Strong business activity in emerging economies has offset declines from developed nations
Los Angeles, CA (PRWEB) June 18, 2013
The Global Courier and Delivery Services industry has experienced relatively stagnant growth in the past five years. During this time, the industry's revenue is estimated to grow at an annualized rate of just 0.6% to reach $204.8 billion, largely weighed down by the global recession. Revenue collapsed in 2009 and remained weak in 2010, as the global economic downturn diminished demand for courier services. Although global business conditions have stabilized since, debt concerns in Europe and North America continue to dampen consumer and business sentiment. Keeping the industry afloat over the period has primarily been higher business activity in emerging economies and demand for time-sensitive goods. “Revenue has also been aided by the growing number of individuals with internet access,” says IBISWorld industry analyst Lauren Setar. “With more consumers using e-commerce websites, a greater number of goods need to be transported using courier and delivery services.” At the same time, however, internet use has diminished the need for some goods to be shipped, like documents that can be scanned and sent electronically. Due to these trends, revenue is expected to increase 3.5% in 2013.
Global Courier and Delivery Services industry profit margins are recovering from a low level in 2008, when fuel prices reached record highs and the global economic downturn constrained demand. In this year, the world price of crude oil skyrocketed 36.4%. “Although many major operators introduced fuel surcharges to cover higher fuel prices, the industry's smaller operators, which wield little market power, were forced to absorb the increased costs, eating into profit margins,” adds Setar. Because small companies make up the majority of the industry, industry-wide profit margins were pressured.
The industry has a moderate level of market share concentration; concentration has increased over the past five years through mergers and acquisitions. Companies must achieve economies of scale to become global players on similar levels to United Parcel Service, FedEx, DHL and TNT Express N.V. To achieve this status, firms in the industry must invest a significant amount of capital into infrastructure and vehicles to provide wider geographical coverage. However, the industry is dominated by small businesses with limited resources. The ease of entry into the industry for these small operators is another factor contributing to the moderate level of concentration. Industry market share concentration is expected to increase further over the next five years; larger companies will likely acquire others to gain market share and global presence. Financially strong companies are more likely to invest in systems, networks and logistics assets to broaden their geographical reach; have lower cost of capital; and greater ability to wait longer for investment pay-offs than competitors that may require faster returns.
Going into the next five years, demand for courier and delivery services is expected to strengthen. Demand for high-end, time-sensitive goods will rise on the back of increased consumer spending, and many manufacturers will take advantage of this by using air transportation to ensure that products reach customers on time. Furthermore, the development of global e-commerce and manufacturing trends such as just-in-time delivery, which requires materials to be shipped within multiple strict timeframes, will back revenue growth for courier and delivery service operators. For more information, visit IBISWorld’s Global Courier and Delivery Services industry report page.
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IBISWorld industry Report Key Topics
Companies in the industry primarily provide air, surface or combined express courier delivery services of parcels, documents and packages for business customers. Industry firms generally provide services between metropolitan areas or urban centers and form a network that includes courier local pick-up and delivery to serve their customers’ needs. This industry excludes services provided by the National Postal Service and commercial airlines.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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