- Global express and parcels market will grow by 8.9% this year, with domestic growth projected at 8.6% and international growth at 10.0%
- The first half of 2021 is expected to be characterized by strong year-over-year B2C e-commerce growth but the second half will be slower as lockdown restrictions are lifted and bricks-and-mortar stores reopen
- The strong recovery in B2B volumes will power market growth through 2021, with the rate of expansion in B2C e-commerce softening following a bumper 2020
- Asia Pacific is projected to grow at the fastest rate in 2021, at 12.0%, and the regional market to be 28.4% larger than pre-pandemic levels
The global express and parcels market will continue to grow in 2021, powered by the rapid rise in global trade volumes and cross-border e-commerce volumes, with Asia Pacific logging the fastest growth through 2025, forecasts Transport Intelligence (Ti).
The transport and logistics consultancy in a new whitepaper projects the global express and parcels market to grow by 8.9% in real terms this year, a moderation from the 13.0% expansion in 2020.
Domestic growth is projected at 8.6% from 13.0% in 2020, while the international segment is expected to expand by 10.0% in 2021, slowing from 12.5% growth last year.
Overall, business-to-business (B2B) volumes dropped significantly last year. The segment was detrimentally impacted by the damage done to the economy by the pandemic. As factories closed during the height of the crisis, demand for express and parcel services from industrial sectors slowed drastically before recovering slowly.
However, the pandemic also led to worldwide closures of physical stores, which led to a dramatic shift towards online purchases and with it a surge in demand for business-to-consumer (B2C) parcels.
Furthermore, the closure of service-related sectors shifted household spending towards consumer goods, which further boosted the market. B2C demand expanded at a fast enough pace not just to offset the decline in B2B, but to power the market to decade-high growth rates.
The first half of 2021 is expected to be characterized by strong year-over-year B2C e-commerce growth due to favorable comparisons with the pre-pandemic and early lockdown stages of 2020. But as lockdown restrictions are lifted, shoppers are expected to return to bricks-and-mortar stores to varying degrees, which will blunt the sky-high year-over-year growth rates that were seen over much of the second half of 2020 and into 2021.
Andy Ralls, senior quantitative analyst at Ti and author of the whitepaper, said, “The strong recovery in B2B volumes will power market growth over 2021, with the rate of expansion in B2C e-commerce softening following a bumper 2020. Longer-term, B2C e-commerce is expected to drive both domestic and international growth.”
According to Ti’s new Covid Recovery Tracker (CRT) metric, which tracks growth in logistics markets following the pandemic, the global express and parcels market will be over a fifth larger in 2021, with a CRT21 of 23.1%. This is attributable to continued expansion in B2C e-commerce volumes accompanied by a strong recovery in the global economy.
Asia Pacific is projected to grow at the fastest rate in 2021, at 12.0%. Led by international growth of 13.4%, the regional market is projected to be 28.4% larger than pre-pandemic levels.
Europe’s market is expected to lose momentum as the economy reopens and B2C volumes slow. This is projected to lead to growth of 5.0%, enabling a CRT21 of 14.4%. North America is expected to see continued strong demand, due in part to strong levels of fiscal stimulus in the US. The market is projected to grow by 8.0% in 2021, enabling a CRT21 of 24.3%.
Over the next five years, prospects are bright as the global express and parcels market is forecast to grow at a real 2020-2025 compound annual growth rate (CAGR) of 7.5%. According to the CRT25, this would make the market 62.2% larger than in 2019.
B2C e-commerce will continue to be a significant growth driver for this market. Faster cross-border e-commerce growth rates than domestic will help propel the international market to a stronger CAGR (7.9%) than the domestic market (7.4%).
B2B growth is being positively influenced by the performance of the economy. Global GDP is expected to grow at a real 2020-2025 CAGR of 4.1%, providing solid foundations for future growth. Government interventions and household savings that were effectively enforced during lockdowns are enabling a strong improvement in B2B volumes.
Asia Pacific is expected to showcase rapid growth over the forecast horizon, with a real 2020-2025 CAGR of 10.8% leading to a CRT25 of 91.0%. This will be led by China, with support from the rapid development of emerging markets.
European and North American growth is projected to normalize over the forecast horizon, with CAGRs of 5.1% and 5.2% respectively. Fast but slowing domestic e-commerce growth will contribute to these more moderate forecasts, but the continued expansion of cross-border parcels will help sustain strong international growth rates.