According to Ti, the global parcels market grew by 8.5%* in 2018, with domestic growth outpacing international growth by 1.9 percentage points. This represents a slowdown from 2017, a year characterised by a buoyant global economy with strong global trade growth.
The IMF’s World Economic Outlook for April 2019 shows that global GDP growth slowed from 3.8% in 2017 to 3.6% in 2018. It is projected to slow further to 3.3% in 2019. International trade conditions will follow the same pattern. These slowing conditions are already hitting provider revenues. In financial results released in early 2019, FedEx CFO and EVP Alan Graf, claimed that, “Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue.”
In Ti’s analysis, the Asia Pacific market regularly stands out as the fastest-growing express and parcels market. Although market growth is slowing, in 2018, it still expanded by 11.7% in real terms and in 2019 is expected grow by 11.6%. China accounts for a significant proportion of the Asia Pacific market and is leading the market with very strong domestic growth.
The North American parcels market also slowed but its 2018 growth rate was still the second fastest when compared against other regions. The US economy grew in 2018 by its highest pace since 2005, according to the IMF. This was a key enabler of robust B2B volume growth in the year. Domestic B2C e-commerce is still growing much faster though.
As mentioned, FedEx has seen disappointing recent financial results. DHL and UPS have also found it difficult to achieve profitable growth and they have had to make vast operational changes in some cases to rectify this. DHL has re-structured and divided its Post-eCommerce-Parcels (PeP) business into ‘Post & Paket Deutschland’ focussed on Germany and ‘DHL eCommerce Solutions’ composed of DHL Parcel Europe and DHL eCommerce. UPS announced a new transformation strategy in 2018 which includes focussing on high-growth international markets, profitable expansion from B2B and B2C e-commerce in the US, further penetration of healthcare and life sciences, and enhancing value for SMEs.
Globally, although the integrators have made significant changes, there are fast-growing sub-sectors of the market which provide strong opportunities, not least domestic e-commerce, which is expanding at a rapid rate. This is highlighted by the revenue growth of the likes of Amazon, Alibaba and JD.com. e-commerce is still a relatively new sector and online retail sales as a proportion of total retail sales (online retail penetration) are consistently increasing in virtually all markets year-on-year. On top of solid economic growth, this will continue to push the expansion of express and parcels over the next five years.
*All growth rates mentioned are in real terms (holding prices and exchange rates constant at 2018 levels) unless stated otherwise.
Source: Transport Intelligence, June 11, 2019
Author: Sergio Korchoff
Ti has released market sizing data for the global express and parcels, freight forwarding, contract logistics, e-commerce and European road freight markets, with market sizes and growth rates for 2018, projections for 2019 and 5-year ahead forecasts. To find out more, click here, or contact Ti’s Head of Commercial Development, Michael Clover via email: [email protected] or through calling +44 (0) 1666 519907.
