Delivery companies

This new guide on delivery companies is part of our boycott Amazon series. Since 2020 Amazon has offered Amazon Shipping, a direct postal service, in the UK.

With a rise in online sales and home-delivered food, there's more use of delivery companies by small and large businesses. In addition, as more people sell items direct from their homes, customers have some choice as to which delivery company will handle their parcels.

Who's failing to deliver on ethics?

For this shopping guide we have reviewed the seven largest delivery companies in the UK and the three biggest restaurant delivery platforms.

We look at workers’ rights including the role these companies play in employing gig economy workers, the companies' environmental impacts and their carbon emissions.

Companies in the market

The UK delivery market is highly concentrated, with the top five carriers accounting for 75% of all shipments:

• Royal Mail (35%)
• Amazon Logistics (15%)
• Hermes (10%)
• UPS (8%)
• DHL (7%)

Amazon Logistics is a new company, only launched in 2013, which has grown rapidly. Initially it only delivered Amazon’s internal parcels, but in 2020 it announced "Amazon Shipping in the UK, a new parcel pick-up and delivery service available to any business, whether they use Amazon’s e-commerce platform to sell on or not” and in 2021 was said to be the second largest courier in the UK.

Royal Mail was privatised over the period 2013-2015. The reason given for the privatisation was that money was needed to pay off the national debt (which incidentally is now almost 5% higher than it was during the financial crisis), as well as to “give the company access to private capital and improve its competitiveness”.

But the funny thing is, as in the rail sector, quite a few of Royal Mail’s competitor delivery companies are themselves state owned, just by foreign governments e.g., DPD is owned by La Poste, which is itself a French state-owned corporation. Similarly, DHL is 21% owned by KFW Group, a German government-owned development bank which is 80% owned by the Federal Republic of Germany and 20% owned by the States of Germany.

The UK delivery market

Over the last 5-10 years the market for the UK delivery sector has exploded, with the Covid-19 pandemic accelerating these already existing trends.

As you can see from the graph above from the ONS, since the mid-2000s the growth in online shopping has been rising at a steady rate, sharply increasing during 2020. Even after the economy had opened up again in April 2021, online shopping sales were far above their pre-pandemic peak. This, of course, means a boom in the logistics industry with delivery companies growing rapidly. High street retail shopping has correspondingly declined, even before the pandemic.

There were even bigger changes in the food delivery sector. During the lockdowns, most restaurants were forced to close. As a way to survive, they turned to online food delivery platforms such as Deliveroo, Just Eat and Uber Eats.

In total, during the pandemic the food delivery market grew by almost £4 billion, to reach over £11 billion, double its 2015 value. By far the biggest of the big three is Deliveroo, which has grown from recording revenues of around £18 million in 2015, to over £1 billion in 2020.

Overall, the number of UK food delivery users has increased from around 13 million users in 2015 to almost 25 million in 2020.

Key ethical issues for delivery companies highlighted by our research

Environmental Reporting

Quite a few of the companies did publish a full environmental/sustainability report or, at least, devoted some time to discussing their climate impacts and what they are going to do about it.

Royal Mail, DPD, DHL and Yodel earned a best rating for Environmental Reporting, while FedEx, UPS and Uber Eats scored a middle rating.

Overall, the restaurant delivery companies fared much worse, although their model is based on more deliveries being done by bicycle or moped, with Just Eat and Deliveroo all scoring a worst and Uber Eats only scoring a middle.

In fact, Deliveroo failed to have in place any sort of environmental report at all. All we could find was a blog post by the founder and CEO Will Shu, which stated that they were trying to reduce packaging by asking customers whether they wanted cutlery, were selling 'eco-packaging' on their store, and encouraging restaurants to use paper straws.

Climate change, carbon emissions and electric vehicles

No company got our best rating for Carbon Management and Reporting.

DPD, Deliveroo, Just Eat, Uber Eats and Hermes all scored a 'worst' rating.

Royal Mail, Yodel, UPS, FedEx and DHL got a middle rating, with all of them failing to get best for the same reason – their decarbonisation target wasn’t good enough, in most cases because they allowed offsetting to count towards it. DHL lost an extra half mark for a contract it had with Shell Oil.

However, many of the companies are taking steps to decarbonise, including electrifying their fleets, although this probably isn’t just idealism – the economics is starting to favour it.

Royal Mail just announced plans to add 3,000 electric vans to its fleet (of about 41,000). With its vehicles and its ‘feet on the street’ network of 90,000 postal workers, it claims to have the lowest per parcel greenhouse gas emissions of any major UK delivery company.

DPD says that 10% of its fleet is now electric and it will have 1,700 electric vans (out of about 8000) on UK roads by the end of 2021.

DHL is planning to introduce 320 more electric vans by the end of 2022. It says that 33% of its deliveries are by foot, bicycle or electric vehicle, and that it aims for its entire fleet to be electric by 2030.

UPS has ordered 10,000 electric vans, although that is to cover the United States and parts of Europe as well as the UK.

FedEx has just ordered 1000 electric vehicles, Hermes a few hundred, and it has 160 compressed natural gas vehicles, which are lower carbon than petrol or diesel, although still fossil fuelled.

Some of the companies, such as Hermes and Yodel, are also investing in real-time route optimising software to save fuel, which is good for the climate but again, is also clearly in their economic self-interest.

