Global Express and Small Parcels 2016

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About the 2016 Global Express and Small Parcels Report

Ti’s new report, Global Express and Small Parcels 2016, includes the latest research on the changing parcel sector. It examines the composition of the sector over time, highlighting the recent strategic decisions that have been made to accommodate changing customer expectations, as well as analysing the sustainability of these choices.

e-commerce continues to dominate the strategic thinking of the main express companies and Post Offices globally. The rapid growth in e-commerce sales is not only impacting parcel companies’ strategies but also their operations.

The main express players are all well established and have spent many years developing comprehensive and wide reaching collection and delivery networks. However, more recently, convenience of delivery – not necessarily to a residential address – is proving more popular amongst consumers and is driving the development of alternative collection.

Global Express and Small Parcels 2016 explores the key issues within this evolving industry from both global and country-level perspectives.

Published October 2016.

This report contains

  • Extensive analysis of the factors shaping the express industry
  • Comprehensive profiles of express providers
  • Analysis of evolving express strategies
  • Insight into the innovations utilised in the express industry
  • Exclusive Ti market sizes and forecast data

This report contains

  • Extensive analysis of the factors shaping the express industry
  • Comprehensive profiles of express providers
  • Analysis of evolving express strategies
  • Insight into the innovations utilised in the express industry
  • Exclusive Ti market sizes and forecast data

Exclusive Highlights on the market
structure of the express industry

  • The B2B market is witnessing something of a renaissance in the form of e-commerce, which is helping to shape future depot networks and, in some instances, form the basis for acquisition strategies
  • Ti sees a move away from the terms B2B and B2C to ‘Industrial’ and ‘e-commerce’. There has been a level of polarisation, with some companies operating only in the ‘industrial’ segment and some only in the lower value ‘e-commerce’ segment.
  • In order to compete with disruptive start-ups, businesses are investing in new delivery models, along with IT to support these, whilst at the same time targeting the higher margin town and city locations.
  • Customer expectations within the online environment have been out of kilter with economic reality for a long time. Some retailers have, such as Amazon, are now charging for deliveries of some lower priced products in an attempt to restabilise the market.
  • Amazon’s fulfilment strategy varies by geography and in areas with higher delivery densities, Amazon also undertakes last-mile deliveries. This is extremely dangerous for the traditional parcel companies, as they are in danger of being left with only those parcels that are less economically viable to deliver

Exclusive Highlights on Innovations
within the express industry

  • Opportunities within the express market upon which innovative companies could capitalise on include: consolidation, mobile depots and crowdsourced delivery, as well as autonomous vehicles and in-boot deliveries.
  • Whilst there are many start-ups covering the whole range of delivery capabilities, none can be considered suitable for all types of delivery scenario.
  • There are hundreds (if not thousands) of disruptive start-ups trying to penetrate the e-commerce market, as well as different segments of the last-mile delivery element of the chain. Ti analyses the varying successes of some of these.
  • Traditional retailers, such as John Lewis in the UK, have previously had their own parcel delivery capability but found this operation to be unviable. Amazon, on the other hand, has started its own delivery operations
  • Asian postal providers, such as Australia Post, China Post, Singapore Post, are all among the LSPs profiled in this report that are investing in innovative technologies.

1.0 Express Industry Market Structure

What factors are driving the change in the parcel sector?

Which definitions within the parcel sector changed?

How is Amazon’s strategy impacting delivery strategy affecting express providers?

How are delivery models evolving to meet demand?

Where can cost savings be made in the last mile?

2.0 Express Industry Innovations

How has the express market evolved?

Which technologies are shaping how we deliver goods?

What do LSPs need to do to maintain a competitive advantage?

Who are the start-up winners and losers?

3.0 Market Size and Forecast

How big is the global parcel market?

How big is the domestic parcel market by region/country?

How big is the international parcel market by region/country?

Which regions and countries have the strongest growth prospects?

4.0 Express Provider Profiles

How do the operations and strategies of express providers vary?

Market structure

  • Ti sees a move away from the terms B2B and B2C to ‘Industrial’ and ‘e-commerce’. There has been a level of polarisation, with some companies operating only in the ‘industrial’ segment and some only in the lower value ‘e-commerce’ segment.
  • Amazon’s fulfilment strategy varies by geography and in areas with higher delivery densities, Amazon also undertakes last-mile deliveries. This is extremely dangerous for the traditional parcel companies, as they are in danger of being left with only those parcels that are less economically viable to deliver

Industry innovations

  • Opportunities within the express market upon which innovative companies could capitalise on include: consolidation, mobile depots and crowdsourced delivery, as well as autonomous vehicles and in-boot deliveries.
  • There are hundreds (if not thousands) of disruptive start-ups trying to penetrate the e-commerce market, as well as different segments of the last-mile delivery element of the chain. Ti analyses the varying successes of some of these.

Market size and forecasts

  • Express market growth is primarily being driven by domestic e-commerce and, increasingly, cross border and inter-regional. Ti estimates that the total global express and small parcels market grew by 7.7% in 2015, down from 8.2% in 2014.
  • Ti expects that by 2019 Asia Pacific will be the world’s largest regional parcel market, representing almost 40% of the global market.

