The European parcel market has shifted from pandemic-era surges to a leaner reality. Across the industry, leaders are moving away from ‘growth at all costs’ toward surgical precision to combat slowed volumes and persistent labor inflation. Profitability now depends on improving revenue quality and executing targeted cost actions to fund long-term transformation.
The 2026 playbook requires connecting commercial choices directly to operational reality. Pricing, product design and network decisions can no longer exist in silos. To prevent margin erosion, operators must ensure every sales promise is backed by a cost-efficient physical delivery model.
Revenue quality: beyond blanket price increases
Margin stabilization will not come from blunt price hikes that risk alienating volume. Instead, it requires a deliberate product architecture aligned with actual customer value. Differentiation must move beyond a simple choice between home and out-of-home delivery to include tiers based on speed, predictability, product features and carbon transparency. Value-based pricing allows premium shippers to pay for high-end features while guiding price-sensitive customers toward products the network can deliver most efficiently without all the bells and whistles. Shippers are increasingly opposing long lists of paid features and surcharges and demanding simplicity.
Cost-to-serve transparency is commercially decisive here. When the economics of each product tier are clear, margins can be protected without undermining competitiveness. This is particularly true for non-conformable shipments. These items often appear attractive on a revenue-per-parcel basis but consume disproportionate manual handling time. As robotics expands in hubs, manual exceptions become even more expensive because they disrupt automated throughput. Accurate costing allows operators to decide whether to handle these in-house or outsource them to specialized channels.
Identifying the gaps: benchmarking for competitive advantage
To execute these shifts, carriers must first understand how their cost structures and operational KPIs stack up against the market. This is where tools like Kearney’s Global Cost Benchmarking (GCB) become essential. By comparing granular KPIs across different regions – particularly in the rapidly evolving out-of-home (OOH) sector – operators can identify exactly where the gaps between them and the competition lie. In the OOH space, GCB allows carriers to analyze locker density, PUDO (pickup drop-off) handling costs and first-time hit rates. This data-driven transparency prevents ‘blind’ investment, ensuring that capital is deployed only where it will yield the highest margin improvement or competitive defense.
Digital sales and demand steering
Revenue quality is also shaped by the cost to acquire and serve. The small and medium enterprise (SME) segment offers high yields but has historically been expensive to manage through manual contracting. Operators that digitalize the SME journey – offering self-serve contracting and instant quoting – can unlock growth while keeping overheads low. In this landscape, time-to-first-shipment is a critical KPI for capturing demand without scaling sales headcount. Shippers look for instant quoting capabilities and a simple user interface during the onboarding process – one confusing step along the journey can make the difference between a new customer and the loss of the same to the competition.
Analytics-driven pricing strengthens this by rewarding behaviors that reduce operational stress. Cut-off linked pricing rewards early tendering, reflecting the value of planning flexibility. Similarly, demand-smoothing incentives encourage price-sensitive orders to ship midweek rather than during costly Monday or Tuesday peaks. Dynamic adjustments to OOH discounts can also accelerate the shift toward lower-cost formats such as parcel lockers.
Automation and last-mile economics: a case study in efficiency
One leading European carrier recently demonstrated the financial impact of integrating AI into the customer journey. Previously, routine ‘where is my parcel’ (WISMP) inquiries accounted for 25% of all customer contacts, tying up significant human resources on low-value tasks. By deploying automated AI solutions – including proactive push notifications and intelligent chatbots – the carrier successfully slashed that figure to just 8%.
This digital layer acts as a critical buffer, ensuring that rising parcel volumes do not translate into a linear increase in customer service headcount. By automating the bulk of status inquiries, carriers lower the cost per shipment and free human agents to handle complex exceptions that require genuine empathy and problem-solving. This shift from reactive to proactive communication not only stabilizes margins but also significantly enhances the recipient experience.
Beyond the digital interface, the last mile remains the most inflation-exposed component of the value chain. Managing subcontractor economics now requires a granular, fact-based approach rather than traditional broad-brush negotiations. Kearney has helped carriers rebuilding internal cost models to define a ‘should-cost’ for specific regions and individual tours. By establishing a fair cost-plus-margin baseline, negotiations with delivery partners become constructive, performance-linked dialogues. This transparency ensures subcontractor sustainability in a high-inflation environment while protecting the carrier’s bottom line through data-driven precision.
Executable cost-out with linehaul optimization
Major hidden costs often reside in linehaul design and trailer use. Advanced network planning tools – such as OPTANO – are decisive here, using prescriptive analytics and mathematical modeling to evaluate millions of scenarios in seconds. This allows carriers to identify the cost-optimum network configuration, transforming rigid transportation structures into agile, data-driven networks that balance maximum use with strict service levels.
By optimizing holistically, operators reduce complexity and strip out significant linehaul costs while maintaining reliability. This shift from manual planning to algorithmic optimization ensures that every kilometer driven contributes directly to the bottom line.
The shift from boom to balance is about reconnecting the CEP profit model. Revenue quality initiatives improve yield and steer demand toward efficient operations, while targeted cost actions reduce unit costs. In 2026, profitability will come from the disciplined execution of these reinforcing levers to stabilize margins and fund the future of the industry.