Following completion of Ti’s market sizing study for the soon to be released report, Global Express and Small Parcels 2015, it is estimated that the total global express and small parcels market grew by 8.4% in 2014, largely driven by growth in e-commerce related parcel delivery.
Following completion of Ti’s market sizing study for the soon to be released report, Global Express and Small Parcels 2015, it is estimated that the total global express and small parcels market grew by 8.4% in 2014, up from 6.8% in 2013. The improvement was largely driven by continued strong growth in e-commerce related parcel deliveries and better macroeconomic fundamentals in advanced economies. Volume growth was responsible for the majority of the 8.4% overall growth figure, with price growth having a relatively small impact.
What really helped the express market post better year-on-year growth was the improvement in the economic performance of advanced economies (which the IMF defines as a group of 37 developed countries). Real GDP growth was 1.8% in 2014 compared to 1.4% in 2013. In addition, import and export volume growth for advanced economies stood at 2.5% and 2.9% respectively, both improvements on 2013 figures. However, emerging market real GDP growth was down year-on-year, from 5.0% to 4.6%.
Looking specifically at the global domestic express and small parcels market, Ti estimates that it expanded by 9.7% in 2014. The international express market, by comparison, is thought to have grown by just 4.4%. The disparity in the growth rates can primarily be explained by the domestic express market’s disproportionate exposure to e-commerce compared to international express. In addition, price movements in the international express sector are thought to have slightly depressed growth, whereas the overall impact of price movements was thought to be slightly favourable for the global domestic market in 2014.
What does the future hold for the express sector? The trajectories of the domestic and international markets are actually in different directions.
The domestic market is predicted to grow at a compound annual growth rate (CAGR) of 9.0% from 2014 to 2018 (holding prices constant), less than the 9.7% growth estimated for 2014. Macroeconomic drivers affecting domestic markets will probably stimulate faster growth, but this will be offset by e-commerce’s impact on domestic express losing some of its steam.
Conversely, the international market’s trajectory is clearly upwards, with a CAGR of 7.0% expected for 2014 to 2018 (holding prices constant), compared to just 4.4% growth in 2014. Improving trade volumes should see the international express market post superior growth rates in the coming years.
Although this forecast only estimates the impact of express volume growth, it will be interesting to keep an eye on all the other factors that impact international express revenues in the coming years. One trend that the integrators will be especially looking to halt is customers shifting from premium products to cheaper, more standard alternatives. Shorter average trade lanes will also decrease the average price per shipment, although this is not a problem for the integrators, merely a reflection of the faster growth of intra-regional trade lanes compared to other lanes. Changes to customer mix, fluctuating fuel prices and exchange rate volatility (both in terms of its direct impact on revenues and its indirect effect through distorting global trade volumes) are far more difficult or impossible to anticipate but nonetheless important considerations. The industry’s best performers will undoubtedly acknowledge and manage all of these factors successfully, in addition to satisfying the ever-present need of winning and retaining volumes.
To find out more about the upcoming report ‘Global Express & Small Parcels 2015’ or to register your interesting in purchasing, please contact Holly Francis E: [email protected]
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)