Covid-19 to suppress Express market growth to just 4.5% in 2020

  • The global express and parcels market could contract by as much as 4.4% in 2020 if the economy fails to recover towards the end of the year
  • However, e-commerce growth has surged during lockdowns, and a permanent switch in consumer behaviour combined with an economic recovery in H2 could lead to growth of up to 4.5%
  • Ti’s scenario-based projections for express market growth in 2020 show, with suppression of the pandemic and recovery in H2, potential for growth of up to 6.3% in domestic express and 3.3% in the international express market.
  • There are gloomier prospects under a ‘severe impact’ scenario, however. A prolonged pandemic could see as much as 2.5% wiped from the domestic market with a contraction of -13.3% in international express.

Bath, UK, 26th May – Express and parcels companies have played a vital part in keeping the global economy moving over the course of the COVID-19 pandemic, clearing bottlenecks in industry, delivering vital services in healthcare and pharma transport and have given retail a lifeline in its hour of need.

However, according to new Ti research, the market will not gain from the crisis. A lack of output in industrial sectors could lead to severely depressed demand for parcel services. A failure to suppress outbreaks, particularly in the transport and warehouse sector, or the potential for a second wave of infections threatens the growth prospects for the e-commerce sector. The likelihood of reduced consumer income levels also weighs on the growth prospects for online retail sales.

In this ‘severe impact’ scenario, Ti projects that the market could stand to lose up to 4.4% of its value.

Conversely, recent growth trends in e-commerce could point towards a stronger picture for the B2C parcels market overall. Due to lockdowns, the share of e-commerce in retail has soared considerably. In the UK, the figure has reached 30.7% according to the ONS, up from just over 20% in 2019. This rapid change in consumer behaviour has been caused by necessity, but there are indications that some of these changes might be permanent. A survey from research firm Detail Online found that 80% of consumers will return to shop online for non-essential goods later in 2020.

The change in consumer behaviour could push e-commerce growth beyond long-run levels. However, it will be limited by weaker consumer incomes expected to come about due to slower economic growth, even if this is not as bad as in the ‘severe impact’ scenario. Under these conditions, the B2B sector of the parcels segment is still expected to come under immense strain, with a lack of demand from a number of key sectors. There could be an upsurge in demand in the second half of 2020, but it would still not offset the lack of B2B demand seen in the first half of the year.

Under this ‘current impact’ scenario, the market could grow by up to 4.5%. This upper limit for growth would keep express as one of the fastest-growing global logistics markets, albeit at a reduced level compared to historical rates.

Ti’s COVID-19 Impact Analysis also assesses growth from a domestic and international point of view. Domestic growth is set to sit in a range of between 6.3% and -2.5%, whilst international growth is expected to fall between -3.6% and -13.3%. The domestic segment is more shielded due to the proportion of B2C e-commerce parcels in the market. Meanwhile international trade conditions are expected to heavily deteriorate in 2020 compared to the previous year. The international express market will not be able to escape these poor conditions, although it will prove vital in clearing bottlenecks and allowing the global economy to keep moving.

Andy Ralls, Quantitative Analyst at Ti, commented: “The performance of the express market hangs in the balance. It cannot escape the weak global economic environment caused by the COVID-19 pandemic but at the same time restrictions on daily life have led to a surge in e-commerce growth. The change in consumer behaviour, if permanent, could lead to much higher express growth rates in future, but in 2020 the economic environment will force growth down, potentially into negative territory.”

Ti’s new whitepaper, Global Express & Small Parcels Market Sizing 2020 COVID-19 Impact Analysis, provides a snapshot of market growth potential and is available for download today. The paper includes global and regional projections for the impact of COVID-19 on the global air and sea forwarding markets. Ti’s Global Supply Chain intelligence (GSCi) database includes these projections, as well as projection for 23 individual countries including China, Japan, South Korea, Germany, the UK and US.

About Transport Intelligence (Ti): Ti is the world’s leading source of market intelligence for the logistics and road freight industry, providing data and analysis through its European Road Freight Transport report series, Global Supply Chain intelligence (GSCi) database and expert consultancy services.


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