Ti’s new Global Express & Small Parcels 2021 report shows that the market has seen high growth rates in 2021, with y-o-y growth of 16.4% in the first half of 2021 and total 2021 growth projected to be 10.4% y-o-y. As growth in the second half of the year slows back to pre-pandemic levels, the express market is moving into a new phase as it adjusts to the post-pandemic new normal.
The express market’s growth throughout 2020 and 2021 has been characterised by surging B2C volumes and greater use by shippers seeking to manage and mitigate supply chain disruptions caused by the pandemic. However, the gradual re-opening of societies, worldwide supply chain challenges, and rising inflation rates affecting the prices of goods and purchasing power have led express growth to slow in the second half of 2021.
Over the forecast period the express market is set to see more moderate growth at a CAGR of 7.7% from 2020 to 2025, a growth rate more similar to the rates seen prior to the Covid-19 pandemic. However, the market is unlikely to return to pre-Covid norms in any other sense.
High levels of demand from e-commerce are expected to continue out to 2025, although the surge in growth from lockdown led demand for home delivery will ease. The B2B segment of the market is also expected to drive growth, but demand patterns are changing within this segment. The changes in the B2B express sector are largely driven by shifting inventory policies to mitigate supply chain risks, the transition from ‘just-in-time’ to ‘just-in-case’. However, another major driver of change is B2B buying habits becoming more similar to B2C. This is breaking down the distinction between B2B and B2C volumes, as B2B express shipments are increasingly comprised of more frequent consignments of smaller sizes, like their B2C counterparts. As the market continues to develop out to 2025 the distinction between B2B and B2C volumes is expected to fade further, with the exception of higher value per shipment sectors, such as aerospace or pharmaceuticals.
As well as assessing the growth and major changes likely to affect the express market in the future, the report also examines new opportunities for the sector like on-demand delivery. Ti’s experts assess the development of the on-demand sector, how addressable the volumes within it are for express providers and how profitable the market will be for the players already active within it. The report shows that market conditions are likely to become increasingly challenging for on-demand providers, as high demand from consumers in lockdowns is unlikely to be present beyond 2022.
To be economically viable as volumes stagnate or even decline, on-demand companies need to increase efficiency, delivery network density, ‘shopping basket’ value and commission. It is likely that some market consolidation will be required to ensure sufficient network and drop density. Ken Lyon, an Advisory Board Member and Technology Specialist for Ti, said: “I think if a new player enters the market, exploiting technology (e.g. Electric bikes, very smart tech that can optimise the cost base) or an existing player upgrades to the same, that may create new distributed operating models that can survive”.
Source: Transport Intelligence, 7th December 2021
Author: Transport Intelligence
To find out more about our Global Express & Small Parcels 2021 report please visit: ti-insight.com/product/global-express-small-parcels
NEW MARKET REPORT:
GLOBAL EXPRESS & SMALL PARCELS 2021
– Market sizing and 5-year ahead forecasts, split by country, international and domestic.
– Comparison of market pricing and parcel yields.
– The future of on-demand delivery, including analysis of on-demand economics, investment, consolidation, localised services and market opportunities.
– Detailed assessment of B2B express logistics, including market characteristics, major drivers, and customer segments.
– In depth express provider profiles.
– Comparative reviews of the global integrators.