reference year 2013) 222 and refer to total inbound volumes of parcels circulated by the NPOs as well as the total amount of inbound ordinary (standard) parcels circulated by the NPOs, broken down by country, for year 2013, expressed in 000s.

Table 14 – National Postal Operators, International courier express and parcel by USP under direct or indirect designation - ordinary parcels up to 10/20 kg. in thousands of parcels

Source: Postal Statistics Database (2015)

The Universal Postal Union (hereafter UPU) 223 headquartered in Switzerland, part of the United Nations, representing 192 member countries, with its national postal administrations worldwide, publishes a similar database that gives the following information for equally value-added parcels, standard parcels as well as insured parcels (this time broken down by inbound cross border and outbound cross border (expressed in Units):

Table 15 – National Postal Operators, cross border volume performance in 2013, data from UPU's Statistics Database

Source: UPU statistical database (2015)

Operations

Operationally, the cross border B2C parcel delivery largely depends on the choice of the operator initiating the cross border fulfilment and its level of operational control and ownership over the cross border transaction.

With the possible exception of the 4 main network integrators (DHL Express, UPS, TNT Express, FedEx), who they either have a 100% ownership or full operational control over their cross border network, most of the other cross border delivery providers identified in the previous sections cooperate with other operators to be able to fulfil all legs of the cross border delivery. CE (2012) has identified the following cooperation models for the B2C e=commerce driven cross border delivery:

Table 16- Co-operation models for cross border delivery

Source: Copenhagen Economics 2013

According to CE (2012) the choice of cross-border co-operation model designed by delivery operators to facilitate their cross border deliveries is driven by four main factors: price and quality of delivery, reciprocity, and the presence of own delivery networks. Information on prices and quality of physical delivery and associated data (e.g. information used for cross-border tracking of parcels) are of course decisive for delivery operators’ choice of co-operation partner. Although NPOs often co-operate with each other, they do not always do so if they get better quality and price offers from other operators. According to CE(2012) reciprocity is another factor that to some extent affects the choice of cross-border delivery partners, in the cases that a potential agreement involved the mutual cooperation for the cross border delivery in both directions (operator A distributes the parcels of operator B and vice versa). Finally, the choice of delivery partner is influenced by the presence of the delivery operator in the country of destination of the parcels. One has to note that the cooperation model and its characteristics are dependent on the type of parcel to be sent (packet, parcel, or express product) as in most of the cases there are separate streams to organise each specific delivery. Finally the operational characteristics are dependent on the urgency of the consignment. Time definite (express) and day definite (deferred) or standard parcels are generally handled by different operational streams.

In the sections that follow we will try to shed some light on the operational characteristics of the cross border parcel operations. For this purpose we base our presentation on desk research, on the replies of the public consolation that was conducted in view of this Impact Assessment and on the results of a Study that was commissioned with the aim to explore the cost structure of the cross border delivery and its implication on the price setting and the overall profitability of the cross border products 224 .

Cooperative models for cross border parcel delivery

Integrators value chain model

As all four integrators either own or exercise full control over the infrastructure and the IT systems facilitating the cross border delivery, in this case there is no cooperation model in place, but a single-operator model that is managing the cross border delivery.

In the COMP/M. 6570 merger case of UPS and TNT, the integrator's business model is very briefly described 225 . The operational and information management infrastructure of the integrators is largely developed around the concept of hub and spoke system. It normally involves pick up from the premises of the customer, processing and sorting in the sorting centres and hubs, line haul or air transport (depending on the distance and the time sensitivity of the shipment) to the main hub, transport by trucks and vans in the local hubs sorting and final dispatching (by vans) to the final recipients. The network supporting this operational sequence is single and sophisticated, allowing visibility or even real time traceability. That allows the express segment to offer cross border delivery services of added value to their customers, although at a higher price.

Figure 30- Overview of steps in small package delivery

Source: Further Synergies Submission, p.3, 4-9-2012

NPOs+ NPOs value chain model

The traditional cross border parcel delivery route involves cooperation between 2 domestic national postal operations. FTI(2011) confirms that typically after collection and primary sortation in the originating country the cross border parcels are transported to a hub where they are sorted again according to their place of final destination. From there they are shipped to foreign countries either by air or land. Once in the destination country parcels are collected and again sorted then transported to the appropriate are of the country where they undergo a secondary sortation. They are then transported to the relevant delivery office and from there they are delivered to recipients.

