European Parcel/Express Market in Transition

Five factors will shape the future of the European express parcel industry, according to a recently released report from Datamonitor. Among the factors that will reshape the industry are globalization, deregulation of the postal sector, mergers and alliances, trade growth and e-commerce.

The express industry in nine major European Union countries (Germany, France, United Kingdom, Spain, Italy, Belgium, Netherlands, Sweden and Poland) will grow at a compound annual growth rate of 4.1% to €41.2 billion by 2010, the report estimates.

The air express industry is driven by just in time business operations and expanding international trade and as a result, between 2006 and 2013, Datamonitor expects the value of the global air freight market will expand by almost 6% annually.

“Globalization supports the growth of these industries which consequently promote express services, says Pooja Khazanchi, Express analyst with Datamonitor and author of the study. “These products need faster transportation as they are either perishable or high value-low volume items; therefore they continue to dominate the growth in the global express market.”

Express carriers are now focusing on road services, he continues. For instance, TNT has started investing and developing its road networks in Europe to facilitate its express and parcel business, investing over €14 million in expanding and upgrading its facilities at the Duiven hub. DHL now relies on its road network for the delivery of its day-definite products and also to provide the targeted capacity for time-definite services.

“Road networks have become important alongside air networks as customers are attaching more importance to reliable and timely deliveries. Instead of plain vanilla faster transportation, the integrators are taking lead in developing their road express networks,” said Khazanchi.

Express operators are investing in emerging markets, but consolidation is not limited to major express operators. “2006 saw some of the national post operators such as Austrian Post, Finland Post and Swiss Post expand their networks across Europe by acquiring smaller express companies”, says Khazanchi.

Deregulation will promote competition among players mainly in the mail reserved area which was dominated by national operators until now.

Global e-commerce activity has grown rapidly, mainly as a result of the increased penetration of broadband internet. Although the business-to-business (B2B) segment dominates with majority values generated from the segment, business-to-consumer (B2C) is set to experience faster growth with the rising use of e-commerce. According to Datamonitor, B2C will become one of the key driving factors for growth in the European express and parcels delivery market.

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