London — October 31, 2007 — Europe's parcel and express delivery business is expected to continue to grow at a higher rate than in previous years due to an increase in business-to-consumer (B2C) traffic and strong international demand, according to new research by market analyst Datamonitor.
However, the research, "European Express Market Map 2008," which covers 12 major European markets, says that although currently exhibiting a higher growth rate than parcel services, express services are going to have to demonstrate extra value as customer demand is shifting to using cheaper yet reliable parcel services in key growth areas of international and business-to-consumer (B2C) delivery services.
"Over the next five years, the B2C and C2C (consumer-to-consumer) sectors will experience faster growth than B2B (business-to-business), due to increased e-commerce activity, especially in less mature home delivery markets such as Italy and Spain," said Erik van Baaren, Datamonitor express analyst and author of the study.
International services are also growing at a higher rate primarily due to the enlargement of the European Union and the trend to centralize operations to fewer countries and outsource manufacturing to low-cost countries, according to van Baaren.
50 Billion Euros by 2012
The parcel delivery segment includes non-day definite and non-time definite products, such as "deferred," "standard" and/or postal parcel deliveries. The express delivery service category includes traditionally high-value services such as same day delivery (or urgent), next day delivery and time definite products.
Datamonitor expects the European express and parcels delivery market to grow by a 4 percent compound annual growth rate on 2006 levels to reach a total value of nearly 50 billion euros ($72.2) by 2012. The report analyzes the express and parcels market by destination and shows that although the "domestic" segment still accounts for the majority of value and volume, international volumes are showing the highest growth rate.
"The logistical trend to centralize warehousing and distribution facilities and relocation of manufacturing bases to Eastern Europe is driving the growth in international volumes," said van Baaren. "This has led to companies employing lower stock levels and having to rely on longer and leaner supply chains to serve their customers and to require fast, reliable delivery services."
Over the last few years this trend has led to increased use of express services — and especially time-definite — as companies apply just-in-time principles to the organization of their supply chains. The success of in-night (late pick-up and early delivery) and timed slots (pre-9 a.m., pre-noon, etc.) continues to infringe upon the traditional same day courier service, which is now having to reinvent itself in niche offerings such as emergency shipments and specialist supply chain services.
Rise in Quality for Parcel
The rise in quality of standard, non-premium "parcel" services in a number of European countries and the continued expansion of postal operators' international networks are offering customers an alternative to the more expensive "express" services, Datamonitor reports.
"As the difference in quality between the two sectors becomes smaller and previous value-added features such as track and trace are becoming standard 'extras,' the 'express' operators have to find ways of demonstrating the extra value they can offer as customers reevaluate the costs and benefits of both options," van Baaren said.
Another route that express companies can take would be widening their product portfolio by offering additional delivery options that lie between pure economy and express. This could lead to an increasingly level playing field within parcels and express as the two service options converge. The tradeoff of cost versus speed and delivery precision will become more pertinent if countries' economic growth rates start to fall.
B2C Parcel, Delivery See Highest Growth
The report also analyses the B2B and B2C/C2C components in each of the 12 European markets covered. Generally in Europe, although B2B still dominates, as e-commerce trade levels rise, the B2C segment is showing the highest growth and is set to change the less mature home delivery markets significantly over the next five years.
There are currently vast differences between countries, with the U.K., Germany and France having the highest proportion of B2C traffic, whereas Italy and most Scandinavian countries have among the lowest levels in Europe. The sector is still generally dominated by incumbent national postal operators but is increasingly attracting traditional B2B operators as they recognize the potential.
"New entrants will have to demonstrate added value through convenience and/or other advantages to gain a share in this fast-growing segment of the market," van Baaren said. "IT applications — as introduced by some major carriers — appear to offer a solution as they appeal to both corporate customers that demand integration into their IT infrastructure and private users who can easily use the companies' express services online."
Datamonitor's "European Express Market Map" provides a breakdown of the 12 major European markets: Germany, U.K., France, Spain, Italy, the Netherlands, Sweden, Belgium, Denmark, Norway and Finland, as well as the key Eastern European market of Poland.