National postal operators that maintain separate operations for parcels and letter markets include Royal Mail, La Poste, TNT and Deutsche Post, Where a National Postal operator does not maintain separate operators for letters and parcels, those products are collected together, but they are sorted separately. Priority products will of course follow the priority stream. Generally speaking parcels and express products are distributed separately from packets.

Figure 31- Cross-border postal pipeline

Source: FTI (2011)

The consultation has confirmed that, at least in the NPO's cross border deliveries, the standard delivery model, as described by FTI (2011) is the most usual way for NPOs to fulfil the cross border delivery. The University of Antwerp (2015) in a study conducted on behalf of the European Commission 226 show that in the case of European Postal Operators, even for cross border destinations as short as 10km away, such as from the Netherlands to Belgium, parcels still need to be loaded from the regional depot to the national sort hubs to be sent later for cross border delivery. However, on the basis of quality and pricing considerations, alternatives or exceptions to the standard delivery model, at least in a subset of countries, do apply.

Most of the cross border transportation itself is outsourced. The motivation for that is not only to reduce the (higher) transportation cost by means of finding cheap(er) providers, but also by means of correcting costs occurred due to trade and network imbalances.

NPOs and foreign subsidiaries or private operators

As previously explained there are exceptions to the standard delivery model, at least for some operators who choose to differentiate their logistical operations either in their entire cross border value chain or at least in some country destinations. For example, some NPOs who operate a parallel international network often use this broader cross border network to facilitate their international operations. Another example of differentiation to the standard model is when instead of contracting the NPO of the destination country, to contract private (alternative) operators in order to perform the cross border delivery. Reasons for this strategy are mainly pricing or QoS considerations of the NPOs of the sending country.

(1)

Notice from the Commission on the application of the competition rules to the postal sector and on the assessment of certain State measures relating to postal services (98/C 39/02) Official Journal C 039 , 06/02/1998 P. 0002 - 0018

(2)

Commission Decision of 10 August 2010 establishing the European Regulators Group for Postal Services (2010/C 217/07)

(3)

ERGP (13)37 ERGP opinion on cross-border parcel delivery

(4)

The fieldwork was carried out in 2014, i.e. before the entry into force of the ADR Directive (July 2015), which obliges Member States to establish full ADR coverage for disputes covered by the ADR Directive and which involve a trader established in their territory.

(5)

Seventeen countries have a regulatory routing time for parcels.

(6)

Source ERGP (13) (31) Report on the Quality of Service.

(7)

ERGP(14)26 ERGP Opinion on a better understanding of European cross-border e-commerce parcels delivery market(s) and the functioning of competition

(8)

Clickstream survey covering only BE and PL, not a representative sample.

(9)

Oxford Economics The Economic Impact of Express Carriers in Europe, 2011, Oxford, UK.

(10)

A coherent framework for building trust in the Digital Single Market for e-commerce and online services COM(2011) 942 final

(11)

See Annex 1, Procedural Information, Evidence and Studies for further details of relevant studies.

(12)

The Postal Users Forum is an initiative launched by former Commissioner for the Internal Market, Michel Barnier in 2011. The aim of the Forum is to get feedback from stakeholders (consumers and businesses) on postal services in Europe. The third forum in 2014 (the two previous events took place in 2012 and 2011, respectively), focused on the e-commerce driven parcels market, given its increasing importance as alternative source of growth against the declining traditional letter post

(13)

Defined according to number of employees.

(14)

Question 8 (To which markets do you sell online? Only domestic/ domestic and international/ only international) and Question 9 ( What are your reasons for not selling online to other European countries? Delivery related reason/ any other reason (e.g. payments, language, legislation)).

(15)

Q12 - How do you arrange your cross-border delivery operations?

(16)

Q15 -For cross-border transactions where more than one delivery operator is involved, the method most often used is the standard delivery model which uses the networks of the two national postal operators involved in cross-border delivery, as follows: Does this text describe your standard delivery model for cross-border delivery? " After collection and primary sorting in the originating country, cross-border parcels are transported to across-border hub of the sending national postal operator, where they are sorted again according to their country or place of destination. From here, they are transported to a central hub in the receiving country. Once in the destination country, the parcels are “collected” and sorted by the receiving national postal operator, then transported to the appropriate area of the country where they undergo a secondary sorting. From this secondary sorting point, they are transported to the relevant delivery office and from there, they are delivered to recipients. (FTI, 2013)

Q15b - Do you use alternatives to the standard delivery model?

