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KEY TRENDS: THE PATH TO VALUE

Accenture Post and Parcel Industry Research 2019

CTT eCommerce Day November 2019 OVER A DECADEOF RESEARCH

Accenture post and parcel research

2006 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

The unfolding story in 2019

Copyright © 2019 Accenture. All rights reserved. 2 THE STATE OF THE DELIVERYINDUSTRY: DECLINING MAIL, PROFITLESS PARCELS 3 Year Revenue Development – Aggregate(1) [USD Bn, FY 2015 – FY 2018] Favorable mix shifts for most and higher Continued e-Commerce pricing in the US decline led volume Price increases +$4 bn growth +$8 bn -$8 bn $375 bn $0.2 -$2 bn

+$40 bn

$333 bn

Median Margin Posts:(2) 3.7% Median Margin Posts:(4) 10.7%

Median Margin Integrators:(3) 9.7%

Total Revenue Parcel Parcels Mail Mail Logistics Others Total Revenue Posts & Integrators Volume Rev per Unit Volume Rev per unit Revenue Posts & Integrators 2015 2018 Based on 13 companies listed in the footnotes. 55% of our peer-set; - $ 16bn not included as only companies which report mail and parcel revenue as well as volume could be considered

Note: (1) Aggregate sum of data from Austria Post, Canada Post, DPDHL, FedEx, La Poste, Post Nord, Poste Italiane, PostNL, Royal Mail, Swiss Post, UPS, USPS, Yamato; Rise due to Parcel Volume = (Volume 2018 – Volume 2017) * Revenue per unit 2017; Rise due to Rev per unit = (Revenue per unit 2018 - Revenue per unit 2017) * Volume 2018; (2) Median margins of 9 posts that report parcel margins separately: Austria Post, Canada Post, CTT, La Poste, PostNL, Posten Norge, Royal Mail, SingPost, Swiss Post; (3) Integrators include Aramex, DPDHL, Fedex, UPS; (4) Median margin includes Austria Post, CTT, Posten Norge, PostNL, Swiss Post; Exchange rate as of June 2019 Source: Annual reports; Accenture Client Value Services Copyright © 2019 Accenture. All rights reserved. 3 CONSUMERS EXPECT MORE FROM CARRIERS: SPEED, RELIABILITY AND CONTROL

PRICE FREE FAST FREE + FAST CONTROL

We are here

Copyright © 2019 Accenture. All rights reserved. 4 CONSUMERS DEMAND MORE SPEED The Rise in Same Day Delivery The number of US digital buyers using same-day Groceries are the leading product delivery nearly doubled YoY in 20181 category wanted the same day1 Delivery options that US Internet Users have used Items that US Internet Users want to be received via when making digital purchases in the last 12 months, same-day delivery vs. actually received, by Feb 2017 and Feb 2018 Category, Feb 2018 (% of respondents)

64% 19% 26% 4% 2017 Same-day 17% Groceries Beauty products delivery 31% 2018 46% 4% 24% 4% Healthcare products Electronics 42% 7% 22% 2% Next-day 40% Specialty snacks Appliances delivery 46% 41% 5% 21% 2% Alcohol Clothing, shoes, 28% 5% and accessories 67% Two-day Household products delivery 78% 28% 4% Want Received Source: https://www.gopeople.com.au/blog/same-day-delivery-trends-and-statistics-to-guide-your-business/ Copyright © 2019 Accenture. All rights reserved. 5 WHY LAST MILE MATTERS?

NA Retail & Hospitality eCommerce Consumer Spend by Fulfilment Channel(1)

[USD bn] CAGR CAGR 1,460.0 [2015 – 2018F] [2018F – 2021F] Fulfilled from Store +10.9% Fulfilled from Fulfillment Center 1,330.0 370.0 33.4% 24.9% Fulfilled from Warehouse 1,180.0 300.0 (25.3%) (22.6%) 1,070.0 230.0 +14.1% 190.0 (19.5%) 930.0 (17.8%) 130.0 400.0 820.0 390.0 11.9% 4.6% (14.0%) (27.4%) 720.0 110.0 370.0 (29.3%) 80.0 (13.4%) 350.0 (31.4%) (11.1%) 320.0 (32.7%) 280.0 (34.4%) 250.0 (34.1%) (34.7%) 690.0 580.0 640.0 10.8% 9.2% 530.0 (48.1%) (47.3%) 430.0 480.0 (49.2%) 390.0 (51.6%) (49.5%) (54.2%) (52.4%)

2015 2016 2017 2018F 2019F 2020F 2021F

Source: (1) Retail’s Radical Transformation/Real Opportunities, August 2018 by IHL Group

