Pitney Bowes: the e-commerce industry is not immune to broader economic trends
New data from Pitney Bowes Inc. reveals that UK parcel volumes have declined for the first time in more than a decade.
This latest Parcel Shipping Index from Pitney Bowes, featuring ‘22 data from 13 major countries, also found that coming off two years of pandemic-fuelled growth, global parcel volumes increased only 1% in 22, impacted largely due to the lockdowns in China.
The UK shipped, received and returned 5.1 billion parcels in ‘22, a 5% decline in volumes from 5.4 billion parcels in ‘21, attributed to a drop of 7% in ecommerce sales. Physical stores performed markedly better than online stores, and even Amazon experienced its lowest-ever annual growth rate of 5.2% in the country. This is the first time the UK has experienced a parcel volume drop since ‘13.
Pitney Bowes forecasts UK parcel volume most likely to reach 5.6 billion by ‘28, with a 1% CAGR ‘23 – ‘28. The latest Index also shows 14 million parcels were shipped in the UK each day in ‘22 or around 162 parcels per second. Per capita parcel volume for the UK declined nominally from 80 to 76 with an average of 181 parcels shipped per household during ‘22. The UK parcel market is highly consolidated, with the top five carriers (Royal Mail, Hermes, Amazon Logistics, DHL, UPS) accounting for 71% of parcel shipments in the country. In GBP, parcel revenues declined by 2%, from 18.7 billion GBP to 18.3 billion GBP.
“A year-on-year drop in deliveries for the first time in a decade is a reminder that the ecommerce industry is not immune to broader economic trends. Customers are tightening their belts amid an ongoing cost-of-living crisis and are therefore placing fewer online orders”, stated Georges Berzgal, Chief Revenue Officer & SVP, Global Ecommerce at Pitney Bowes. “With even the major players struggling to sustain revenue in this climate, carriers must ensure they keep up to speed with evolving customer preferences, such as increasing demand for both same-day delivery and services that are environmentally sustainable or short of that Click-and-Collect. Otherwise, shoppers will have their heads turned by competitors in the market or the alternative of shopping in person.”
This year’s Index found a direct alignment between parcels per person and GDP per capita in the US, Germany, Brazil, and India. Parcels in China, Japan, and the UK exceed GDP per capita, suggesting significant share of exports and deep penetration of ecommerce. Norway, Sweden, and Australia, meanwhile, saw parcels per person lag behind GDP per capita, suggesting a fairly low penetration of ecommerce.
China parcels grew at the slowest rate in Index history, hitting 110.6 billion parcels in ‘22, marking only a 2% growth due to lockdowns and COVID outbreaks. China’s parcel volume had grown at a CAGR of 23% in ‘17- ‘22. Pre-pandemic China parcel volume forecast was 25 % CAGR ‘18-’22 and actual volume growth was lower, at 22% CAGR ‘18-’22.
Key takeaways from the latest UK Index include:
· Key Trends for UK:
o A study found[1] that the demand for same day delivery is on the rise, with 56% of online shoppers now prioritising is, compared to 33% in ‘21.
o More carriers are focusing on zero emission deliveries, with electric vehicle (EV) fleets growing in the UK.
o In January ‘23, Royal Mail deployed its 4,000th EV van from its Blackpool office as part of its goal to become net zero by ‘24 and plans to operate all delivery and collections in the area using electric vehicles.
o Investments in smart parcel lockers are expected make the UK one of the largest parcel locker networks in Europe.
o Parcel volume reached 5.1 billion in ‘22, down 5% from 5.4 billion in ‘21.
o Per capita, the UK generated 76 parcels down from 80 parcels in 2021, the second highest, behind only China at 78.
o 162 parcels were generated every second, equating to around 14 million parcels per day.
o Around 181 parcels were shipped per household in ‘22, down from 192 in ‘21.
- Parcel Revenue by Carrier:
- By revenue, all major carriers except Amazon Logistics reported decline when measured in USD.
- Royal Mail generated the highest revenue of all major carriers at $5.1 billion, a decline of 26% from ‘21.
- Amazon Logistics is the only carrier that had parcel revenue increase in ‘22, at 7% higher than in ‘21.
- Amazon Logistics generated the highest CAGR in revenue growth during ‘16-’22 with 28%, followed by Hermes (27%).
- Parcel Volume by Carrier:
- Royal Mail shipped 1.3 billion parcels, a 19% decline from 1.6 billion in ‘21; UPS’s volume declined by 15%. DHL, Hermes, Yodel had single digit increases in parcel volumes; UK Mail (DHL) increased parcel volume by 17%.
- While Amazon Logistics experienced an increase in parcel revenue, its volume declined by 5% decline in parcel volume from 0.92 billion in ‘21 to 0.87 billion in ‘22.
- Carrier Market Share:
- Over the last seven years, Amazon Logistics generated the biggest increase in market share by revenue at 9% CAGR ‘16-’22, followed by Hermes at8%) and DPD at 3.%. Royal Mail declined in revenue share by 9% CAGR ‘16-’22.
- In ‘22, market share by revenue remained roughly the same for UPS, Hermes, DPD, DHL and UK Mail (DHL), while Amazon increased from 12% share to 15% and Royal Mail lost 4 percentage points, from 27% share in ‘21 to 23% share in ’22.
- Amazon Logistics generated the biggest increase in market share by volume at 11% CAGR ‘16-’22, followed by Hermes at 5%, DHL at 2%, and DPD at2%. Royal Mail experienced a 14% decline in volume share CAGR ‘16-’22, the highest drop among carriers.
Key global findings from the latest Parcel Shipping Index include:
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- Parcel volume reached 161 billion in ‘22, up 1% from 159 billion in ‘21.
- 5102 parcels shipped per second compared to 5052 in ‘21.
- Parcel revenue in USD was $485 billion, down 1 percent from $489 billion in ‘21, impacted by strong USD and its increase in value compared to other currencies in the Index.
- Highest CAGR ‘17- ‘22 for parcel volume was generated by China at 23% followed by Brazil at 20%.
- Highest CAGR ‘17-’22 for parcel revenue was generated by China at 17% followed by the US at 13% and by Italy at 12%.
- China remains the largest parcel volume market, contributing to the slow volume growth in ‘22 due to its unprecedented low 2% parcel volume increase.
- United States remained the market with the highest carrier revenue, reaching $198 billion, an increase of 7% year-over-year.
About the Pitney Bowes Parcel Shipping Index
The Pitney Bowes Parcel Shipping Index measures parcel volume and spend for business-to-business, business-to-consumer, consumer-to-business and consumer consigned shipments with weight up to 31.5kg (70 pounds) across Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom and the United States. Population data points were sourced from Macrotrends.net. The Pitney Bowes Parcel Shipping Index spans 13 countries and represents the parcel shipping activity of 3.7 billion people.
