The European international courier, express and parcels (CEP) market grew solidly with a 10% volume rise and 5% revenue increase in 2016 but average yields are dropping due to the surge in lower-priced B2C parcels, according to a detailed new study by consultants A.T. Kearney.
The European international CEP market grew by 5% to revenues of €16.2 billion last year, with cross-border volumes increasing by 10% to 720 million shipments, according to A.T. Kearney’s study, which was based on a review of 13 countries and more than 500 interviews with industry experts.
International standard (deferred parcels) grew by 10% to 549 million shipments and by 5% to revenues of €9.1 billion. This represented 76% of volumes and 56% of revenues respectively. International express grew more slowly by 7% to 171 million shipments, with revenues up by 5% to €7.1 billion.
International standard outgrew express in every one of the 13 markets last year, the consultants noted. The fast growth of B2C shipments was the main factor, mostly for international standard but partly also for international express. However, the stronger growth of B2C compared to B2B shipments led to declining revenue per shipment of -5% for standard shipments and -2% for express shipments.
Looking ahead, A.T. Kearney predicted that European international CEP market volumes will grow by 8% (CAGR) to 908 million by 2019, with standard up by 9% to 702 million shipments and express up by 6% to 206 million. A revenue forecast was not made in the report.
Europe’s five largest national markets – Germany, France, UK, Italy and the Netherlands – grew by a combined 5% in revenue and 9% in volumes last year. The remaining eight smaller markets combined grew at slightly faster rates of 6% in revenue and 11% in volumes, according to the report.
The fastest-growing cross-border markets were Poland (revenues +19%, volumes +31%), Romania (revenues +8%, volumes +17%), the Netherlands (revenues +8%, volumes +15%), and the UK (revenues +8%, volumes +13%) along with the Czech Republic and Russia.
Germany (volumes +7%), France, Italy, Spain and Austria all grew by more than 5% while Sweden and Turkey showed the lowest growth rates.
However, Germany remained the largest European international CEP market with revenues of €3.7 billion in 2016, the report showed. France was second (revenues of €3.06 billion) followed by the UK (€2.6 billion), Italy (€2.2 billion) and the Netherlands (€1.5 billion).
"The European market for international courier, express and parcel services has grown significantly in 2016. 720 million shipments are sent annually, and by 2019 we expect 908 million. The recovery of the European economy and the e-commerce trend are filling the order books,” commented Ferry Salehi, a partner in the logistics and transportation division at A.T. Kearney.
On pricing trends, Jan Matuska, manager and transport expert at A.T. Kearney, explained: "More and more light packages, falling fuel prices and the trend to deliveries within Europe are pushing down revenue per single shipment."
The consultants highlighted various challenges facing the CEP industry, including last-mile logistics, cost and revenue management, and innovative services. With the new importance of online shopping, innovative concepts are becoming increasingly important for last-mile deliveries. In particular, delivery firms need to reduce costs per stop and improve the first-time delivery success rate, they pointed out.
In addition, with many customers unwilling to pay higher basic rates for services, European CEP companies will have to respond in the medium term with price measures such as surcharges for peak season periods such as Christmas, they recommended. Moreover, additional or innovative products and services are becoming a differentiating competitive factor.
"If you manage to offer the customer an uncomplicated, fast and transparent delivery experience while at the same time managing costs efficiently, then you can profit from the current (growth) trends," Salehi concluded.
