Busy December for parcel firms delivers good start to New Year

Each year, the winter holidays are an important time for many businesses. Brisk trade during this period can help a firm achieve the year's financial forecast or even exceed expectations. Parcel delivery companies are no strangers to a busy end of year. The period of high demand for delivery services is a peak for a business which is already increasing in volume year-on-year. Normal daily deliveries are accompanied in the winter holiday season by the delivery of gifts, with companies making up the bulk of clients.
Bogdan Zafiu, sales and marketing manager for TNT Romania, says the boost the delivery industry gets during the winter season was mirrored in the generated value of processed parcels, which has grown by almost 30 percent on the same period of last year. In terms of volume, the season also brought a 30 percent increase compared to the average monthly traffic in 2007.
The courier market is considered a good indicator of the health of the business environment, says Zafiu. So the bigger the package burden on parcel service providers, the better the outlook for business in general.
TNT estimates the boom period at the end of the year may account for around 10 to 11 percent of its yearly turnover. The company processed 25 percent more items during this period, compared to the same period of 2006, and the increase is in line with the growth of international transportation. In TNT's case, international express delivery represents the core of its business, as well as the main performance indicator in terms of operational and financial results.
Elsewhere, the last quarter of 2007, together with the holiday season, brought a 25 percent increase in the total volume of international shipments, both letters and parcels, for DHL Romania, compared to the same period of 2006, says Gian Sharp, country manager of the firm.
This increase is most representative in terms of shipments. On the domestic market, DHL Romania registered in the fourth quarter of last year the highest growth – 70 percent on the same period in 2006. However, internal parcel services are also an important driver of delivery companies' businesses. Many local companies, focused on delivery services inside Romania, have seen year-on-year growth in the last two-three years.
“The winter holiday season is characterized by increases of at least 60 percent on normal business months. The demand is mainly fuelled by the delivery of holiday gifts,” says Ciprian Pulpa, executive manager of Fastius Curier.
Besides the increasing number of processed items, parcel services companies have also faced an increasing demand, up to 300 percent bigger than in an average month.
The year-end boom is expected to continue in the following years, as more customers decide to outsource package and document delivery, as they involve high volumes the firms cannot cover by themselves, explains Pulpa.
The winter season does not mean just volume increases for parcels, but for some companies, even an increase in volume for the delivery of large packages. These companies are delivering on behalf of clients who need to supply products to large retail chains. When the existing fleet and personnel are not enough to cover the demand, delivery companies hire third party transportation companies to cover the excess work. It makes no sense to increase the fleet for this period only for it to sit idle for the rest of the year.
Employees work three shifts over holiday season, and parcel companies even hire and train additional personnel two to three months in advance. The number of new hires is not excessively high, and the additional personnel is of use even after the holiday season ends, as the parcel business is increasing on a yearly basis anyway.
Year-on-year, parcel delivery companies need to further invest in their operational capacities, fleet and people to keep up with the next year's demand. “We consider it imperative to dedicate an average of 10 to 15 percent of the total turnover to invest in further development of our operational capacities and linehaul connections,” says Bogdan Zafiu of TNT.
The local parcel services market is split between international companies, like TNT, DHL, UPS and FedEx, and by local companies, like Cargus, Fan Courier, Pegasus, Speed Courier, Alo Courier and Curiero.
The market has seen a boost and an increasing number of competitors, mainly since the 2007 EU accession, as the trade between Romania and other countries has intensified.

By Corina Saceanu