International, B2C Volumes Seen Driving Growth of Europe's Express, Parcels Business

B2B shipments still dominate, but consumer shipments catching up; "grey" zone blurring distinctions between express and parcel services

London — January 18, 2007 — International and business-to-consumer (B2C) parcels delivery volumes will be the fastest growth sectors of Europe's parcels and delivery market over the coming five years, reveals a new report by independent market analyst Datamonitor.

The report, "European Express Market Map," predicts Europe's parcels delivery services will be a $53.1 billion business by 2010, a compound annual growth rate (CAGR) of almost 4 percent on 2005's value.

According to Datamonitor, increasing trade within the European Union and internationally, particularly from China and India, and growth in e-commerce activity (expansion of mail order services and Internet shopping) will be the key factors behind this growth. The report also notes an increasing "grey" zone between express and parcel services as traditional parcel services become more express in nature.

Datamonitor's report covers eight major European markets — France, Germany, Italy, Spain, Sweden, Belgium, the Netherlands and the United Kingdom — and the largest Eastern European market, Poland.

International Business an Increasing Factor

Datamonitor expects international volumes and values, particularly intra-E.U., to exceed domestic volume and value growth in most countries. Non-E.U. volumes are also expected to exhibit higher growth rates, although from a lower base.

"The growth in international services is primarily due to the trend to centralize operations (e.g. warehousing) to a single country and outsource manufacturing to Eastern Europe and to China, which is having a positive impact on the proportion of outbound parcel volumes in Western Europe," said Chris Morgan, Datamonitor express analyst and author of the study. "There is also an increasing demand from business customers for a 'pan-European' solution, which is poised to increase the number of package volumes delivered within the E.U. region. In addition, the eastward expansion of the E.U. is also having a positive impact on intra-E.U. volumes and promises greater demand for express and parcel services in the coming years."

Belgium and the Netherlands remain the most international markets, with Sweden also having a relative large share of non-domestic volumes. Spain and France are the least international parcel markets.

B2C Market to See Faster Growth

Datamonitor's "European Express Market Map" report also provides European parcel volumes and values segmented by the type of recipient. Within this sector, the business-to-business (B2B) segment dominates, accounting for the vast majority of volumes in each country. Italy, Spain and Belgium have the biggest share of B2B volumes.

However, the business to consumer (B2C) market is set to experience faster growth as mail order services and Internet shopping expand, and this will become one of the key driving factors for growth in the European express and parcels delivery market in the coming years. Currently, Germany has the biggest proportion of B2C in the E.U., as 30 percent of total market value and 42 percent of total market volume stem from B2C deliveries.

Parcel Services Growing

In terms of overall services, parcel services account for a larger share of volumes than express services in the majority of European countries, reflecting the dominance of the national postal operators and their core parcel business.

Differences across countries exist though, with Germany and the Netherlands accounting for the highest proportion of parcel volumes in the European region, while Belgium has the lowest proportion.

Overall, parcel services are set to continue growing, albeit with some differences in each country, primarily due to a higher demand for cheaper "tailor-made" services (with traditionally express added-value features).

"Grey" Zone between Express and Parcel

Business customers in particular are increasingly seeking parcel suppliers that can meet demands for delivery precision (time-definite, door-to-door shipments) at affordable prices. This is creating a "grey" zone between express and parcel services in the region, as traditional parcel services become more express in nature.

Consequently, "what were traditionally seen as premium services in the parcels and express industry are now becoming increasingly standardized. As a result, companies will have to increase their service portfolio in order to maintain their customer base and take advantage of the significant growth that the industry is set to experience in the coming years," concludes Morgan.