The global courier, express, and parcel (CEP) market is expected to witness a CAGR of 10% during the forecast period. The pandemic depressed manufacturing activity and goods demand as well as affected cargo capacity. As a result, industry-wide cargo ton-kilometers (CTKs) contracted by 27.7% Y-o-Y in April 2020. With the decline of passenger flights in most regions of the world, industry-wide available cargo ton-kilometers (ACTKs) dropped an even 42% year-on-year in April 2020. However, the COVID-19 pandemic also resulted in a surge in demand for e-commerce, driving the performance of several package delivery services providers such as FedEx Corp. FedEx recorded a 234.7% growth in its operating profit, which amounted to USD 1.59 billion in the fiscal year ending Q1 2021 (August 31, 2020) when compared with the USD 475 million in the previous quarter.
The rise in e-commerce had a significant impact on the massive parcel shipping volumes expected in 2020. The package volume in the United States increased by 37% year on year, hitting 20 billion in 2020, up from 15 billion in 2019. The CEP industry is posting impressive growth in the developing countries, driven by the growth in international trade, rising internet and smartphone penetration boosting e-commerce sales, growing middle-class population, disposable incomes, and improved standards of living. Besides e-commerce, the emerging trends of omnichannel retailing in certain countries and growth in trade driven by economic growth are also some of the drivers of the CEP industry. Major economies like India, China, the United States, and Germany, among others are expected to observe higher demand for CEP services with the COVID-19 pandemic changing consumer buying habits. Countries that are developing are also observing growth in the CEP industry as the internet penetration and smartphone penetration increase. Global supply chains have allowed developing countries to improve their cross-border trade and, with it, the increase in courier and express deliveries.
The market observed growing activity from new and emerging players. The number of startups that receive funding is increasing. Courier companies are being forced to rethink their traditional parcel delivery system, driven by the demands of the digitally-connected consumer who wants similar speeds and visibility for a lot less money, plus a healthy sprinkling of more convenience, more control, and a lot more choice. Technology plays an important role in the CEP industry with the growing e-commerce industry. Autonomous vehicles, Automated Parcel Lockers, and Drone Delivery have become major technologies emerging in the market.
Key Market Trends
Cross-border E-commerce is Stimulating the Growth of the international CEP Market
The growing e-commerce sector, along with the growing cross-border trade, is one of the key factors driving the growth of the CEP market. The development of cross-border trade channels, especially in emerging nations, has enhanced the adoption of international trade and B2C shipments. Furthermore, the increasing consumer preference for shopping online through various e-commerce portals is also providing a boost to the market growth. E-commerce stores partner with courier service providers to deliver their products across domestic and international locations. Technological advancements, including the utilization of digital technologies with crowd-sourced delivery models, are also creating a positive outlook for the market. These technologies aid the service providers in increasing their overall operational efficiency and meeting the requirements of the customers effectively. Other factors, including rapid urbanization, rising consumer expenditure capacities, and significant growth in the manufacturing sector, are projected to drive the growth of the market during the forecast period.
Automated package and freight shipping solutions are available to improve efficiency for the entire shipping process of retail vendors. Moreover, with more regional and trade deals being negotiated between governments and trading blocs, it has become more attractive for SMEs to expand into new markets. The rapid growth of cross-border e-commerce is attributed to the rise of a young, urban population that is heavily reliant on technology. According to industry forecasts, the value of cross-border e-commerce is expected to reach USD 627 billion by 2022, accounting for 20% of all e-commerce. One of the greatest cross-border e-commerce markets, India and Mexico were in the top five countries in the world. With 50 million e-buyers, India is in third place (the high-growth region of Southeast Asia has been triggered by increased logistics and broadband infrastructure), and Mexico is in fifth place with 40 million e-buyers.
Asia-Pacific is Driving the Growth in the Market
Asia-Pacific is the largest regional market by value, accounting for around 41% of the global market. North America and Europe together represent a little over 50% of the market. The demand for CEP services in the Asia-Pacific region is expected to witness high growth during the forecast period, owing to high population growth, rising disposable incomes and standards of living, and growth in international trade.
As the governments are focusing on developing the manufacturing sectors in the countries and the global companies are setting up their manufacturing bases in the region, the countries’ international trade is rising and is expected to rise further in the future. The retail sector in the region is also growing rapidly.
The global courier service industry is projected to be driven by the revival of the manufacturing sector and expected economic expansion. Asian countries, such as China, Taiwan, South Korea, and Thailand, are witnessing increased penetration of electronic devices. This, coupled with the rise in availability of multiple online payment methods, the changing lifestyles due to urbanization, and the growth in electronic goods, automobiles, and food and beverage shipments, will benefit the courier, express, and parcel industry.
The Southeast Asian region is one of the emerging hotspots globally, attracting investments from across the world. E-commerce in the region is also expected to bolster in the next few years. The rise in contract manufacturing of FMCGs in emerging markets may significantly influence courier, express, and parcel service growth over the next few years.
With a large number of national postal operators, global integrators, and other smaller, privately-owned CEP companies, the market is fragmented with intense competition. As the demand for CEP services is growing rapidly in developing countries, the companies are becoming more competitive to capture the huge opportunity. International players are making strategic investments to establish a regional logistics network, such as opening new distribution centers and smart warehouses.
Local companies are facing high competition from multinational companies that have a comparatively well-developed infrastructure. As a number of start-ups are entering the market to leverage digital technologies, there is a trend of large companies acquiring these start-ups to gain a significant footprint in the market.
DHL, FedEx, and UPS are continuing to expand their businesses across the world to capture the market in untapped areas.
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