Nominal parcel revenues rose 1.6% last year. Real revenues fell 0.8%, to £13.2bn. The gap between those two numbers is inflation, and inflation does not appear as a line item on anybody’s P&L. That is the whole problem in two sentences.
The number that shows, and the number that does not
Open most operators’ management accounts and the picture looks fine. Accounts are growing. Volume is up. Revenue is up in cash terms. Nothing on the page says the business is going backwards.
But the erosion is not on the page. It sits in the difference between what a parcel earned in 2024 and what the same parcel earns now in money that buys the same things. Nobody books an inflation adjustment against unit revenue, so nobody sees it until the year-end conversation about why margin is down on flat costs.
Where it bites, and where it does not
If you own the network, volume growth partially rescues you. More parcels across the same sortation, the same linehaul and the same depots absorbs fixed cost and offsets some of the rate compression. It is not comfortable, but it works.
If your income is a slice of the price rather than a slice of the volume, none of that applies.
- Resellers and brokers earn on the spread, and the spread is what compressed
- Fulfilment operators pass carrier rates through and take margin on the handling, so a carrier increase lands on them twice
- Neither has fixed-cost absorption to hide behind
For those operators the compression arrives across the entire customer base at once, rather than account by account at renewal.
The arithmetic
A 7.3% fall in real unit revenue needs roughly 7.9% more volume just to hold real income per parcel steady. The market grew 7.1%.
The average operator ran 7.1% harder in 2024–25 and stood approximately still.
That is not a failure of execution. It is what happens when the growth rate of the market is slightly below the rate at which unit economics are eroding. Everyone is working, everyone is busy, and the aggregate result is flat.
Where the extra volume has to come from
The instinct is to grow existing accounts. It rarely solves this, because existing accounts are already priced at the compressed rate. Adding volume to a thin margin adds thin margin.
New business is the only volume that can be won at a rate you set rather than a rate you inherited. It is priced today, against today’s cost base, with today’s surcharge table in view.
New business used to be how the business grew. It is now how the business stays the same size.
What that means practically
If new business has quietly moved from growth engine to survival mechanism, then the amount of prospecting capacity in the business needs to move with it — and in most operators it has not. It is still one BDM, still expected to build their own list, still expected to research their own prospects, still expected to close.
That is the part worth looking at before the next rate review.