GeoPost drives on with ‘ground express’ strategy

July 8, 2016

Paul-Marie Chavanne 

La Poste’s international parcels division GeoPost is again growing well this year and will continue to expand as a ‘ground express specialist’ in Europe and overseas, targeting B2C deliveries for growth, according to top executives.

GeoPost is continuing to grow “considerably” and is expanding beyond Europe to Asia, Africa, Latin America “and perhaps even one day to North America”, the French postal group’s CEO Philippe Wahl told international journalists on a trip to the DPD UK hub at Hinckley in central England last week.

Tasked with expanding La Poste’s international parcel activities, GeoPost, which now trades under the DPDgroup brand, will particularly focus on developing services in response to e-commerce, Wahl said. “Innovations will speed up in the years to come.” In particular, the British business DPD UK has a key role to play in developing innovative B2C services for the group, he commented.

Outlining the strategy, GeoPost president Paul-Marie Chavanne explained that the parcels division defines itself as “the ground express specialist in Europe and worldwide” and wants to be one of the key players in the overall global $300 billion express delivery market.

In 2015, GeoPost increased revenues by 15% to €5,675 million and volumes by 10.9% to 941 million parcels. B2C parcels increased by 21% and now represent 30% of total volumes. “This year the strong growth trends are continuing, with double-digit growth,” Chavanne commented.

In Europe, the French group is number two in the overall €46 billion (air) express, deferred (ground) and postal parcels market through DPDgroup and separate French B2C unit Colissimo, with turnover of €6.7 billion and a 15.7% market share in 2014, he said.

Deferred parcels account for 50% of this European market by value, ahead of express with 27% and postal parcels with 23%, according to the group’s figures. Deferred parcels account for 61% of volumes compared to 22% for postal parcels and 17% for air express.

Excluding postal parcels, DPDgroup claims to head the European express and deferred parcels market with turnover of €5.1 billion and a 16.7% market share.

Commenting on competitors, Chavanne described the integrators (DHL, FedEx-TNT, UPS) as “the kings of air express” with a combined 90% share of the international express market. In the European ground parcel market, Deutsche DHL is “powerful” in its home German market but has “very few positions” across the rest of the continent, UPS and Royal Mail-owned GLS have “average” coverage, while FedEx is now “entering the market” by acquiring TNT, he said.

Driven by e-commerce, B2C will remain the key market growth driver for the foreseeable future and will force parcel companies to make deep changes, according to Chavanne. B2C grew by 9.5% to represent 23% of the European express/deferred parcels market by value in 2014, and 31% of volumes, while B2B grew only 2.8% in value terms, GeoPost figures showed.

“B2C is not just e-commerce growth with additional customers. It’s a paradigm change. The last mile is becoming the most important aspect with delivery to private customers. You have to adopt the view of the end-customer who wants service solutions.”

For GeoPost, this means transforming from a transport company into a service company, where “innovation and operational excellence are the decisive factors for success”.

Explaining GeoPost’s operational approach, Chavanne highlighted the single hybrid B2B/B2C network, the ‘multi-domestic’ own businesses in Europe and various other countries such as Russia and South Africa as well as various partnerships, including BRT in Italy, PostNord in the Nordics, Yurtici Kargo in Turkey, DTDC in India and Aramex in the Middle East.

Looking ahead, the GeoPost chief added: “We are working on Asia and are looking at South America.”

Source: GeoPost, CEP-Research