Global express and small parcels market driven forwards by e-commerce but challenges threaten a gloomier horizon

  • The global express and small parcels market grew to a value of €306.2bn in 2018. Domestic growth of 8.8% outpaced international growth of 6.9%.
  • The mechanisms which have facilitated the boom in global cross-border e-commerce are increasingly being called into question. Access to foreign markets for low cost manufacturers and retailers may change as a result.
  • Alternative delivery networks are rapidly gaining popularity amongst consumers for the convenience they offer. Such networks have strategic implications for new ‘online-to-offline’ retail models, while their environmental benefits are unclear

October 1st, London, UK – New research from logistics and supply chain consultancy Transport Intelligence (Ti) finds that the global parcels market grew to a value of €306.2bn in 2018 as domestic market growth of 8.8% outpaced international growth of 6.9%. e-commerce continued to be a key driver in both the domestic and international markets.

As clouds gather – not least the expectation of a slowing global economy and lower international trade growth – the global express and small parcels market is expected to hold up reasonably well. Ti expects market growth to slow in 2019, with the international market slowing most significantly with a forecast expansion of 5.5%. Uncertainty in the global economic environment is also weighing down growth over the medium-term, with Ti forecasting a real 2018-2023 CAGR of 7.8%.

“The growth rates for 2018 show a steady decline from 2017, which was a bumper year for the global economy,” said Andy Ralls, Quantitative Analyst at Ti. “Into 2019, we expect the market to slow further, as macroeconomic conditions have clearly worsened. Nonetheless, there are significant bright spots for the express market, not least in e-commerce. Despite conditions softening, the unique market conditions in China means it once again stands out as a major driver of global growth.”

Cross-border Challenges

Allied to the threat of economic uncertainty in the global express and small parcels market are questions over international trading relationships. The effects of the move towards deglobalisation on the market are unclear, but more specific questions over the mechanisms which have facilitated the boom in cross-border e-commerce being raised. Recent agreements may ease some worries, but other issues remain, including those around competition the movement of counterfeit goods into Western markets.

Alternative Delivery Networks

The rapid growth in online sales volumes has forced a rethink of the B2C last mile delivery model. With home delivery expensive for retailers and parcels companies, inconvenient for shoppers and a headache for administrators and regulators concerned about congestion and pollution, many companies involved in the e-retail sector are looking for alternative delivery solutions.

Ti’s Global Express & Small Parcels 2019 report finds that the development of alternative delivery solutions has strategic implications in the trade-off between inventory management and product availability as many retailers are converging their online and offline offering into an ‘online-to-offline’ (O2O) approach to combine the benefits of open-all-hours e-retail with a physical presence, close and convenient to the customer. Moreover, while such networks should bring environmental benefits, the location of the boxes and the operating environment (rural, semi-rural, suburban, inner-city) are the critical factors in the efficiency and sustainability of alternative delivery systems.

Source: Transport Intelligence, October 1, 2019

Author: Transport Intelligence


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