B2C deliveries will be the major growth market for the European express and parcels industry in thenext few years along with international deferred shipments as customers downtrade from premium
express to slower but cheaper products, the Courier and Parcel Logistics conference in London wastold yesterday.Home deliveries will grow strongly as consumers increasingly shop on the internet instead ofin the high street, but issues surrounding “final mile“ deliveries will continue to poseoperational challenges, senior industry managers said on the event’s opening day.
David Smith, managing director of Parcelforce Worldwide, the Royal Mail parcels subsidiary,said that while overall CEP market growth was slowing, B2C was still growing strongly thanks toe-commerce. Parcelforce, which concentrates on the B2C sector, would focus more on higher-valuehome deliveries in future, while Royal Mail would handle lower-value parcels, he said.
Operational complexities are increasing, however, since there are more diverse sizes andshapes of shipments, Smith said. The “final mile” remained a challenge, and different companieswere testing different solutions. In the future, operators might start to offer “time slots” forhome deliveries, he suggested.
Ken McCall, CEO DHL Express UK and Ireland, told the conference that the European B2C marketwas forecast to grow to some €15 billion by 2012. The company’s UK B2C service DHL@Home, usinglocal couriers to make evening deliveries up to 21:00, had “unprecedented” levels of first-timedelivery success, including about 90% for some products, he commented.
Jerry Del Gaudio, UPS vice president corporate strategy, outlining how UPS had moved into “adjacent” markets and expanded its product portfolio with 30 acquisitions in the last decade, saidB2C had been the company’s fastest-growing US market segment in the last 10 years. UPS delivers 30%of its US parcels to private addresses, according to its recent 2007 sustainability report.
Speakers agreed that the B2C market would move towards segmentation between premiumdeliveries of higher-value goods and standard delivery of lower-value items. However, there waslittle customer take-up of parcel collection and drop-off points so far, they commented. “Tractionhas been slow,” said Del Gaudio, while McCall added that customers who had ordered online did notwant to go out to pick up their goods. The issue was how to deliver in “time slots” rather than usedrop-boxes, said Smith.
Addressing market trends, speakers said that the world economic slowdown and recent financialmarkets turbulence would impact on business. The express industry would see fewer shipments andmore bundling of volumes from financial customers, while customer relationships were being shakenup by the rapid changes in the financial sector, McCall said. More generally, operators needed toright-size their networks, remove excess capacity but not endanger their customer service levels,he pointed out.
Customers would put more pressure on prices and increasingly select slower but cheaperservices, Smith said. Sales and marketing staff needed to be trained to understand their customers’situation and the reasons for the switch from air to ground and ocean, Del Gaudio added.
In contrast, Osama Fatelleh, Aramex chief operating officer, stressed that the Middle Eastremained a high-growth region thanks to massive investment in areas such as aviation, the creationof the GCC economic area, special economic zones and opening of the Saudi Arabian market. Theregion was also well-positioned to become a transit hub for East-West trade, Africa and the CISregion, he said.
