Freight News, Logistics

Parcels firms face upheaval

[ September 21, 2015   //   ]

The express parcels industry is coming under pressure as never before, according to a new report by transport consultants Ti. Fundamental changes in the market structure, caused by e-retailing, technological disruption and macro-economic upheaval, have created opportunities and challenges for express companies says Global Express and Small Parcels 201’.
According to the report’s authors, e-retail has led to more sophisticated delivery strategies, which better take into account the requirements of the final recipient. Home deliveries are costly and inefficient and hence express carriers have been developing more flexible solutions which allow the recipient to choose the time and location of delivery. As well as this, alternative delivery locations are being developed.
The growth, particularly strong in Asia Pacific (where the express market grew by nearly 16% in 2014) has not necessarily resulted in profitability for express players, especially those exposed to the domestic market. Even the largest carriers, such as UPS, have struggled to find a solution to deal with the surge in demand at peak times of year, including the so-called Black Friday.
In addition to this, competition is also arising from unlikely sources. Many technology companies, such as Uber and Nimbr, have become massive businesses and the possibility that one will emerge in the logistics industry should never be ruled out.
The changes in the market are not all driven by changing patterns of consumer demand. The biggest shake up will be caused by the likely acquisition of TNT, by FedEx, reducing the number of large, global express players from four to three.