Express provider profiles

  • Asian postal providers, such as Australia Post, China Post, Singapore Post, are all among the LSPs profiled in this report that are investing in innovative technologies.
  • According to a report from Accenture and AliResearch B2C cross-border e-commerce is expected to increase to US$1 trillion in 2020, from US$230bn in 2014. DHL, UPS and FedEx are all investing in the development of their networks to better serve this fast growing segment of the market.

Joel Ray BA MCILT

A career dedicated to strategic consultancy and corporate development in the logistics industry, with a particular expertise in distribution property, express logistics and assisting companies in developing their logistics strategies. After graduating with a degree in Business Administration Joel joined a specialist logistics consultancy firm where he spent a number of years developing its Mergers and Acquisition business, as well as leading a number of strategic consultancy projects. He relocated to Ireland in 1998 to take up the position of Strategy Manager with An Post (the Irish Post Office) where he was responsible for analysing organic and acquisition growth opportunities, advising the board on the strategic direction of the company. He joined Transport Intelligence in 2002 to head up its bespoke research and consultancy division after establishing and running an internet based warehousing exchange. As part of his role at Ti Joel has travelled extensively throughout Europe, the Middle East, the Americas, India and Asia working on a variety of client lead projects. Joel is also an experienced conference moderator and speaker, having participated in many global logistics events.

David Buckby

Having obtained a Masters in Economics David is now Ti’s resident Economist. He manages one of Ti’s core
strengths, that of quantitative analysis of a range of logistics markets, including sizing and forecasting. He has
completed market sizing studies over a number of years on markets such as freight forwarding, contract
logistics, European road freight transport, express and small parcels and e-commerce logistics. He also regularly updates Ti’s other quantitative tracking products - the Dashboard and Global Logistics Monitor.
David also provides contributions to the GSCi portal, Ti reports and consultancy projects. He authors many briefs for Ti’s Logistics Briefing service, contributes articles to external publications and is regularly cited by industry media.
His key interests are the economics of the logistics sector, emerging markets and statistical modelling.

 

New Ti report investigates how express companies are adapting to a sector dominated by e-commerce and assesses the impact that increased competition is having on companies’ strategies.

  • As customer expectations drive additional complexity into already low margin operations, is online retail really a panacea for the parcel market?
  • Ti’s market sizing and forecasting study* estimates that the global parcel market expanded by 7.7% in real terms in 2015.
  • Ti’s forecasts show the domestic and international market sizes growing in real terms at a 2015-2019 compound annual growth rate of 9.1% and 5.6% respectively.

24th October 2016, Bath UK: Ti’s latest report, Global Express and Small Parcels 2016, asserts that while global parcel volume growth remains healthy, largely thanks to consumer related e-commerce, it questions whether online retail is really the panacea it is often made out to be. Should express operators target the B2B e-commerce sector as a strategy to sustain growth going forwards?

Express markets have undergone seismic change since the advent of e-commerce. Many analysts believe that e-commerce has been the saviour of the express sector, however, customer expectations continue to drive additional complexity and cost into already low margin operations”, explains lead author Joel Ray, Head of Consulting at Ti.

Ti’s market sizing and forecasting study* estimates that the global parcel market expanded by 7.7% in real terms in 2015, with domestic and international growth at 8.4% and 5.0% respectively. Looking ahead, the overall market is projected to grow in real terms at a 2015-2019 compound annual growth rate (CAGR) of 8.4%, with the corresponding domestic and international figures at 9.1% and 5.6% respectively.

Explosive growth rates in e-commerce, allied with the high level of media attention garnered by the sector, has resulted in many other companies encroaching on the playing field. These comprise new entrants, other logistics companies, as well as existing operators from other geographies. This increase in competition poses a continued threat to traditional integrators and express companies which are already witnessing an erosion of revenues due to major customers (large volume retailers) undertaking a greater level of activity that used to be the domain of the operators – be it Click & Collect deliveries to retail outlets or pre-sorting and line-hauling to local delivery depots.

In addition, in order to compete in this fast growing ‘consumer e-commerce’ segment of the market, recent entrants are investing heavily in new delivery models, along with IT to support these, whilst at the same time targeting higher margin town and city locations. This results in the lower cost operators - posts and independent national players - often being left to handle the most difficult and unprofitable rural traffic. Low margins are clearly a concern for many.

Overall, the report’s four main chapters - Market Structure, Industry Innovations, Market Size and Forecasts and Provider Profiles - explore a number of fundamental questions that the industry faces, such as:

  • How can traditional express companies continue to fight off the onslaught of geographic, horizontal and disruptive competitive pressures?
  • Where are the real opportunities for growth? Domestic markets, cross-border or inter-regional?
  • Is B2C e-commerce the panacea for the parcels sector, or is the B2B sector likely to represent a more attractive target in the future?

*In addition to global figures, market sizes have been estimated for 78 countries and 12 regions, for the years 2008-2015, in addition to a forecast for 2019. Growth rates for each market have been estimated for the years 2009-2015, as well as a forecast in the form of a CAGR from 2015-2019. For each geographical market, domestic, international and total market sizes and growth rates have been estimated.

 

About Transport Intelligence

Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.

www.ti-insight.com

Key Contacts

Michael Clover, Business Development Manager, E: mclover@ti-insight.com

This report is perfect for

  • Global manufacturers
  • Banks and financial institutions
  • Supply chain managers and directors
  • Logistics procurement managers
  • Marketing managers
  • Knowledge managers
  • Investors
  • All C-level executives

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