The global small-parcel market grew almost 13 percent from 2016 to 2017 to $245.5bn. Based on proprietary market research, Spend Management Experts’ annual analysis expects the global market to continue double-digit growth in 2019 due to good economic conditions, business digitization efforts as well as domestic and cross-border B2C e-commerce growth.
North America and Asia-Pacific regions combined hold a commanding share of the global small-parcel market at 57 percent. Not only are these two regions entwined by cross-border trade, but carriers in each region have also built out intricate regional networks created to serve not only consumer demand but also for business. Not surprisingly, China and the U.S. are the largest countries, noting 8.0 percent and 10.0 percent year-over-year small-parcel growth, respectively.
Meanwhile, Europe’s small-parcel market is a mature one that is also one of the most competitive. Holding an estimated 27 percent share of the global small-parcel market, this region’s growth is primarily due to the growth in East Europe, Russia and Turkey.
Finally, Emerging Markets has an estimated market share of 8 percent. Despite the smaller share, this group, which includes Africa, the Middle East and South America, noted a year-over-year growth of 6.4 percent and holds much opportunity for small-parcel carriers due to a growing middle class and home to 85 percent of the world’s population. As such, small-parcel carriers are expanding capabilities into these locations to serve existing and future growth.
The 2019 global small-package growth will continue at a strong pace. Led by the growth in e-commerce, the market will benefit from both consumer and business demands. Despite some political risks, good economic conditions are likely to continue into 2019, which will drive domestic and cross-border growth.
The small package’s role in trade, whether domestic or international, is immense. According to UPS, the company moves 6.0 percent of U.S. GDP and 2.0 percent of global GDP through its system. Similar statistics are available for the two other largest global small-package carriers, FedEx and DHL, and the growth will only keep moving upward. Economic growth has been positive with record low unemployment in the U.S., happy consumers willing to open their wallets wider for purchases and businesses investing back into operations.
Consumers have been ordering goods online for several years now and we’ve watched the growth of B2C skyrocket thanks to such e-commerce providers as Amazon and Alibaba. According to Shopify, global B2C e-commerce sales were $2.3tr in 2017. In addition, cross-border e-commerce is growing in double-digits which have resulted in FedEx and UPS expanding their airplane fleet.
Thanks to enhanced technology, more business transactions are moving towards online as business models digitize. As more business transactions move towards online, opportunities within the B2B market will grow for small-parcel carriers outpacing B2C growth rates. Indeed, Shopify noted that B2B e-commerce will reach $7.7tr in 2017.
The Outlook
As more transactions move online, small-parcel carriers will not only develop new solutions to manage the increased volumes but new entrants into this market, such as Amazon, will grow their capabilities to challenge legacy providers. Shippers should benefit from increased competition from a price perspective as well as service offering.
