Hermes face-off with redundancies and speculation about sales, causing a critical situation for the Otto Group's parcel service
In the ever-evolving world of parcel delivery, Hermes Germany, a subsidiary of the Otto Group, is facing challenges that could lead to significant changes.
Rumours of a potential sale have been circulating, with industry experts speculating that online retail giants from China, such as Temu or Shein, could be interested in acquiring Hermes Germany. Another possible buyer could be JD.com, a Chinese company currently looking to acquire the German Media-Markt-Saturn group. However, acquisition talks with DPD did not result in a sale.
Hermes Germany's book value of the stake in the group is now zero, and the main cause of its losses is falling parcel volumes. The company, which primarily delivers business customers to private addresses, lacks a unique selling proposition compared to competitors who mainly deliver to each other.
If a sale does not occur, Hermes Germany may face restructuring measures. This could include a withdrawal from sparsely populated regions and a focus on major cities. The Otto Group has warned of the risk of initiating new turnaround processes or closures due to the continued difficult market conditions in logistics.
The parcel delivery industry is experiencing extreme overcapacity and high demand for parcel drivers. In many companies, jobs are being cut, including Deutsche Post, Hermes, and DPD. In Berlin, for instance, parcel drivers are delivering more parcels in less time, with 200 shipments a day being common.
Amazon has successfully built a parcel service in Germany, adding to the competition. DHL, with a market share of around 50%, holds the largest share in the German parcel market. However, the industry is under pressure due to consumer restraint, causing a decline in order and parcel volumes.
The parcel delivery industry experienced a surge in hourly wages above the legally prescribed minimum wage in 2021, reflecting the high demand for parcel drivers. Fedex, currently integrating the Dutch delivery service TNT, is unlikely to be interested in Hermes Germany.
InPost, a Polish logistics company, is a possible candidate for acquisition. InPost Group has already acquired Mondial Relay, a logistics company from the Otto Group, in France. If InPost were to acquire Hermes Germany, it would further expand their European footprint.
The parcel delivery industry is a critical component of the modern economy, and the future of Hermes Germany could shape the competitive landscape in Germany and beyond. As the situation develops, updates on the potential sale or restructuring measures will be closely watched by industry observers.
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