DPD finalise CitySprint acquisition, but is it profitable?

DPD have announced that they have completed the CitySprint acquisition, the UK’s premier same day delivery company, following the recent approval of the transaction by the Competition and Markets Authority.

CitySprint acquisition

This completion makes CitySprint now part of DPDgroup and means that DPD UK’s customers will now be able to access CitySprint’s same day and specialist delivery services in the UK, while CitySprint will be able to offer its customers access to DPD UK’s domestic next day and international expertise.

“This transaction makes genuine sense for both parties and we are delighted to have completed the acquisition. Same day delivery is one of the fastest growing segments of the logistics market and this deal will enable us to provide our customers with fantastic new services. Demand for home delivery has continued to grow as consumer behaviour has evolved post-pandemic and DPD UK is perfectly positioned to meet that demand and consolidate our position as a market leader.”
– Elaine Kerr, CEO, DPD UK

“We are delighted to have finally completed this transaction and formally become part of DPDgroup. This represents a major opportunity for both our colleagues and customers as we join forces with Europe’s largest parcel delivery network. There continues to be strong demand for same day delivery services, and we believe we have the right strategy in place to capitalise and build on this within the enlarged DPDgroup.”
– Gary West, CEO, CitySprint

This news follows a period of growth for CitySprint, which supports businesses across the UK with a range of delivery solutions, including same day, bespoke logistics design and specialist services for key sectors such as retail and healthcare. CitySprint’s unique national same day delivery network comprises 30+ service centres across the UK with geographical reach to over 88% of the mainland population within 60 minutes.

How profitable is the CitySprint acquisition?

Here’s where it gets interesting though. Yesterday I received a delivery of 100kg of cement purchased from Wickes. It came from the Reading Wickes store which is about £15 miles away and the delivery charge was just four quid. Having only ordered the cement the evening before, this is effectively a same day service and I’m struggling to see how CitySprint make any money no the deal. £4 hardly covers the diesel for a van to drive £15 miles, although admittedly they’ll also be doing other drops but nowhere near as many as the 150-200 daily drops a DPD driver makes. With bulk goods ranging from sand and cement to timber, fence panels and 8 by 4 foot sheets of ply, a CitySprint driver can probably only do around a dozen drops.

It’s possible that Wickes are in part subsidising the delivery cost, but their top charge appears to be £7.95 and even at that price their’s not much meat to pay for a driver, van, insurance and diesel.

CitySprint offer an absolutely amazing service and I adore them. DPD have always been a leader in delivery experience too. But will there come a time when the cost of deliveries has to rise because someone has to pay for them and currently, at least with CitySprint, I don’t feel like it’s me the customer.

Source: https://tamebay.com/2022/01/dpd-finalise-citysprint-acquisition-but-is-it-profitable.html