New market forecasts from Transport Intelligence (Ti) show that the global express & small parcels market will expand by 7.2% in 2020, largely driven by strong demand from online retail. On a near-global level, social lockdowns and the closure of many retail and leisure businesses saw consumers utilise e-commerce options for many retail categories. However, the collapse in demand in the B2B express sector through the first half of 2020 has inhibited overall growth and has particularly harmed the international market, which is expected to grow by just 1.8% over 2020.
The rapid rise in online retail during 2020 has helped to keep express market growth much more in-line with previous years than is the case in other logistics markets. This is especially true of the domestic market where growth has actually been stronger than the trend over the last decade – this is the case in North America, for example, where forecast growth of 6.2% in domestic express matches 2017 and exceeds both 2018’s and 2019’s expansions. In many regions though, it is the case that Covid-19 has reduced growth prospects.
Global Express & Small Parcels – 2020 Market Size & Growth by Region
The accelerated shift towards e-commerce due to lockdowns and restrictions on the use of usual retail stores has led to a surge in volumes for parcel service providers. It has even been strong enough to offset the decline in B2B parcels as entire industries shut down, employees were sent home and the global economy collapsed. Ti research has concluded that the global domestic express and parcels market grew by 9.8% year-on-year in real terms in H1.
The second half of the year is likely to see global growth slow somewhat. e-commerce penetration is expected to remain elevated relative to long-run trends, but year-on-year growth in e-commerce sales will not come close to the rates seen whilst the tightest lockdown orders were in force. Conversely, a bounce-back for the economy should see B2B parcels pick up again. The recovery in this higher-margin element of the market will be good news to those that have struggled to cope with the costs of B2C deliveries or those without that delivery capability. However, the results from H1 show an efficient B2C operation is an ever-more vital element of a parcel provider’s strategy.
Andy Ralls, a Quantitative Analyst at Ti said, “COVID has accelerated the shift towards e-commerce, spurring a strong increase in B2C parcel growth. However, the economic damage caused by the pandemic severely weakened the B2B segment, leaving domestic growth slightly below pre-COVID projections. Meanwhile international express has been crucial in re-starting supply chains and enabling cross-border e-commerce to flourish. This means the global express market remains one of the fastest-growing in the logistics sector.”
Source: Transport Intelligence, October 28, 2020.
Author: Transport Intelligence
Read the full analysis in Ti’s latest whitepaper, Global Express & Small Parcels Market Size & Growth 2020 – CLICK HERE to download the whitepaper for free.