(17)

Q12 (retailers) which type of cross-border delivery services do you usually offer when selling to other EU/EEA counties? Cheapest delivery service/ Delivery service with track and trace option/ Delivery service with insurance option/ Delivery service with return option/ Other. Multiple answers were possible and for each option retailers were asked to state always/ often/ sometimes/ never.

(18)

Q13 - How satisfied are you with the following delivery features when selling to other European countries? Please rank each answer that applies to you on a scale from 1 to

(19)

Base size for the table is 41-48 retailers who responded to each subsection.

(20)

Q21 Do you receive any price discounts for the packets/parcels you send to other European countries from delivery operators?

(21)

Q6– When buying online how often do you face the following delivery problems?

(22)

Base size for the table is 199-206 consumer responses to each subsection. 70 'other' responses not shown.

(23)

Q7 – How important are the following delivery location options to you when ordering from a web shop? Delivery to a home address/work address/neighbour/post office/relay point (shop offering parcel collection facilities/parcel locker/collect in store (from retailer).

(24)

Q13 - What are the five main obstacles you face when delivering abroad? Please rank only the options you consider as obstacles using a scale from 1-5, where 1 is the most significant obstacle, 2 is the second most significant obstacle, etc.

(25)

Q35 - What are the additional challenges arising from sending and receiving packets / parcels to / from non-EU/EEA-EFTA countries?

(26)

Q22 - Which, if any, of the following improvements to the delivery process would make you more likely to sell online or increase your online sales. Please select the three most important to you. Chart shows the number of responses

(27)

Base size for the chart is the 46 retailers who replied to this question

(28)

Q24 (retailers)- Compared to the prices you currently pay for delivery, what decrease in delivery prices do you think would allow you to substantially increase your sales to other EU/EEA countries?

(29)

Q10 (consumers) - Which, if any, of the following improvements to the delivery process would make you more likely to buy online? Please rank on a scale from 1-5 Where 1 is not at all likely and 5 is very likely.

(30)

Base size for this chart is 203-207 consumer responses to each subsection. 44 'other' responses not shown.

(31)

Q36 (NPOs) –What do you think could improve the quality of intra-EU/EEA-EFTA cross-border parcel delivery services? 

(32)

See the 'Evidence and Studies' section of Annex 1, Procedural Information for further details.

(33)

NPOs that are not covered are CY, EE, LU

(34)

For standard products we try to find the cheapest alternative, that is a product for the residential customers and delivered at home. For premium, following additional characteristics were taken into account Time to delivery < 7 days, Track and Trace, Insurance, Proof of delivery

(35)

For letters : 0,25kg,0, 5 kg,5kg,1kg,2kg

For parcels : 0,25kg, 0,5kg, 1kg,2kg, 5kg,10kg

(36)

When a specific product could not be found in the public list price data of an NPO the dataset considered it as missing.

(37)

A cross border product has as many prices as many destinations this product is offered. Each country is examined for 24 destinations (all EU countries except CY, EE, LU)

(38)

 Portugal, Latvia, Lithuania, (Estonia), Greece, Bulgaria, Malta, Romania and Croatia

(39)

United Kingdom, the Netherlands, Italy, Germany, France and Spain.

(40)

JRC technical Report (2015): Institute for Prospective Technological Studies Digital Economy Working Paper (2015-06)

(41)

The standard errors are corrected for heteroskedasticity (White’s heteroskedasticity robust standard errors for large samples) and we therefore report the z-value.

(42)

Both regressions explain better cross-border price differentials for letters and parcels separately compared to a regression in which we estimate the regression for letters and parcels jointly but use interaction terms to account for possible differences.

(43)

expected to be published at http://ec.europa.eu/growth/sectors/postal-services/index_en.htm in October 2015

(44)

  http://www.upu.int/en/resources/postal-statistics/query-the-database.html  

(45)

  http://ec.europa.eu/eurostat  

(46)

WIK (2013) Main developments in the Postal Sector 2010-2013

Note that freight services naturally involve heavier shipment the handling of which typically requires specific equipment. 31.5 kg is the weight that appears to be an appropriate threshold to distinguish the CEP market from freight as it is the weight that can be handled by one single carrier.

