For the past six years, the Pitney Bowes Parcel Shipping Index has closely tracked the parcel industry in 13 of the world’s most influential markets. Each year, the industry’s growth story continues. With just one exception (Japan), the forecasts for both volume and revenue continue to grow at least to 2025 for every country in the Index. Although largely e-commerce-driven and boosted by the explosion in online shopping in 2020, this growth is also generated by B2B shipments. People are shipping more and becoming increasingly reliant on the world’s carriers to move and deliver parcels. In response, carriers are powering up, accelerating innovation, and investing in infrastructure.
It’s important for any business that ships parcels to stay on top of these trends, particularly businesses that send or receive packages overseas. Market volumes and trends impact carrier strategy and influence the shipping costs, tariffs, and rates that you pay, as well as the services available to you. Ultimately, this affects your customers and revenue. Here are three key takeaways from the latest Pitney Bowes Parcel Shipping Index to help drive your planning for 2021 and beyond:
Parcel Shipping Volumes Will Continue to Rise For At Least The Next Five Years
The Shipping Index forecasts double-digit growth in parcel volume to 2025, with the highest rise in parcel numbers expected to be seen in 2020’s figures. The forecast points to a 22% year-over-year increase, with parcel volumes reaching a phenomenal 126 billion in 2020. In 2026 – as far ahead as the current forecasts project – parcel volume is most likely to reach 220-262 billion. That’s more than 8,000 parcels shipped every second in the world’s 13 major markets, compared with the 3,248 shipped every second in the latest Index.
E-commerce is the biggest driver behind this growth, but in a separate study, we asked 250 US enterprises about their shipping practices during the first months of the pandemic. We found that almost 50% were sending more mail and parcels than previously. We also interviewed 450 small-to-medium-sized businesses (SMBs) in the UK, the US, and China to find out how their shipping practices had changed recently. With employees often working remotely, we found that businesses turned to traditional shipping methods to communicate with remote workers: 61% of respondents in China, a quarter of businesses we spoke to in the US, and 24% in the UK had done so. Items that employees would usually collect from the office were shipped to them at home instead, such as office supplies and legal documents. As remote working practices are set to continue, the number of parcels businesses are shipping is likely to increase further.
China and Emerging Markets Continue to Exert a Major Influence on the Industry
In 2014, China’s parcel volume was positioned behind Japan’s, reaching 9.19bn compared to Japan’s 9.52bn. By the following year, China had overtaken Japan as the market with the highest parcel volume. In 2019, China’s parcel volume reached 63.5 billion, reaffirming its position as the global powerhouse of the Parcel Shipping Index, although its growth is beginning to slow. Emerging markets such as Norway are also growing: Norway’s percentage increase in parcel volume is second only to China’s, with the European country shipping 80 million parcels compared to the previous year’s 60 million — an increase of 24%. India follows in terms of growth, reaching a year-over-year increase of 19% in parcel volume, shipping 2.8 billion parcels. Forecasts anticipate these markets will generate continuing growth over the next year at least, with Brazil and Australia hot on their heels.
Carriers Continue to Generate Revenue in Highly Competitive Markets – Creating Customer Value
The Shipping Index takes a closer look at carrier movement and market share. In the US, the USPS, FedEx, and UPS account for the majority of the market, while the remainder is comprised of Amazon, DHL, regional, and local carriers. Other regions such as India have more fragmented carrier markets. One interesting takeaway from the Index is that even in the market in which parcel volume is declining – Japan – carriers are still generating profitability. Across all 13 markets in the study, carriers are finding innovative ways to expand their networks, to manage increasing capacity, and improve the customer experience.
The more we shop online, the higher our expectations for e-commerce and business shipments. These expectations are driving carriers to innovate and invest, as Unmanned Aerial Vehicles (UAV) or drones, autonomous vehicles, and AI become reality. In October 2019, UPS Flight Forward Inc. received certification from the FAA for unlimited flight to operate a drone airline for parcel delivery. Earlier in 2020, UPS partnered with Wingcopter, a Germany-based drone manufacturer, to develop vertical takeoff and landing delivery drones. Similarly, FedEx has launched its SameDay Bot, “ROXO,” an autonomous delivery robot to make last-mile and same-day deliveries, and UPS has invested in TuSimple, a US-based trucking company. UPS has been using TuSimple’s self-driven trucks to make deliveries in several cities of the US.
As parcel volumes rise, staying ahead of trends, insights, and carrier services could help your business improve customer experience and generate a competitive advantage.
Jason Dies is EVP and President, Sending Technology Solutions, Pitney Bowes. For more information on the latest Pitney Bowes Parcel Shipping Index, including a video, infographic and interactive map, visit https://www.pitneybowes.com/us/shipping-index.html.
This article originally appeared in the January/February 2021 issue of PARCEL.