However, the research, "European Express Market Map 2008," which covers 12 major European markets, says that although currently exhibiting a higher growth rate than parcel services, express services are going to have to demonstrate extra value as customer demand is shifting to using cheaper yet reliable parcel services in key growth areas of international and business-to-consumer (B2C) delivery services.
"Over the next five years, the B2C and C2C (consumer-to-consumer) sectors will experience faster growth than B2B (business-to-business), due to increased e-commerce activity, especially in less mature home delivery markets such as Italy and Spain," said Erik van Baaren, Datamonitor express analyst and author of the study.
International services are also growing at a higher rate primarily due to the enlargement of the European Union and the trend to centralize operations to fewer countries and outsource manufacturing to low-cost countries, according to van Baaren.
50 Billion Euros by 2012
The parcel delivery segment includes non-day definite and non-time definite products, such as "deferred," "standard" and/or postal parcel deliveries. The express delivery service category includes traditionally high-value services such as same day delivery (or urgent), next day delivery and time definite products.
Datamonitor expects the European express and parcels delivery market to grow by a 4 percent compound annual growth rate on 2006 levels to reach a total value of nearly 50 billion euros ($72.2) by 2012. The report analyzes the express and parcels market by destination and shows that although the "domestic" segment still accounts for the majority of value and volume, international volumes are showing the highest growth rate.
"The logistical trend to centralize warehousing and distribution facilities and relocation of manufacturing bases to Eastern Europe is driving the growth in international volumes," said van Baaren. "This has led to companies employing lower stock levels and having to rely on longer and leaner supply chains to serve their customers and to require fast, reliable delivery services."
Over the last few years this trend has led to increased use of express services — and especially time-definite — as companies apply just-in-time principles to the organization of their supply chains. The success of in-night (late pick-up and early delivery) and timed slots (pre-9 a.m., pre-noon, etc.) continues to infringe upon the traditional same day courier service, which is now having to reinvent itself in niche offerings such as emergency shipments and specialist supply chain services.
Rise in Quality for Parcel
The rise in quality of standard, non-premium "parcel" services in a number of European countries and the continued expansion of postal operators' international networks are offering customers an alternative to the more expensive "express" services, Datamonitor reports.
"As the difference in quality between the two sectors becomes smaller and previous value-added features such as track and trace are becoming standard 'extras,' the 'express' operators have to find ways of demonstrating the extra value they can offer as customers reevaluate the costs and benefits of both options," van Baaren said.
Another route that express companies can take would be widening their product portfolio by offering additional delivery options that lie between pure economy and express. This could lead to an increasingly level playing field within parcels and express as the two service options converge. The tradeoff of cost versus speed and delivery precision will become more pertinent if countries' economic growth rates start to fall.
B2C Parcel, Delivery See Highest Growth
The report also analyses the B2B and B2C/C2C components in each of the 12 European markets covered. Generally in Europe, although B2B still dominates, as e-commerce trade levels rise, the B2C segment is showing the highest growth and is set to change the less mature home delivery markets significantly over the next five years.
There are currently vast differences between countries, with the U.K., Germany and France having the highest proportion of B2C traffic, whereas Italy and most Scandinavian countries have among the lowest levels in Europe. The sector is still generally dominated by incumbent national postal operators but is increasingly attracting traditional B2B operators as they recognize the potential.
"New entrants will have to demonstrate added value through convenience and/or other advantages to gain a share in this fast-growing segment of the market," van Baaren said. "IT applications — as introduced by some major carriers — appear to offer a solution as they appeal to both corporate customers that demand integration into their IT infrastructure and private users who can easily use the companies' express services online."
Datamonitor's "European Express Market Map" provides a breakdown of the 12 major European markets: Germany, U.K., France, Spain, Italy, the Netherlands, Sweden, Belgium, Denmark, Norway and Finland, as well as the key Eastern European market of Poland.