1995 2005 2017

1 Facility 6 Facilities 787 Facilities Including 458 Whole Foods

Source: MWPVL.com, amazon.com,

Copyright © 2019 Accenture. All rights reserved. 8 MILEWAY IS INVESTING IN URBAN DELIVERY CENTERS ACROSS EUROPE’S ECONOMIES Mileway Offers Urban Logistics Hubs Within Close Proximity To Europe’s Major Cities, Enabling Clients To Shorten Delivery Times, Grow Their Customer Base And Expand Rotterdam: Geographically 300k+ Amsterdam: Manchester: 41 3.1 400k+ Glasgow: 200k+ 7.3 40 150k+ 73 6.4 18 4.8 Copenhagen: Edinburgh: 10.0 3.6 2.7 100k+ 120k+ Hanover: 8.3 15 14 250k+ 8.0 2.0 18 6.7 Liverpool: 8.6 5.4 Berlin: 250k+ 13.9 100k+ 37 Cardiff: Dusseldorf: 7 4.4 200k+ 350k+ 4.0 6.8 40 23 14.3 3.6 2.9 Birmingham: 5.0 15.2 Munich: 150k+ Paris: 100k+ 27 600k+ 7 London: Lyon: 4.1 73 Frankfurt: 4.8 50k+ 200k+ 5.6 35.1 400k+ 14.3 25 17 8.2 35 5.7 35.5 11.8 3.0 2.0 11.4 Barcelona: 55k+ Portfolio size (sqm) Madrid: Note: (1) Average capacity is calculated as 3 Number of assets 20k+ portfolio size/ number of assets; Source: 54.0 Population density (‘000 per 1 Company website; Accenture Client Value 18.3 km^2) Services 10.8 Average capacity(1) (‘000 20.0 sqm/unit) Copyright © 2019 Accenture. All rights reserved. 9 RETAILERS ADAPTING USING THEIR STORES FOR LOCAL DELIVERY Two Models To Speed Up Delivery And Meet Consumers Needs

Retailer Example Characteristics Fulfillment Model Scale Marketplace Amazon Analytics From own fulfillment centers Subscription services At least 35 orders per year High density of stores Adapting own stores as Grocery Walmart, Carrefour Cold chain and special packaging warehouses and FCs Deep pockets Low to high store density Use shared warehouses (3PLs) and Mass Merchant Nordstrom, Macy’s High cart values own stores Less frequent purchases Use shared warehouses (3PLs) and Retail Chains Sephora, Zara Variable density of stores own stores (Shopping Centers) Losing retail space Increasingly going DTC - direct to Nike, Nespresso DTC consumer – but challenge in getting Use shared warehouses (3PLs) consumers to their websites

1 2 3 4

FASTER SMALLER LOCAL ATOMIZATION CYCLES SHIPMENTS DELIVERIES OF INVENTORY

Source: Retail and Supply Chain SMEs; Accenture analysis

Volume (in 000) by product Revenue (in 000 USD) by product type for USPS from 2010-17 CAGR type for USPS from 2010-17 CAGR 2.800.000 Parcel Select 39.8% 9.000.000 2.600.000 Priority Mail 6.3% 8.000.000 2.400.000 2.200.000 7.000.000 2.000.000 6.000.000 1.800.000 Parcel Select 41.3%

1.600.000 5.000.000 1.400.000 1.200.000 4.000.000 1.000.000 Priority Mail 4.0% 3.000.000 800.000 600.000 2.000.000 400.000 Parce Return 13.5% 1.000.000 Express Mail -1.1% 200.000 Express Mail -5.0% Parce Return 15.9% 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017

Source: USPS

FINANCIALS FOR TRADITIONAL COMPETITION FROM LAST MILE DELIVERY COMPANY DELIVERY STARTUPS

B2B B2C

Cost per stop $5.00 $5.50 Parcels per stop ~3 ~1.05 Cost per parcel $1.67 $5.23 First time delivery 97% 85% rate

UPS Avg. and Max. Daily Shipping Volume (mn)1 Amazon Prime Day - 20182 45 Global Prime Day 40 4.2 Bi Sales – July 16 2018 35 1.7x Jump in sales from 2017 30

25 China Singles Day3,4

20 Sales recorded in 24 $25.5 3 15 +bn hours in 2017 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 Greater than average daily 12x shipping volume in 20174 Maximum Shipments in a Day Average Shipments in a Day

Source: (1) Financial Reports and News Reports; Accenture Estimates; (2) Statista and Amazon; (3) TechCrunch; (4) Alibaba Group

From To Static Dynamic 5 Days/Week 7 Days/week Traditional Fulfillment Disruptive Supply Chain Hub And Spoke Deep Induction and Two Wave Delivery Constant Labor Variable Labor Single Model Ecosystem Conventional Ops Data driven Ops

Acceleration: Number Of Global VC Funding – Supply Chain Examples of Exponential Growth Years To Reach 50M Users1 And Logistics – Number And Value of Startups In Postal and Parcel Of Investments2 Sector3

Deal Value [USD bn] 598 Since 2013, Cainao expanded from Deal Count [#] 558 a Chinese logistics player into a global one valued at ~USD 15 bn Lalamove, a HK based on-demand 451 12900 389 delivery company, now has presence across Asia and is valued at ~USD 1 bn in less than 6 years 9220 8755 Glovo, a Spanish on demand 234 courier service started in 2015 now operates in 19 countries -valued at 5076 USD 0.7 bn 87 109 3254 Launched in 2013, Deliveroo is a food delivery company that has 495 436 1010 expanded across Europe and Asia 2012 2013 2014 2015 2016 2017 2018 2019H1 with funding >USD 1,5 bn

Source: 1 - Visual Capitalist; 2 – CBInsights; 3 – Press releases, Accenture Research

Accenture is a leading global professional services André Pharand company, providing a broad range of services and solutions Global Consulting Leader in strategy, consulting, digital, technology and operations. Accenture Post and Parcel Industry Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – [email protected] Accenture works at the intersection of business and /in/andre-pharand technology to help clients improve their performance and create sustainable value for their stakeholders. With @andre_pharand 477,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. www.accenture.com/PostandParcel This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is Copyright © 2019 Accenture. All rights reserved. not intended to represent or imply the existence of an association Accenture and its logo are trademarks of Accenture. between Accenture and the lawful owners of such trademarks.