Ti’s latest Express and Small Parcels report shows continued fundamental strength in the sector. Global growth in real terms of 8.5% meant 2016 was the strongest year for the market over the past five years. The domestic market grew by 9.3%, with the international market growing by 5.4%.
Adapting to changing market conditions has been key to taking advantage of growth. Since the mid-2000s, major express providers have looked to develop B2C capabilities, a change from their home in the B2B market. B2B delivery is a higher value, more premium service, which has showed steady growth for many years. Numerous reports suggest that (certainly in developed markets) there is an approximate one-to-one relationship between B2B parcel volume growth and real GDP growth. It is therefore B2C volumes, driven by e-commerce, that were the key contributor to the strong growth in the market in 2016.
Nowhere is this trend seen more emphatically than in China, with real growth in the overall market of over 25%. The last couple of years have seen the bigger players fighting to gain market share. YTO Express, STO Express, ZTO Express and SF Express have all sought public backing over the last couple of years, in attempts to gain investment to expand their operational capabilities.
In Europe, the interconnectedness of the market sets it apart. Domestic and international volume growth rates are more closely matched in 2016 than in any other region. The maturity of the major markets means less growth is seen on a domestic level. Meanwhile the EU’s single market allows for strong cross-border trade.
The difference between domestic and international growth rates is slightly wider in North America. Its key distinguishing factor is the strength of the US internal market, which means that the domestic market makes up nearly 90% of the parcel market in North America.
Over a four-year horizon, Ti is forecasting the global express and small parcels market to grow at a real compound annual growth rate (CAGR) of 8.2%. This remains within the range of growth rates seen in the past five years (between 7.1% and 8.5%).
In the international market, cross-border e-commerce sales in industries such as beauty & cosmetics, pet care, food and beverages and sporting goods have significant potential for growth.
Furthermore, if economic growth can sustain the improved rates seen in 2017, domestic B2B markets are likely to see stronger growth.
The market as a whole has experienced fundamental changes over the past 30 years and new trends are set to change the market in the future. Express providers have invested significantly in technology and have had to expand networks and then adapt them to match the changing marketplace. Further disruptive forces specific to the sector, as well as wider trends such as population growth, changing energy supplies and the geography of supply chains are set to play a part in affecting growth the longer term.
Source: Transport Intelligence, September 12, 2017
Author: Andy Ralls
To find out more about the 2017 Global Express and Small Parcels Report, or Ti’s expertise in the express and small parcels market, including analysis of its market size and forecasts, strategies of the major providers, analysis of technologies in the industry and more, click here or contact Ti’s Business Development Manager, Michael Clover.