(47)

WIK(2014) Design and development of intiiatives to support the growth of e-commrce via better functioning delivery systems in Europe.

(48)

Ecommerce B2C report, 2015 available at: https://www.ecommerce-europe.eu/facts-figures/free-downloads  

(49)

IPC (2014) Global postal industry Report, p. 93

(50)

IPC(2014) Global Postal Industry Report, p. 93

(51)

Civic Consulting for the European Commission, Consumer market study on the functioning of e-commerce and Internet marketing and selling techniques in the retail of goods, 2011 – the consumer welfare gains from an integrated EU market for e-commerce in goods assuming 15% share of internet retailing was estimated at EUR 204.5 billion per year (EUR 70.4 billion from lower online prices and EUR 134.1 billion from increased choice)

(52)

  http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:E-commerce  

(53)

Ecommerce B2C report, 2015

(54)

Apex Insight 2015, p. 25

(55)

 ANEC (2015) "Cross border online shopping within the EU"

(56)

World Bank (2014) "Connecting to Compete 2014: Trade logistics in the global economy"

(57)

Copenhagen Economics (2013), p.35

(58)

However, there is another element that needs to be taken into account; IPC (2014) points out that in the traditional segmentation one element is missing. In many cases a B2C transaction might be considered by delivery providers as purely domestic from an operational viewpoint, but it might have a hidden international component that is not always clear and obvious to the logistic partner and the external analyst. A domestic e-retailer might be importing goods form a third country, and sell them in his country. In that sense there are severe implications in the upstream and reverse logistics (from this B2B2C service) affecting the e-commerce value chain and that render the traditional segmentation not fit-for-purpose.

(59)

FTI (2011) Study on intra-community cross-border parcel delivery  

http://ec.europa.eu/internal_market/post/doc/studies/2011-parcel-delivery-study_en.pdf  

Copenhagen Economics (2012) Study on the pricing behavior of postal operators and its effect on postal markets

(60)

University of St Louis (2015) "Econometric Study of parcel list prices."

(61)

Eurobarometer (413), 2015 http://ec.europa.eu/public_opinion/flash/fl_413_en.pdf

(62)

Data of 2012, EU28, NACE G47.9 Retail trade not in stores, stalls or markets

(63)

 GfK for the European Commission, Consumer survey identifying the main cross-border obstacles to the DSM and where they matter most, September 2015

(64)

Copenhagen Economics(2013) "A Study for the State of Play of EU Parcel Markets with a particular emphasis on e-commerce)

(65)

ComScore(2014); UPS: a pulse of the online shopper

(66)

COM(2012) 298 final of 29 November 2012 "An integrated parcel delivery market for the growth of e-commerce in the EU" http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52012DC0698

(67)

COM(2013)883 final of 16 December 2013 "A roadmap for completing the single market for parcel delivery" http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013DC0886  

(68)

COM(2015) 192 final of 6 May 2015 "A Digital Single Market Strategy for Europe" http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf  

(69)

 H53 of NACE Code, for details read: http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF/dd5443f5-b886-40e4-920d-9df03590ff91?version=1.0 , page 242

(70)

WIK (2013) Main Developments in the postal Sector 2010-2013

(71)

Estimated figure: Postal statistics database, OXFORD Economics(2011): Impact of Express Carriers in Europe

(72)

WIK (2013) Main Developments in the postal Sector 2010-2013

(73)

Eurostat, Services by employment size class (NACE Rev. 2, H-N, S95) [sbs_sc_1b_se_r2]

(74)

AT Kearny (2015) Europe's CEP Markets: Steady growth begins to shift

(75)

The market definition refers to network related traffic in 13 countries (including Russia and Turkey) for shipments up to 2.5 tns (therefore including freight to a certain extend).

(76)

The sector definition is more narrowly defined and limited in the parcel market (up to 31.5 kgr) and also refers to EU28

(77)

La Poste Annual Report (2014)

(78)

Market definition focusing on all CEP products

(79)

Apex Insight (2015) The European CEP market)

(80)

Market definition focuses on European countries, it excludes freight and pallet services and includes domestic and international parcels weighting up to 31,5kgr.

