Parcels revenue grew by €6.9 billion in 2018
Global postal industry revenue grew to €409.8 billion in 2018 according to the IPC Global Industry Report 2019 key findings, published today.
Volumes of parcels (weighing 2-30kg) delivered by posts grew 9.1% on average in 2018, while their
aggregate volumes have almost doubled since 2008. However, volume growth still lags behind that of the e-commerce market, which quadrupled in size over the same period, offering posts opportunities for further development.
Holger Winklbauer, CEO of IPC commented: “E-commerce remains the engine for postal industry growth. And with global e-commerce sales predicted to roughly double over the next five years, delivery firms are competing intensely to offer faster, cheaper and simpler solutions to consumers and e-retailers alike.”
Driven by growth for lightweight e-commerce packets, as well as rate increases, posts saw aggregate mail revenue grow €1.8 billion in 2018, despite accelerating volume decline. Mail volumes were down 5.9% on average in 2018, following a 5.0% average drop in 2017.
As mail volumes continue to fall, posts are seeing increasing value in diversification: close to two thirds have seen mail revenue shares fall since 2013. Non-mail services accounted for 67.5% of industry revenue in 2018, with some posts generating as little as 10% of revenue from mail. Alongside parcels, financial services were a key driver for industry growth in 2018.
In pursuit of new revenue opportunities, posts have acquired controlling stakes in almost 300 companies since 2008, with more than half of new subsidiaries operating in the parcels and logistics sectors. Moreover, just under a third of acquisitions were made in nearby or neighbouring markets, as posts continued to seek international growth, particularly in sectors that support e-commerce.
With e-commerce growth continuing apace, global integrators, regional delivery firms, e-retailers and start-ups are looking to gain a firmer foothold in the B2C delivery market. As competition for e-commerce delivery heats up, price and cost pressures persist for posts. Many have launched targeted efficiency initiatives to streamline and modernise their delivery and retail networks, but profitability continues to be squeezed. While average revenue growth remained stable in H1 2019, at 2.6%, posts’ EBIT margins dropped to 2.2% on average, down from 3.2% in H1 2018.
Winklbauer concludes: “In the light of strong competition, posts worldwide are investing to meet the needs of customers both today and tomorrow, strengthening their positions in growth markets such as e-commerce logistics, while at the same time bolstering their digital capabilities. It will be interesting to see which kind of business models the posts will keep in order to grow their position on the e-commerce markets.”