Despite challenging market conditions, the Hermes Group has recorded solid growth in the 2018 financial year, as it profits from the continuing robust growth of e-commerce. The successful year builds on what it says is its No. 2 position in Europe’s largest courier, express and parcel (CEP) markets.
On a comparable basis, the Hamburg-based retail and logistics services provider increased its revenue by around 6.0 per cent to EUR 3.2 billion (at constant currency). Overall volumes have grown with Hermes handling a total of 817 million parcels in Europe during 2018 (+6.7 per cent). The company achieved significant growth in France (Mondial Relay) with a 38.8 per cent volume increase, and cross-border business within the EU was up by 35 per cent, both outperforming the market.
In addition, Hermes says it has reinforced its market leadership in two-man delivery in Germany and France. The company has continued to invest heavily in its infrastructure, digitisation, customer-focused services, payroll and last-mile staff, as well as a sustainable vehicle fleet.
“The Hermes Group has shown very strong growth over the past six years – with sales up on average by 10 per cent per annum,” notes Carole Walker, CEO of Hermes Europe. “This past financial year we have faced challenging market conditions, especially in Germany, along with increases in costs, including ongoing investments and driver pay increases. Nevertheless, we have continued to deliver strong growth across all areas.
“Our dedicated B2C and C2C parcel network now covers 80 per cent of the key European markets, using proven cooperation models for other markets. We also operate the largest parcelshop network – with approximately 40,000 ParcelShops in total in Europe’s key markets”, she adds.
“To me, it is particularly important that we have succeeded in laying the foundations for a continued successful future with additional growth capacity, progressive expansion of digital services for our customers and ongoing development of our cross-border parcel business through the founding of the Hermes International business unit.
“The long-term growth projections for e-commerce are that volumes will reach up to 70 per cent of retail sales over the next two decades and we believe we are in a strong position to benefit from this market growth,” Walker adds.
To ensure the group maintains a well-positioned logistics network, able to provide fast, flexible and eco-friendly delivery solutions, it has continued to invest in its state-of-the art infrastructure, spending EUR 162 million across all parcel companies.
In order to meet the increasing delivery demands of consumers, the Hermes parcel companies have made significant investment in digital solutions. This includes giving customers the ability to choose a number of delivery options, receive regular communication about their parcel’s journey and make returns online or through a mobile app.
Hermes has also introduced a number of digital tools to support its couriers, including intelligent and dynamic route planning software solutions in France, Germany and the UK, which help to reduce emissions and increase productivity.
“For us, investment in digital solutions for the last mile is the key to satisfying increased retailer and customer demand for richer products, real time delivery information and a wider range of delivery solutions. We believe the delivery of a parcel is an extension of the overall brand experience and we are continually looking at technology to help achieve a great customer journey,” says Walker.
In the 2019 financial year, the Hermes Group says it will continue to make significant investments at a constantly high level. This will include gradual wage increases for couriers – with EUR 100 million earmarked for this in Germany alone over the next five years.
The company established Hermes International in 2018, aimed at tapping the enormous growth potential of cross-border e-commerce. Hermes expects the global cross-border e-commerce market to grow at an annual rate of 16 per cent between 2015 and 2025 (from EUR 94 billion to EUR 405 billion).
The intensive further development of the ‘China to Europe’ trade lane was one of the highlight projects of the new business unit which bundles together the international activities of the Hermes Group, it says. Overall, Hermes International recorded double-digit volume growth in 2018.
Through a strategic partnership with the horizontally positioned multi-channel logistics company SEKO Global Logistics, which includes taking over the German SEKO locations in Frankfurt and Bremen, Hermes has joined a strong international network that offers further growth potential for the entire Hermes Group – especially in markets outside Europe, such as the US and China, it adds.