Dive Brief:
- Pitney Bowes expects its Q4 parcel volumes to grow YoY, aided by the 32 new domestic parcel customers that have gone live in its network since the start of Q3, executives said on an earnings call last week.
- New clients are expected to account for roughly 20% of Q4 domestic parcel volumes, said Executive Vice President and CFO Ana Maria Chadwick. Notable additions include Hudson's Bay and Japan Crate, a subscription box company.
- Fast fashion retailer Shein, another new customer, represents “a tremendously exciting win” for Pitney Bowes, President and CEO Marc Lautenbach said on the call. Pitney Bowes began processing parcels for Shein in Q3, and it expects Shein’s volumes to increase substantially in Q4.
Dive Insight:
Securing new customers throughout the year is translating into increased volumes for Pitney Bowes as the peak shipping season begins to heat up, despite industry expectations of a more moderate holiday demand surge versus 2021.
“Right now we expect volumes in the quarter to be up year-to-year and quarter-to-quarter pretty materially,” Lautenbach said, adding that it is “predicated on peak.”
In Q3, the shipping and mailing company's domestic parcel volumes declined YoY, which it attributed to softer e-commerce activity and a decline in inbound parcels from China. Weekly volumes during the quarter increased slightly from 2.8 million at its start to 2.9 million at its end, Lautenbach said. Through the first three weeks of Q4, Pitney Bowes saw activity jump to about 3.6 million parcels per week.
"We have a very strong pipeline in the fourth quarter," Lautenbach said. "So we've got probably over $100 million of revenue that's signed that we're working on integration."
The early increase in Q4 volumes will help Pitney Bowes in its attempt to rebound from a weaker-than-expected peak season last year. Its Q4 2021 U.S. parcel volumes were 20% below what the company had planned for, as customers struggled with upstream supply chain issues. Experts are forecasting a smoother peak season for 2022.
Pitney Bowes has landed new domestic parcel customers following significant investments like automation that drove improved service, Chadwick said. This also helped the company draw more volume from existing clients like Victoria's Secret and Bark, known for its BarkBox subscription service.
“Our ability to win new customers and regain volume from existing customers is a direct result of our increased service levels, which position us very well vis-à-vis our competitors,” Lautenbach said.
