Eastern Europe's express and delivery industry poised for double-digit growth

Express and delivery markets across the 10 new EU countries are poised for double-digit growth rates over the coming five years, spearheaded by central and eastern Europe. Early entry into these countries is paramount; the four integrators already have a presence in the region, and other pan-European players are ready to move in. Datamonitor express analyst Emilio Pedrinaci reports…

The increasing elimination of export duties and trade barriers is creating a Europe which is made of – and perceived as – economic regions as opposed to individual countries. As such, western European companies are pouring large sums into the construction of manufacturing plants in central and eastern Europe.

For European express and parcels delivery providers there is an opportunity to benefit from growing parcel volumes in the region. According to Datamonitor, the express delivery market in this region will be a E2.7 billion business by 2010. In addition, the favorable costs and skilled readily-available workforce certainly make the new 10 EU states ripe for the picking.

Borders between and among the EU 15 and the 10 new members have been effectively eliminated. This combined with central and eastern Europe's large pool of skilled, well educated and less costly workforce and the fact that accession states labor costs will remain below those in traditional EU member states, offers an enticing opportunity for pan-European express and parcels delivery firms to establish low cost operations in the region.

Poland spearheading eastern European express and parcels growth

Datamonitor's analysis of the central and eastern European region reveals that Poland represents the largest share of the eastern European express and parcels market in value terms. As the biggest economy in eastern Europe, it is also the most developed and consolidated parcels market in the region. The Czech Republic and Hungary are the second and third largest markets, respectively.

The major players in Poland's express and parcels market control nearly 80% of the market. With an estimated 31% share, DHL Express Polska has the largest presence. The second largest player in Poland is Stolica, although still quite a long way behind DHL. However, the company was acquired by UPS at the beginning of 2005 and the new company will compete with DHL in most market segments. The estimated market share of the new UPS/Stolica business would be 18.6%.

Major players moving towards standard global product offerings

As with most industries, the western European express market is consolidating. This trend, stimulated by the major European players and UPS, has profoundly affected the structure of the industry.

Following the internationalization of Europe, all major players are seemingly moving towards standard global product offerings with minor regional differences. Most firms in the parcels delivery market are moving towards express products with faster delivery times and other complex value-added features. In addition, express or faster delivery times are spreading to heavier volumes, and the weight based segmentation between services is becoming increasingly blurred.

The elimination of export duties and trade barriers, as well as the ensuing liberalization of markets in Europe, has made international trading between member states easier. This is reflected by the proportion of international services in the European express and parcels market, which is growing at a much faster pace than domestic services.

However, players need to secure strategic partnerships and enlarge their geographical coverage, otherwise they stand no chance of competing with the integrators and the larger pan-European postal houses, some of which have already established a presence.

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