(81)

CE(2013) E-commerce and delivery, estimates are based on a questionnaire based survey as well as on desk research, for more info see p.97 of the report

(82)

BCG(2012) Focus on the future

(83)

Including Express and parcels delivery, weight limit up to 31.5kg/parcel, excluding same-day deliveries

(84)

Effigy (2013) a CEP Market Summary for the European Commission

(85)

This Figure was provided to the Commission by Effigy Consulting which remains the copyright holder. Accordingly, Commission Decision 2011/833/EU on the reuse of Commission documents does not apply to this information. Any requests for reproduction or further distribution should be sent to Effigy Consulting.

(86)

Effigy (2013) a CEP Market Summary for the European Commission

(87)

La Poste Annual Report (2014)

(88)

Effigy (2013) a CEP Market Summary for the European Commission

(89)

AT Kearny (2012) Growth on new terms

(90)

Apex Insight (2015) The European CEP market

(91)

Meaning, offering the entire value chain, from the point of collection to the point of the delivery

(92)

WIK(2013) Main developments in the Postal Sector, 2010-2013, p. 234-235

(93)

Section 10 of this Annex

(94)

BCG(2012) Focus on the future

(95)

This point in time is mentioned as tipping point and it is considered to be achieved when NPOs will domestically achieve 70% market share in B2C (with as much revenue from additional services as revenue from plain delivery) and 10% in B2B

(96)

Asendia (the joint venture of Swiss Post-CH and LaPoste-FR falls under this category (although for the cross border segment, as it offers predominantly international delivery solutions)

(97)

CE(2012) E-commerce and delivery

(98)

More information available at CE(2012) E-commerce and delivery, p.p. 40-42

(99)

WIK gives an estimate at 20% for 2012, CE(2012) states that this figure is 27%

(100)

WIK (2013) main developments on the postal sector 2010-2013

(101)

Glossary for postal statistics, 2014 available at http://bookshop.europa.eu/en/glossary-postal-statistics-pbET0415666/?CatalogCategoryID=e9gKABstGNMAAAEjQ5EY4e5L

(102)

Basic parcel services without added-value service features

(103)

possibly not even tracked nor traced

(104)

Oxford Economics (2010) The Economic Impact of Express Carriers in Europe

(105)

Glossary 2014, available at http://bookshop.europa.eu/en/glossary-postal-statistics-pbET0415666/?CatalogCategoryID=e9gKABstGNMAAAEjQ5EY4e5L

(106)

CE(2012) E-commerce and delivery, p. 101

(107)

AT Kearny (2012) Growth on new terms

(108)

DHL Logbook; Discover logistics, in cooperation with Technical University Darmstadt

(109)

ERGP (2015) report on the courier express and parcels segment statistics

http://ec.europa.eu/growth/sectors/postal-services/ergp/index_en.htm

(110)

Effigy (2013) a CEP Market Summary for the European Commission

(111)

This Figure was provided to the Commission by Effigy Consulting which remains the copyright holder. Accordingly, Commission Decision 2011/833/EU on the reuse of Commission documents does not apply to this information. Any requests for reproduction or further distribution should be sent to Effigy Consulting.

(112)

CE(2012) E-commerce and delivery, p. 103

(113)

CE(2012), E-commerce and delivery p. 103

(114)

CE(2012) E-commerce and delivery p. 125

(115)

This Figure was provided to the Commission by Effigy Consulting which remains the copyright holder. Accordingly, Commission Decision 2011/833/EU on the reuse of Commission documents does not apply to this information. Any requests for reproduction or further distribution should be sent to Effigy Consulting.

(116)

  http://www.statista.com/statistics/235412/b2c-market-share-of-parcel-services-in-europe/  

(117)

CE Ecommerce (2012) E-commerce and delivery, p. 104

(118)

Effigy (2013) a CEP Market Summary for the European Commission

(119)

http://postandparcel.info/66800/news/update-tnt-takes-note-of-ecs-phase-ii-review/

(120)

AT Kearney (2012) Europe's CEP market: Growth on new terms

(121)

WIK (2013) Main developments Study (2010-2013)

(122)

AT Kearney (2012) Europe's CEP market: Growth on new terms

(123)

WIK (2013) Main developments in the postal Secotr (2010-2013)

