The global downturn is hitting parcels operators hard, according to results released by two major players this week. In its second-quarter results, Dutch-owned express giant TNT points to a sharp decline in volume in June in some key markets. It adds: "The impact of the sudden volume pressure was aggravated by sharply increasing fuel prices, which led to additional temporary cost pressure due to the time lag in fuel surcharge pass-on." This cost the Express division an extra €7m (£5.8m) in Q2.
It has also seen a shift in the market, with customers shunning costly air movements in favour of its road-based network where it saw volume growth. Overall, the Express business saw revenue increase by 10.7% on the same quarter in 2007 to €1.7bn (£1.4bn) with operating income at €153m (£127.5m), up 1.3%. However, its half-year results show that although turnover grew by 5% on 2007's figures, income fell by 7.8%.
Group revenue stood at €2.8bn (£2.3bn) for the second quarter, up 4.5% 
on 2007, with operating income down 1.8% on last year at €324m (£270m). In the first half of 2008, turnover was up 5% to €5.5bn (£4.5bn), but operating income fell 10% to €613m (£510m). Meanwhile, TNT's UK rival City Link says it has also seen a weakening in demand over the last quarter.
The business had been underperforming since the acquisition of Target Express in 2006, but since new management arrived at its parent company Rentokil Initial, a recovery plan has been in place. This has boosted service levels to consistently above 98.5% and customer losses stemmed, it says. However, the effects of these improvements may be offset by slowing demand.