XPO launches European last-mile delivery service

Transport and logistics company XPO Logistics Inc. said today it would begin "last-mile" deliveries in Europe of online orders of heavy goods, with service in the five countries where it operates.

Greenwich, Conn.-based XPO said it will provide service in the United Kingdom, Ireland, France, the Netherlands, and Spain. It declined to comment on expansion plans beyond those countries. Nor would it disclose growth projections other than projecting in its statement that it will manage 750,000 last-mile deliveries in Europe during 2018. The European last-mile heavy-goods delivery market is fragmented, and is dominated by what Luis Gomez, managing director of transport for XPO's European operation, called in the statement "small-scale, regional players."

XPO began limited last-mile deliveries in 2016 in the UK. It began deliveries last year in the UK, Ireland, and the Netherlands for brick-and-mortar and e-commerce purchases.

In 2016, European e-commerce logistics costs—the amount shippers paid for e-commerce services—hit $75.8 billion, according to Armstrong & Associates, a consultancy that tracks the third-party logistics (3PL) industry. The 3PLs' share of European e-commerce revenue was $8 billion in 2016, and is expected to compound annually at a 9.2-percent rate at least through 2020, bringing 3PL revenue up to $11.3 billion by that time, according to Armstrong data. The top six markets are the UK, Germany, France, the Netherlands, Italy, and Spain, the firm said.

The European e-commerce market was expected to be valued at year-end 2017 at about 602 billion euros, or US$752 billion, according to a report released last June by Ecommerce Europe, EuroCommerce, and the Ecommerce Foundation.

XPO has built a solid position in the North American last-mile delivery market mainly by leveraging its 2013 acquisition of 3PD Inc., which had been one of the top last-mile delivery providers in the U.S. Last-mile delivery of online orders of heavy goods like appliances is a fast-growing segment of the overall market, though still much smaller than the delivery market for items that move as small packages.

In addition, many heavy-goods orders require entry into the home, followed by product assembly and installation, all of which fall under the industry classification of "white glove" service. That service calls for a level of customer interaction and provider expertise that many traditional delivery carriers are not accustomed to offering.