The global parcels market is growing by 7.5% a year on average, driven by trade with China and the surge of e-commerce around the world, but carriers are facing diverse challenges, according to a new report.
The worldwide market grew at an annual average of 7.5% between 2010 and 2014, the Global Parcel Delivery Market Insight Report 2015 by UK-based researchers Apex Insight found. This included growth of 8.5% last year.
While the US remains the largest market in value terms, China is witnessing staggering growth in parcel volumes and is now the world's largest market by volume, according to the report. Parcel volumes in China grew by a staggering 52% in 2014, as the country embraces e-commerce, which is growing at 35% per year.
The combined revenues of carriers covered in the report, including DHL, FedEx, TNT, UPS and several European and Asian groups, amounts to US$150bn. This figure, however, only covers 12 leading players and not the entire global market.
Market consolidation continues, mostly notably in the planned acquisition of TNT by FedEx but also through many smaller deals, often made to gain capabilities for e-commerce. Yet even after recent waves of consolidation in the global parcels market, there are still smaller players operating within most domestic and even regional markets.
However, all carriers and retailers are wrestling with last-mile delivery challenges as a result of the rise of online shopping, the authors wrote. “E-commerce growth has driven a huge growth in B2C parcel market volumes and consumers are now demanding more convenient methods of collecting their parcels as well as more efficient methods of returns.”
In addition, some customers have shifted from priority to deferred product options and this has impacted carrier profitability, they pointed out. “Despite worldwide growth from online retail, maintaining profitability remains a key challenge for parcel delivery operators. Several of the largest carriers have witnessed a shift from priority services to deferred services over the last few years, which has directly impacted margins in what remains – in most geographies – an intensely competitive market.”