(124)

AT Kearney (2015) : Europe's CEP Markets: Steady Growth begins to shift: Market Outlook p. 6

(125)

P. 121

(126)

FTI(2011) provided that distance selling in general is responsible for 2.3 bn shipments in total

(127)

we note that those estimations include freight operations to some extent

(128)

BCG(2012) Focus on the future

(129)

WIK(2013) Main Developments in the Postal Sector (2010-2013) p.223

(130)

P. 103

(131)

Apex(2015)

(132)

about 60% of the total parcel volume in Europe, if one calculate it as a share of the maximum estimated total of the CEP Market (which is 6,5bn, according to WIK (2013))

(133)

  https://www.pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=FactSheets&id=1426321556103-109  

(134)

  http://www.dpd.co.uk/content/products_services/followmyparcel.jsp  

(135)

  http://www.royalmailgroup.com/royal-mail-helps-online-retailers-keep-shoppers-updated-their-deliveries  

(136)

  http://www.royalmailgroup.com/royal-mail-helps-online-retailers-keep-shoppers-updated-their-deliveries  

(137)

  http://www.ipc.be/  

(138)

  http://newsletter.dhl.de/11651/letterView.php?id=111689#124134  

(139)

  https://www.post.at/privat_empfangen_paket_ems_post24.php  

(140)

  http://uus.smartpost.ee/en/why-smartpost  

(141)

  https://www.doddle.it/?v=1  

(142)

  http://www.inpost24.com/en/inpost-lockers/global-reach  

(143)

  http://www.piggybee.com/en/  

(144)

http://siliconvalley.blog.lemonde.fr/2015/06/17/pour-limiter-ses-couts-amazon-testerait-un-uber-de-la-livraison/

(145)

  http://www.logisticsmgmt.com/article/ups_expands_b2c_presence_with_kiala_acquisition  

(146)

  https://gls-group.eu/EU/en/news-overview/strategic-alliance-in-france  

(147)

  http://postandparcel.info/59384/news/markets/dhl-express-teams-with-mondial-relay-for-french-e-commerce-delivery/  

(148)

  http://www.dpd.com/portal_de/home/news/latest_news/geopost_launches_its_new_brand_identity c

(149)

  http://www.tnt.com/corporate/en/data/press/2012/03/UPS_and_TNT_to_create_a_global_leader_in_the_logistics_industry.html  

(150)

  http://europa.eu/rapid/press-release_IP-13-68_en.htm  

(151)

  http://postandparcel.info/65949/news/fedex-requests-eu-approval-for-tnt-bid/  

(152)

  http://www.ecommerce-europe.eu/home  

(153)

  https://www.hermesworld.com/int/about-us/hermes-group/hermes-logistik-gruppe-deutschland/  

(154)

  http://www.ipc.be/~/media/documents/public/market-flash/501-600/mf514.pdf

(155)

PWC(2012) "Outlook for UK mail volumes to 2023"

(156)

Royal Mail Annual Report (2014)

(157)

RM Annual Report (2014)

(158)

  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11711534/John-Lewis-to-charge-2-for-click-and-collect.html  

(159)

  http://www.royalmailgroup.com/sites/default/files/Annual%20Report%20and%20Accounts%202014-15_0.pdf  

(160)

Annual report (a presentation)

(161)

  http://postandparcel.info/57885/in-depth/yodel-strategies-to-restore-a-reputation/  

(162)

PayPoint, Annual Report for the Year Ending 31 March 2014 and Annual Report for the Year Ending 31 March 2015.

(163)

  http://www.ft.com/intl/cms/s/0/392e7cd2-90e6-11e4-914a-00144feabdc0.html#axzz3edOMlAW1  

(164)

Royal Mail Annual Report (2014)

(165)

  http://postandparcel.info/56588/news/companies/hermes-uk-expects-15-growth-in-parcel-volumes-this-year/  

(166)

  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11711534/John-Lewis-to-charge-2-for-click-and-collect.html  

(167)

  http://www.whistl.co.uk/  

(168)

  https://en.wikipedia.org/wiki/Whistl  

(169)

in May 2015 Whistl announced that it would suspend door-to-door letter mail deliveries in London, Liverpool, and Manchester, and use Royal Mail's final mile delivery service rather than their own

