Market structure

• Ti sees a move away from the terms B2B and B2C to ‘Industrial’ and ‘e-commerce’. There has been a level of polarisation, with some companies operating only in the ‘industrial’ segment and some only in the lower value ‘e-commerce’ segment.
• Amazon’s fulfilment strategy varies by geography and in areas with higher delivery densities, Amazon also undertakes last-mile deliveries. This is extremely dangerous for the traditional parcel companies, as they are in danger of being left with only those parcels that are less economically viable to deliver

Industry innovations

• Opportunities within the express market upon which innovative companies could capitalise on include: consolidation, mobile depots and crowdsourced delivery, as well as autonomous vehicles and in-boot deliveries.
• There are hundreds (if not thousands) of disruptive start-ups trying to penetrate the e-commerce market, as well as different segments of the last-mile delivery element of the chain. Ti analyses the varying successes of some of these.

Market size and forecasts

• Express market growth is primarily being driven by domestic e-commerce and, increasingly, cross border and inter-regional. Ti estimates that the total global express and small parcels market grew by 7.7% in 2015, down from 8.2% in 2014.
• Ti expects that by 2019 Asia Pacific will be the world’s largest regional parcel market, representing almost 40% of the global market.

Express provider profiles

• Asian postal providers, such as Australia Post, China Post, Singapore Post, are all among the LSPs profiled in this report that are investing in innovative technologies.
• According to a report from Accenture and AliResearch B2C cross-border e-commerce is expected to increase to US$1 trillion in 2020, from US$230bn in 2014. DHL, UPS and FedEx are all investing in the development of their networks to better serve this fast growing segment of the market.

Joel Ray BA MCILT

A career dedicated to strategic consultancy and corporate development in the logistics industry, with a particular expertise in distribution property, express logistics and assisting companies in developing their logistics strategies. After graduating with a degree in Business Administration Joel joined a specialist logistics consultancy firm where he spent a number of years developing its Mergers and Acquisition business, as well as leading a number of strategic consultancy projects. He relocated to Ireland in 1998 to take up the position of Strategy Manager with An Post (the Irish Post Office) where he was responsible for analysing organic and acquisition growth opportunities, advising the board on the strategic direction of the company. He joined Transport Intelligence in 2002 to head up its bespoke research and consultancy division after establishing and running an internet based warehousing exchange. As part of his role at Ti Joel has travelled extensively throughout Europe, the Middle East, the Americas, India and Asia working on a variety of client lead projects. Joel is also an experienced conference moderator and speaker, having participated in many global logistics events.

David Buckby

New Ti report investigates how express companies are adapting to a sector dominated by e-commerce and assesses the impact that increased competition is having on companies’ strategies.

• As customer expectations drive additional complexity into already low margin operations, is online retail really a panacea for the parcel market?
• Ti’s market sizing and forecasting study* estimates that the global parcel market expanded by 7.7% in real terms in 2015.
• Ti’s forecasts show the domestic and international market sizes growing in real terms at a 2015-2019 compound annual growth rate of 9.1% and 5.6% respectively.

24th October 2016, Bath UK: Ti’s latest report, Global Express and Small Parcels 2016, asserts that while global parcel volume growth remains healthy, largely thanks to consumer related e-commerce, it questions whether online retail is really the panacea it is often made out to be. Should express operators target the B2B e-commerce sector as a strategy to sustain growth going forwards?

“Express markets have undergone seismic change since the advent of e-commerce. Many analysts believe that e-commerce has been the saviour of the express sector, however, customer expectations continue to drive additional complexity and cost into already low margin operations”, explains lead author Joel Ray, Head of Consulting at Ti.

Ti’s market sizing and forecasting study* estimates that the global parcel market expanded by 7.7% in real terms in 2015, with domestic and international growth at 8.4% and 5.0% respectively. Looking ahead, the overall market is projected to grow in real terms at a 2015-2019 compound annual growth rate (CAGR) of 8.4%, with the corresponding domestic and international figures at 9.1% and 5.6% respectively.

Explosive growth rates in e-commerce, allied with the high level of media attention garnered by the sector, has resulted in many other companies encroaching on the playing field. These comprise new entrants, other logistics companies, as well as existing operators from other geographies. This increase in competition poses a continued threat to traditional integrators and express companies which are already witnessing an erosion of revenues due to major customers (large volume retailers) undertaking a greater level of activity that used to be the domain of the operators – be it Click & Collect deliveries to retail outlets or pre-sorting and line-hauling to local delivery depots.

In addition, in order to compete in this fast growing ‘consumer e-commerce’ segment of the market, recent entrants are investing heavily in new delivery models, along with IT to support these, whilst at the same time targeting higher margin town and city locations. This results in the lower cost operators - posts and independent national players - often being left to handle the most difficult and unprofitable rural traffic. Low margins are clearly a concern for many.

Overall, the report’s four main chapters - Market Structure, Industry Innovations, Market Size and Forecasts and Provider Profiles - explore a number of fundamental questions that the industry faces, such as:

• How can traditional express companies continue to fight off the onslaught of geographic, horizontal and disruptive competitive pressures?
• Where are the real opportunities for growth? Domestic markets, cross-border or inter-regional?
• Is B2C e-commerce the panacea for the parcels sector, or is the B2B sector likely to represent a more attractive target in the future?

*In addition to global figures, market sizes have been estimated for 78 countries and 12 regions, for the years 2008-2015, in addition to a forecast for 2019. Growth rates for each market have been estimated for the years 2009-2015, as well as a forecast in the form of a CAGR from 2015-2019. For each geographical market, domestic, international and total market sizes and growth rates have been estimated.

About Transport Intelligence

Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.

www.ti-insight.com

Key Contacts

Michael Clover, Business Development Manager, E: [email protected]