Deutsche Post’s £242.7 million deal to buy troubled UK Mail Group will drive up quality in the parcels sector, argues leading UK Parcel broker ParcelHero
The news that Deutsche Post, of which the well-known DHL brand is a part, is to snap up UK Mail, should be welcomed by UK consumers, says the parcel broker ParcelHero, experts in the UK and international courier industry. The take-over will deliver higher quality in the delivery industry, it argues.
The £243 million deal secures the future of UK Mail Group’s services and will help ensure Deutsche Post’s quality and expertise is brought to the UK’s domestic parcels market, says ParcelHero.
ParcelHero’s Head of Consumer Research, David Jinks MILT, reveals: ‘It’s no secret that UK Mail had some serious issues last year when it spent £20m on a new automated hub near Coventry; but hit some serious problems in sorting certain sizes of packages. Its profits fell 28% and customers were very unhappy. While it had largely sorted its issues by Christmas, UK Mail’s shares fell by 18% over the last year. Clearly the take-over has been welcomed by shareholders; it’s shares are up 43% this morning. Deutsche Post will also be pleased at the comparatively low price they have paid, compared to UK Mail’s share price just a year ago.’
The takeover will help boost Deutsche Post’s presence in the domestic UK parcels market; which is growing rapidly with the rise of online shopping home deliveries. UK Mail has more than 50 depots and 2,400 delivery vehicles, and UK Mail’s domestic services are likely to be run as a separate network than the existing DHL UK services. The service, which is likely to use Deutsche Posts’ expertise to develop UK Mails significant postal service, will compliment Deutsche Post’s DHL Express UK parcel services, which are popular with consumers for shipping parcels to Europe and beyond. DHL is a ParcelHero partner.
The combination of UK Mail with DHL Express’s UK operation would make the combined parcel business second only to the privatised Royal Mail in the UK. Observes David: ‘ The two networks are likely to be kept quite separate: which is why it is Deutsche Post and not DHL that has purchased UK Mail. This could head off any investigation by the regulatory authorities. We don’t see the deal as leading to any kind of monopoly, however: so it is to be hoped this won’t lead to too many delays and entanglements.’
Deutsche Post has been developing its parcels operations across Europe recently, adds David: ‘It bought shares in Relais Colis SAS of France in January and has acquired or set up parcel operations in 16 European countries. Obviously this purchase indicates the company is not over-concerned about the impact of Brexit on the UK parcels market; and, if the worst were to happen and tariffs are imposed on UK-EU shipments, gives it a stronger foot in the UK domestic market, which could grow as more items are sourced and mailed from within Britain, rather than facing import tariffs.’