Excessive pay at the top

Excessive pay always looks more jarring in sectors known for poor treatment of workers. And all but Royal Mail were marked down for it.

Uber’s highest paid member of staff received $12 million in 2020, UPS $6 million, FedEx $11 million, Deutsche Post (DHL) €10 million, Roofoods (Deliveroo) £14 million.

Compared to these astronomical sums, the others look almost paltry: Advent (Hermes)'s highest paid staff member had to scrape by on a mere £4 million, Just Eat, DPD and Yodel's on just over €1 million each.

The scale of the gig economy in the delivery sector

The gig economy is an umbrella term to describe the casualisation of the workforce. The growth of the UK logistics and delivery sector has coincided with its rise, which has ridden in on the UK’s relatively deregulated labour market with weak labour protections, and the rise of smartphone usage and artificial intelligence.

‘Gig’ delivery drivers and couriers are not classified as employees but rather ‘independent contractors,’ theoretically able to choose their own hours, select their own customers and enjoy a better quality of ‘flexible’ work. In practice though, this has sometimes meant workers making less than the minimum wage, enjoying none of the traditional employment protections such as sick and holiday pay, and having to work very long hours for low pay, as well as having to take on the risks of operating the business themselves e.g., paying for their own insurance, fuel, vehicle, etc.

However, there is no standardised way of working when it comes to delivery companies. Individual companies all have different ways of classifying workers, with some opting for self-employed to other delivery companies actually employing workers on secure contracts. Below, we outline some of the employment terms and conditions of different delivery companies and restaurant delivery companies. See also the feature below on Fairwork's ranking of several of the companies we have covered.

Hermes

In early 2019, the GMB successfully managed to broker a ground-breaking collective bargaining deal with Hermes.

Now, even though couriers are still self-employed, they have the option to go for self-employed plus, which brings benefits such as holiday pay (pro-rata up to 28 days), a minimum wage of least £8.55 per hour, minimum rest breaks, protection against unlawful discrimination and full GMB representation.

Royal Mail/Parcelforce

97% of Royal Mail’s workforce are on permanent contracts, with postmen and women earning 35% above the UK’s National Living Wage in 2020-21.

Royal Mail does make use of agency labour and it has an internal agency called Angard which provides sorting office workers during busy periods. But all agency workers receive the National Living Wage, with the majority receiving above the Real Living Wage, and there are opportunities to be moved onto a permanent contract.

DPD

In 2018, a DPD employee named Don Lane died after cancelling meetings with a kidney expert due to fears that he would be fined £150 if he was sick and could not find cover. This led DPD to conduct a review into their employment terms and conditions.

Now DPD drivers have the option to be employed directly by DPD, be a self-employed franchisee or become a self-employed worker. It claims that “the self-employed worker contract is designed to give drivers earnings of £28,800 a year, based on working five days a week, along with 28 annual days' holiday, a pension and sick pay”. However, whether the new system is better is controversial.

Yodel

At Yodel drivers have the option to be self-employed or employed directly by Yodel. Self-employed drivers pay their own fuel and insurance, and either own or lease their own vehicle. Payment is per parcel, and drivers get the option to decline deliveries.

Employees are paid a set salary on a monthly basis and are provided with a Yodel uniform and vehicle. They are required to work on a shift basis, with full or part-time shifts available, and around 100 parcels to be delivered per shift. Yodel aims to give shift patterns 12 weeks in advance.

UPS

According to an online job advert in autumn 2021, UPS delivery drivers are directly employed by the company, not through an agency. The working week is a minimum of 40 hours, plus paid overtime as and when required. The hourly rate is £12.46 per hour increasing after 6 and 12 months respectively, with a company pension, holiday pay and 20 days paid holiday.

Just Eat

According to the official website, Just Eat couriers can earn up to £10.20 per hour with paid holiday. If couriers start working from their local hub, they will be provided with an insured pushbike, e-bike or moped. There is also a company bonus scheme, pension contributions and both part- and full-time contracts with flexible shifts.

FedEx

According to an online job advert seen at the time of writing, FedEx couriers have a scheduled work week of 45 hours with an hourly pay rate of £12.07. No other information could be found.

DHL, Uber Eats, and Deliveroo

No information could be found on the employment terms and conditions of DHL, Uber Eats or Deliveroo delivery drivers.

Fairwork's ranking of labour standards in the gig economy

A global collaboration to try to improve labour standards in the gig economy has recently published rankings for 11 UK companies. Rob Harrison looks at the how the project works and compares their rankings to those at Ethical Consumer.

Poor working conditions internationally - South Korean example

Online shopping and the growth of the delivery and logistics sector is not just confined to the UK, it is a globally growing market, particularly with Covid-19.

In South Korea it is not uncommon for delivery drivers to work 14+ hours a day, 6 days a week. Since the start of the pandemic, unions say 21 delivery drivers have died from overwork, which has become so common there is even a work for it, 'gwarosa'.

Coupang, which is South Korea’s answer to Amazon, has a service called Rocket Delivery and, just like Amazon in the UK (UK workforce of 55,000), it is one of the largest employers in Korea. In October last year, one of Coupang’s workers, Jang Deok-Joon, died of a heart attack aged just 27. The company insisted it had nothing to do with this, but after a month-long campaign by his parents, the government officially ruled it death by overwork.

For more information on South Korea’s delivery drivers and their fight for better working conditions, watch this documentary on YouTube.