European parcels market growth continues with FedEx and Amazon making key moves

By Frank Proud

The most exciting developments in the European parcels market in the last year have been the move by FedEx to acquire TNT, combining its global and financial strength with TNT’s European market position, and the moves by Amazon, Europe’s leading parcel shipper, into taking a more active role in deliveries. The first will firmly move FedEx into the group of leading European-wide carriers, alongside Deutsche Post DHL, La Poste / DPD, The Royal Mail / GLS and UPS, while the second is a potential threat to all carriers, in particular those for whom Amazon’s volumes have become critical to the viability of their networks.

European parcels market map

Market size and growth

The parcels market has continued to grow in most countries in spite of the uncertain recovery from recession. A key factor has been the growth of home shopping, which grew by over 15% to approach €400bn in 2014. This has acted as a spur to innovation – in promoting the development of processes to improve the delivery experience, from defined time-slots, to text messages to the further roll-out and establishment of new chains of parcel shops.

Apex Insight believes that the overall European parcels market exceeded €50 billion in 2014. Growth has been fastest in Poland – where a fast-growing economy has adopted modern logistics practices – and the UK, which has led the way in online shopping with average spend per head over €2,600 in 2014. It has been slowest in the more challenged economies of Southern Europe as those economies struggle to recover from the Eurozone crisis.

Carrier innovations

Leading carriers continue to develop new customer service innovations to inform the customer about delivery progress and alternative options. Text message and smartphone apps provide user-friendly front-ends to some complex technology: UPS launched MyChoice, DPD has Follow My Parcel and Predict and the Royal Mail offers text message notifications.

Parcel shop and locker networks have continued to grow to cope with click and collect demand. UPS has rolled out the Kiala network rapidly in the UK and Germany, DPD has announced it will set up a network in the UK and InPost has now rolled-out its lockers to 22 countries.

Future growth and consolidation

Expectations of a more positive economic outlook than in the recent past as well as continued growth in home shopping bode well for the market and are reflected in our growth forecasts: the parcels market as a whole should benefit from recovery. The UK and Poland are expected to continue to be the fastest-growing market and the outlook for Italy and Spain has improved significantly since last year.

Our model suggests that consumer deliveries are likely to account for over a third of the overall market by 2019 and potentially a majority of deliveries in some countries. Nevertheless, we believe there are risks to market growth, such as faltering of the weak economic recovery, the development of different channels for internet retail fulfilment should parcel carriers not deliver the right last-mile experience and even, for certain products, 3D printing.

We expect to see a steady increase in market consolidation as the leading operators fill remaining geographical and capability gaps in their networks. Independent players who are not part of an international partnership may find that they face increasing challenges in retaining / winning customers.

Our report

Apex Insight’s report on the European parcels market includes insights from interviews with customers, profiles of the leading players, as well as growth forecasts for the market and its key drivers. The eight main territories which it covers in depth (Germany, UK, France, Spain, Italy, Netherlands, Belgium and Poland) represent over 75% of European GDP and, our market model suggests, almost 80% of overall parcels revenues.

This report has been completely updated and significantly extended since the previous edition in early 2014. This edition has around one third more pages. Significant additions and changes include updating of market size/growth estimates and all other figures, creation of a European-wide competitor market map, separate sections on the Netherlands and Belgium to replace ‘Benelux’ chapter and more detailed internet retail and B2C parcels information by country.

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