Interview – Geopost’s Thiemo van Spellen on market trends and cross-border growth

Thiemo van Spellen, Geopost’s global accounts director, looks at current market trends in Europe, outlines his expectations for medium-term B2C and B2B growth, and explains how the parcels carrier aims to increase cross-border business this year, in this interview with CEP-Research.

The interview took place last week at DELIVER Europe 2023 in Amsterdam where Geopost was one of the largest sponsors with a prominent stand and several workshops. (The interview has been shortened and edited for clarity.)

How is the market progressing in 2023 and specifically from a Geopost perspective?

For little over a year we have been in this normalising market after the COVID peak years. As soon as the normalisation started, the economic situation in the world changed with this terrible war, with inflation rates that went through the roof. So that was pretty much dominating 2022.

I think 2023 is showing a different pattern. The start of the year was still comparing ‘apples and pears’ because early 2022 was still lockdowns in several countries, at least January and February. So, it was a little hard to compare like for like at the start of this year compared to last year. I think we're pretty happy with where we are this year so far. Growth at least is back. Last year declined compared to the year before and now we see growth compared to the previous year again. Of course, it's at a lower level than we were used to in the few years before that.

One thing really impacting the market of course is also the cost development. That's not only impacting the costs of every one of our customers and suppliers and ourselves but it's also impacting consumer demand of course. Inflation is also still impacting many of the conversations we have with our customers, and they have with their customers and vice versa.

The big challenge in this market is now to make sure that you don't only push to compensate cost increases commercially but also make sure that you go back to increasing efficiencies again. We cannot change the economic environment, so we have to deal with it and make sure our customers stay happy with what we are offering them and how we perform.

When you say growth is back, do you mean volumes or revenues or both?

Volume growth is back but also rate increases due to all these cost increases, so revenue is also up. That doesn't automatically imply that profit is also up with equal percentages because of the cost developments.

How do you see the B2B and B2C trends playing out in 2023?  

If you compare the current (B2C) numbers and last year's numbers with the last pre-COVID year 2019, it's still impressive growth. So that market is growing rapidly long term and it will of course be at a slower pace than in the previous few years. I still expect this 2C market to be growing somewhere between 8% and 12%, or 7% and 11%, on average in the coming years.

The 2B market will probably be at a lower level of low single digit growth but it's a stable one. During COVID it declined due to all the lockdowns and now it's back at the levels where it was and growing again. The importance of 2B for us is still crucial. A big share of what we do is 2B. For us it’s back on the strategic agenda to boost our growth and our market share on 2B and also 2C, focusing very much as well on cross-border.

In terms of geographical markets are there any specific trends you see in Europe?

In some markets competition is a bit more aggressive than in others. In Eastern Europe we have some very fierce competition. I think that is due to the fact that many carriers have invested in capacity during this pandemic and now that volumes are not at that level any more, people are hungry to get volumes in. That's something we see without any exception in all the countries. In some markets where there are some rapidly growing competitors that are buying market share we're fighting a bit more.

Recently you launched the new day-definite cross-border product. How is that being accepted on the market?

Of course, the real effect is still to be seen in the numbers. We launched the project in the first ten countries early this year and the rest of Europe will follow after the summer so in September there will be a full rollout of the service across Europe.

It’s part of a broader programme where we strategically want to strengthen and accelerate our cross-border business growth. This is where Geopost is the strongest in Europe so we need to leverage more on the strength that we have with this European network.  

Accelerating that growth requires a very clear cross-border proposition so having a very clear promise to your customers of zip code to zip code lead time that can be expected is one of the big elements in it. That’s the day-definite proposition. We don't want to be the fastest in the market but definitely we want to be the most predictable one in the market.

Secondly, we are enriching our export portfolio by making sure that step-by-step all the services and also the premium services and sometimes the local premium services that we offer are all going to be available on our export solution as well. So, one integration and having all of Europe and all the services available is a second big pillar of this cross-border programme.

Has it been necessary to make any changes to the network?

There are a few changes. But it’s also a big mindset shift making sure that we understand that at country level or business unit level the inbound business that we receive from our colleagues is actually our export product. By prioritising that, you already have a big impact on the performance. Then in operations making sure that we optimise our linehaul setups. Those are the main two building blocks.

Thirdly it's about visibility and reporting towards our customers. So, what have we promised, what is the performance, what potential issues if there's any issue during the process that leads to a longer than promised lead time. We need to inform our customers along the way.

So, it's linehaul changes, prioritising inbound business and being much more transparent in the reporting to both the shippers and the consignee. The first signals are positive because we see that cross-border business is growing more rapidly than our domestic business currently. So, it seems to be paying off already.