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£31m superhub for Hermes, plus buoyant Royal Mail sees parcel growth


Hermes is making its largest ever single investment, with the development of a 270,000 square foot superhub near Rugby, in Warwickshire.

Work on the hub began earlier this week; when finished it will have the capacity to process up to 1.1 million parcels every day and will increase the company’s overall parcel processing capacity by 45%, as well as creating more than 200 new permanent jobs.

Carole Woodhead, CEO at Hermes, said: “As work begins at our new facility in Rugby, we are embarking on an exciting new chapter in the history of Hermes that will ensure we can continue to provide retailers with world class services and solutions. The hub’s enormous throughput capability and built in flexibility will help to future proof our business whilst also ensuring we are in the very best position to grow alongside our clients.”

The new development starts not long after Hermes reported a record-breaking peak 2015, during which it processed 30.3m parcels, representing a 24% increase on the previous year.

This compares well with results issued this morning by Royal Mail which saw a 6% increase in parcel volumes during December.

For the nine months to 27 December, Royal Mail Group revenue was up 1% at the nine-month point; it had been flat during its first half, demonstrating the impact of the peak period. Parcel volumes for the nine months were up 4%, while letter volume declined by 3% for the same period – a slower decline than the 4% decline seen in the first half.

Moya Greene, chief executive of Royal Mail plc, said: “Once again, our postmen and women delivered a great Christmas – even better than last year’s strong performance. This is because of the commitment of our people and our investment in additional temporary staff and sorting capacity. Extensive planning, which began in the spring, ensured we had the capacity to accommodate additional volumes from our retail customers and other delivery operators.

“In the first nine months, UK parcel volumes were up 4%, with 130m parcels handled in December alone, 6% more than last year. The performance in letters improved slightly over the first half, with addressed letter volumes, excluding elections, down 3%.”

Royal Mail went on to say that parcel volume growth “continued to be driven by Royal Mail account parcels, which benefitted from recent new contract wins, import parcels, and Parcelforce Worldwide, which saw volumes increase by 16%. Growth in these channels has more than offset the tough trading environment in consumer/SME and export parcels.”

An increasing trend of higher volumes of lower-value parcel was highlighted by Royal Mail as one of the challenges it faces, particularly in relation to deliveries into the UK form China.

Commenting on Royal Mail’s performance, Kevin Townend of Advanced Supply Chain, said he feels that competitive pressure must drive further Royal Mail investments: “Royal Mail is having to fundamentally alter its business model away from traditional letter postal services and into the ecommerce market. But the market is highly competitive.

“As well as retailers developing their own networks, such as Amazon, and offering delivery services to ecommerce businesses, manufacturers are also beginning to explore retailing products themselves, establishing their own networks through third party logistics providers.

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