Irish parcel carriers seeing bulk of growth in B2C deliveries

Investing in new technology has been helping retailers and carriers keep pace with these expectations. However, some carriers reported that strong competition in the sector is affecting their growth, particularly with consumers expecting increasing levels of service for “very low prices”, according to a report issued by the economics consultancy firm Frontier Economics and commissioned by the Commission for Communications Regulation (ComReg), postandparcel.info reports.

The research estimates that packet and parcel volumes in Ireland will grow between 3-5% each year overall by volume, with much of that growth in business-to-consumer (B2C) deliveries where 7-9% annual growth will be seen in the near future. Volumes in 2016 will be between 90 million and 109 million items per year.

Projections suggest that the value of the sector will grow 2-4% per annum, including a 6-8% annual growth in B2C and 0-2% growth in B2B. The value of the sector was between EUR 430 million and EUR 520 million in 2013, and in 2016 will be between EUR 470 million and EUR 593 million.

Parcel market is expected to rise to 57%-62% B2B deliveries, 35-40% B2C and 3-4% consumer to consumer or consumer to business. However, parcel carriers expect most of their growth going forward to be business-to-consumer deliveries, with business-to-business volumes remaining relatively stable. The size of the ecommerce market in Ireland is set to grow from EUR 5.9 billion in 2014 to EUR 12.7 billion by 2020.

The challenge in coping with the B2C growth for carriers will be in coping with missed deliveries, fraud and returns, as well as Ireland’s non-unique addresses. The biggest challenge in particular seems to be the increasing expectations of consumers regarding their parcel deliveries, with “sorry you were out” cards no longer acceptable to many consumers.

For UK retailers selling into Ireland, customs delays can also be a significant challenge to inbound shipments and, to improve delivery convenience, carriers have been working on alternative delivery or collection options – parcel lockers, parcel shops, delivery to alternative addresses. Currently, eight parcel carriers account for about 90% of the Irish market by volume. State-owned postal service An Post leads with a 30-40% market share, followed by Nightline, DPD and GLS, which have market shares of between 10-15%. Fastaway and DHL are estimated to have market shares of 5-10% by volume.

Some operators have different market shares by revenue, marking the difference in revenue per item, with An Post’s market share lower by revenue (about 20-30% of the market) and express operators like DHL and UPS higher (between 10-15% of the market by revenue). Looking at prices in the sector, SMEs face much higher prices for sending items abroad than domestically, EUR 8.53 on average to ship items within Ireland, EUR 17.33 abroad.