(170)

  http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=201382160  

(171)

  http://www.ft.com/intl/cms/s/0/43878128-5433-11e4-84c6-00144feab7de.html#axzz3edOMlAW1  

(172)

  http://www.amazon.co.uk/b?ie=UTF8&node=6544826031  

(173)

  http://postandparcel.info/65961/news/amazon-introduces-prime-now-in-london/  

(174)

  http://www.theguardian.com/technology/2014/mar/24/amazon-yodel-barclay-brothers-deal  

(175)

  http://www.ecommerce-europe.eu/press/western-european-e-commerce-expected-to-reach-173.8-billion-in-2013-10-growth  

(176)

  http://www.ipc.be/~/media/documents/public/market-flash/501-600/mf502.pdf  

(177)

Annual Report (2014)

(178)

  http://postandparcel.info/64098/news/companies/la-poste-profits-down-17-7-geopost-and-banking-limits-decline/  

(179)

  http://www.geodis.com/about-us-@/en/view-1866-category.html/1864  

(180)

  http://postandparcel.info/21363/news/geodis-supports-sncf-takeover-bid/  

(181)

  http://moryglobal.com/en/group/  

(182)

  http://www.heppner.fr/en/  

(183)

Colis Prive (2014): Dossier de Presse

(184)

  http://techcrunch.com/2014/05/01/amazon-takes-a-25-stake-in-colis-prive-to-ramp-up-its-delivery-network-in-france/  

(185)

Apex Insight (2015) European Percels, Market Insight Report

(186)

  http://www.mrw.es/?id=01  

(187)

  http://www.tip-sa.com/  

(188)

http://www.tourlineexpress.com/

(189)

http://www.redur.es/

(190)

  https://www.unipost.es/en/unipost  

(191)

p. 236

(192)

  http://postandparcel.info/68553/news/poste-italiane-ipo-begins/  

(193)

http://www.nexive.it/

(194)

http://postandparcel.info/64051/news/markets/nexive-launches-e-commerce-delivery-service-in-italy/

(195)

  http://www.brt.it/en/index.do  

(196)

  http://postandparcel.info/17704/news/italian-express-company-bartolini-launches-balkan-service/  

(197)

http://www.postnl.nl/en/about-postnl/press-news/press-releases/2015/august/solid-q2-results-outlook-full-year-2015-confirmed.html

(198)

http://landmarkglobal.com/

(199)

http://postandparcel.info/65414/news/companies/polands-inpost-enters-courier-business/

(200)

  http://www.inpostpocztowokurierski.pocztowokurierski.pl/  

(201)

http://postandparcel.info/65414/news/companies/polands-inpost-enters-courier-business/

(202)

  http://www.k-ex.pl/  

(203)

http://www.apex-insight.com/european-parcels-market-growth-continues-with-fedex-and-amazon-making-key-moves/

(204)

CE Ecommerce (2012) E-commerce and delivery, p. 104

(205)

WIK (2013) Main developments Study (2010-2013)

(206)

Deutsche PostDHL Group annual report, 2014

(207)

http://www.researchandmarkets.com/research/mw7qrz/express_delivery

(208)

http://www.dpdhl.com/content/dam/dpdhl/presse/mediathek/fact_sheet_dhl_en.pdf

(209)

Effigy(2013), Deutsche Post Annual report (2014) .

(210)

  http://www.kuronekoyamato.co.jp/en/business/international/ups_wwe/  

(211)

  http://postandparcel.info/65949/news/fedex-requests-eu-approval-for-tnt-bid/  

(212)

  http://postandparcel.info/64456/news/fedex-is-gearing-up-for-the-e-commerce-boom/  

(213)

 Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain

(214)

Bulgaria, Cyprus, Estonia, Greece, Latvia, Lithuania, Malta, Norway, Serbia, Sweden, Switzerland, Turkey, United Kingdom

(215)

  http://www.dpd.com/  

(216)

  http://postandparcel.info/60745/news/companies/deutsche-post-dhl-targets-growth-in-emerging-markets-and-e-commerce/  

(217)

  http://postandparcel.info/67172/news/dhl-to-establish-parcel-network-in-austria/  

(218)

Apex Insight (2015)

(219)

  https://www.myhermes.co.uk/  

(220)

  https://www.myhermes.at/wps/portal/PRIPS_AUT/  

(221)

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