Aviation article(s)
October 3, 2017

Logistics systems are being flooded by a torrent of parcels that keep increasing at a frantic pace. Over the last two years the global volume has grown by almost half, and double-digit increases are in store every year through 2021, according to technology provider Pitney Bowes.


At the end of August, the company published its Parcel Shipping Index for the second time, which tracks parcel volume and spend in 13 major markets around the world, including China, Japan, Australia, India, the US, Canada, Brazil and six European countries. It shows a rise of 48% in global parcel volume from the level recorded at the end of 2014.


China, the largest market in terms of parcel volume, has set a blistering pace, showing a growth of 52% last year. India saw volumes climb 22%.


The US, which led the roster in terms of spend, registered an increase of 8.2% in volume in 2016. Germany, Europe’s leading market both in terms of volume and spend, had a rise in volume of 6.7% last year, while the number of parcels in the UK was up 12%.


Pitney Bowes analysts see no slowdown in the global momentum in the near term. They project growth between 17% and 28% a year between 2017 and 2021.


“The continued rise of e-commerce globally is keeping the parcel shipping market strong through 2021 as consumers are increasingly looking to on-line shopping for convenience, price and availability of products from around the world,” said Lila Snyder, the company’s executive vice-president and president of global e-commerce.


“As consumer expectations continue to rise, shipping technology and service providers will need to help retailers and marketplaces meet those demands,” she added.


This is bound to present challenges to those providers. The Parcel Shipping Index shows that revenue growth has lagged shipment growth, reflecting the fierce pressure on pricing and consumers’ widespread expectation of free delivery – even though analysts have routinely pointed out that there is no such thing as free delivery.


One forwarder remarked that setting up the infrastructure for parcel shipping is a costly proposition and that margins are tight.


Pitney Bowes’ analysts anticipate further innovation in the parcel logistics arena, above all in the final mile, which remains the biggest challenge. They predict the emergence of new delivery models like crowd-shipping, on-demand delivery services, evening and weekend delivery and drones.


The company itself deepened its involvement in the parcel shipping market in early September with the acquisition of Newgistics, a US-based provider of parcel delivery, returns, fulfillment and e-commerce solutions, for US$475 million. The firm works closely with the US Postal Service and handles over 50% of the postal agency’s Parcel Returns Select programme.


“Newgistics fits uniquely at the intersection of our parcel growth strategies and will accelerate the overall transformation of Pitney Bowes,” said Marc Lautenbach, president and CEO of Pitney Bowes. “This acquisition – combined with recent innovations in mailing and shipping for SMB clients, organic growth of our global e-commerce business, and expansion of our presort and parcel services network – definitively anchors Pitney Bowes in a growing space and vastly increases the value we can deliver for our clients.”


The strong and rapid growth of e-commerce has also attracted freight forwarders, although postal agencies and the integrated express carriers are seen to have a dominant position in this segment. The WCA forwarder alliance, which claims to be the world’s largest network of independent agents, with more than 5,300 member offices in 190 countries, launched an e-commerce network late last for members. The scheme is backed by a certification programme which includes financial protection and special insurance products. The certification covers the participating company as well as its e-commerce solutions and capabilities and the technology at its disposal.


By 2020 it is projected that freight forwarding will be 20 percent e-commerce driven,” said WCA founder and chairman David Yokeum.


In some circles, however, the rise of parcel volumes is causing alarm. Airport facilities have traditionally been designed on the basis of tonnage throughput. The volumetric nature of this traffic has handlers and developers scratching their heads how the infrastructure can cope with the demands on space, rising concerns about congestion and bottlenecks.



By Ian Putzger

Air Freight Correspondent | Toronto

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