Courier, Express, and Parcel Services Market Intelligence

Industry Outlook & Drivers

Global CEP Industry Outlook

• The global CEP industry was valued at approx. $261 billion in 2017 and the market is forecasted to grow at about 6 percent Y-o-Y to reach $277 billion by 2018
• The e-commerce industry is the main driving force for the forecasted period. As of 2017, revenue of the e-commerce sector stood at $2.3 trillion and is projected to grow at a CAGR of 18 percent until 2020

Drivers and Constraints for the CEP Industry

Drivers

E-commerce

•  The global e-commerce market was valued at $2.3trillion in 2017. On-time delivery plays a crucial role in e-commerce, and e-retailers depend on CEP service providers to fulfill these demands

Global Import and Export Activity

• Continued shifts in the global economy toward more services, increased production of high-value and lightweight goods and expanded trade among the member countries result in increased imports and exports

GDP 

• The CEP market is directly proportionate to GDP of a country. The GDP is an indicator of economic parameters such as manufacturing, trade and consumer spending, impacting courier industry directly

Constraints

Digitization

•  Technology and digitization have been reducing the volume of physical mail

Fuel Rate 

• Fuel price is one of the major costs incurred by service providers
• Fluctuating fuel prices impact service providers; if fuel prices go up, profit margins decreas

Service Provider Maturity

• The CEP market is highly mature in North America and Western Europe, with fierce competition among the top global suppliers (DHL, UPS and FedEx)
• In APAC and the Middle East, the CEP market is emerging due to e-commerce business and there are numerous service providers. The CEP market is highly fragmented in these regions

Supply Market Outlook 

Global/Regional Outlook

Increase in M&A and tie-ups

• Global suppliers are enhancing their presence by having tie-ups and M&A with regional players to use their expertise (on a regional level)
• FedEx acquired TNT Express in a $4.8 billion deal, assisting to expand its presence and market size in Europe
• UPS cooperates with First Flight couriers in India to increase its presence in the Indian CEP market

Value-added services

• Global suppliers have shaped their service offerings based on shippers' requirements. Services such as same-day delivery, door-to-door service, NFO* options, time-critical services and customized supply chain solutions

Tier-2/Local Supplier

• Global suppliers, collaborating with regional suppliers to cater to the domestic needs of CEP in the region(e.g. DHL and Blue Dart collaborate to cater to the international operations of BlueDart)
• Tier-2 and tier-3 suppliers entering the CEP market to bridge the demand-supply gap for e-commerce companies by handling last-mile delivery
• Many small and regional players have cost-effective supply chains, due to the advantage of using a 3PL for last-mile delivery rather than having end to end services

 Engagement trends

• Single sourcing:Shippers with high volumes of domestic and limited international shipments adopt a single-sourcing strategy in order to secure maximum discounts on rates and incentives on volume. In order to mitigate the risk of dependency, shippers can engage with another supplier as a secondary carrier
• Multiple sourcing: Shippers with significant volumes of international express transactions adopt a multiple sourcing strategy in order to secure the regional expertise of respective suppliers. In addition, the risk of supply disruption is also low, with decreased dependency on a primary carrier. However, the scope of securing discounts on high spends is reduced