DPDgroup invests in growth as B2C volumes soar

GeoPost/DPDgroup has coped well with the Covid-19 pandemic, is growing profitably with surging B2C volumes and plans to speed up network investments to increase capacity, new CEO Boris Winkelmann said today.

In addition, the Groupe La Poste division will expand ‘green’ urban deliveries, introduce more food delivery services and target selective acquisitions in key markets, he told a French and international media briefing.

Winkelmann, a former head of DPD Germany, was appointed Executive Vice President of GeoPost / DPDgroup at the start of this year. After a six-month transition, he took over as CEO upon the retirement of long-serving Paul-Marie Chavanne at the end of June.

With turnover of nearly €7.8 billion last year, GeoPost already accounts for 30% of La Poste’s revenues. It expects to end 2020 with turnover of about €10 billion, partly due to the acquisition of a majority stake in Italian carrier BRT (in which it previously held a minority stake) in January.

“GeoPost/DPDgroup will be the biggest parcels operator in Europe this year,” Winkelmann declared. “We will be number one.”

B2C volumes surge as e-commerce booms during corona crisis

Looking back at the last six months, Winkelmann stressed that DPDgroup has coped well with the Covid-19 pandemic and played an “essential” role in providing delivery services for organisations, businesses and consumers across Europe. This included setting up an airbridge to fly 100 million masks from China and delivering vital healthcare supplies to hospitals in various countries.

“We have been able to grow profitably,” he said. “We have the impression that we are getting through the crisis better than our competitors.”

Moreover, he emphasised, “the role (of delivery services) has never been so visible. This is important for what we want to do in the coming months and years.” DPDgroup has just launched a new marketing campaign to highlight this role.

Like most express and parcel companies, the group saw a “brutal” slump in volumes in March as the pandemic spread rapidly through Europe, forcing widespread lockdowns, business closures and stay-at-home orders for the population.

In response to a CEP-Research question about major challenges during the crisis, Winkelmann admitted that there had been “several days of concern” in March as volumes slumped dramatically. But the crisis also brought the management teams closer together and “forced us to take decisions”, he pointed out.

Business then picked up strongly in April and May with a 30% surge to 300 million parcels delivered across Europe as consumers bought far more everyday goods online and businesses started to re-open in some countries. This “super-growth” included dramatic increases in B2C volumes, with Germany and Italy up by 40%, Benelux and French unit Chronopost by 50-60%, UK by 70% and Russia and Brazil by over 100%.

As a result, B2C deliveries now make up 55% of DPDgroup’s volumes compared to 45% last year, while B2B shipments have fallen to 45% from 55%. All country units now have higher B2C than B2B volumes.

“In three months, we have seen an acceleration of the last three years,” Winkelmann commented. Although the 30% growth rate would inevitably slow, he was confident that strong B2C increases would continue in the coming months.

He admitted that B2B volumes “will suffer” this year although there has been a slight comeback in recent weeks as shops re-open and re-stock their inventory. However, he emphasised that this downturn will be compensated by B2C growth over the year as a whole.

Investing in growth

Looking ahead, GeoPost/DPDgroup now plans to accelerate its strategy of expansion and diversification into new business areas. “We will speed up investments for growth,” Winkelmann said.

Network capacity will be increased faster than originally planned, with new hubs in the UK and France brought forward by 2-3 years, while a series of new depots will go into operation. In the UK, where business “is flourishing”, the B2C boom is far outweighing any negative effects of Brexit to date, he underlined.

In terms of products, DPDgroup plans to further develop its food and grocery delivery services against the background of strong growth for online purchases of such goods over the last few months. In a first step, DPD Fresh will be launched in Belgium this month.

The food delivery market can be split into three segments, Winkelmann explained. These are home deliveries of goods bought online or offline (in supermarkets), deliveries of ‘ready-to-cook’ meal boxes, and temperature-controlled deliveries of fresh or chilled goods. “All three segments are growing fast,” he commented.

‘Ambitious’ green urban deliveries

Another priority will be expansion of ‘green deliveries’ in European cities with more electric vehicles, cargo bikes and micro-depots. “We are working on an ambitious plan for green deliveries,” Winkelmann said.  

In parallel, GeoPost will cooperate closely with Urby, La Poste’s urban logistics unit which consolidates volumes in edge-of-town facilities and delivers them via city centre micro-depots to businesses and consumers using low-emission vehicles.

La Poste and its new state-owned majority shareholder CDC have just invested €34 million into this start-up business, which is already active in 16 French cities, and plan to expand it to all of the country’s 22 metropolitan areas.

International expansion continues

Meanwhile, expansion in overseas markets will remain a strategic priority for GeoPost, with South-East Asia, Latin America, the Middle East and Africa top of the list, according to the new CEO.

The group has just increased its 70% stake in fast-growing Brazil firm Jadlog to nearly 100%, he disclosed. In terms of further acquisitions, he commented: “We may have something to say in the autumn.”