Parcel Volume in 13 Markets Up 21% in 2021, Revenue Grows Slower

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Parcel volume in 13 global markets increased 21% in 2021 to 159 billion pieces, according to an annual Pitney Bowes shipping index that tracks the activity, but revenue increased at a slightly lower rate of 17% as declines in per-piece yield in China acted as a check on that growth.

Also notably, FedEx was listed in fourth place domestically in terms of parcel market share, at 19%, based on Pitney Bowes research. The U.S. Postal Service was the market leader at 32% of domestic volume, followed by UPS at 24% and Amazon Logistics at 22%. FedEx last week reported volume softness globally in a brutal Q1 report.

FedEx unit TNT, which has faced integration challenges since the 2016 acquisition, came in third place in Brazil in terms of parcel volume, at a 5% market share (after government carrier Brazil Post and Total Express), and in France, at 8% (after national unit La Poste and Geodis). UPS had the third-largest market share in Germany, at 12%, after DHL and Hermes. Amazon was the third-largest in parcel volume in Italy, after Poste Italiane and BRT.

With ecommerce demand cooling somewhat in the face of economic uncertainty and inflation, Pitney Bowes expects flat to low-single-digit growth in parcel volume for 2022.

China, meanwhile, crossed the threshold of 100 billion parcels shipped in 2021. The staggering figure of 108 billion pieces shipped from China represents 30% growth year-over-year, second only to Sweden, which was up 33%, among markets studied. By contrast, parcel shipping in the U.S. increased just 6% in 2021 to 21.6 billion pieces.

The U.S. had the greatest parcel shipping revenue, at $188 billion, followed by China at $160 billion and Japan at $31 billion. The three nations combined represented 87% of global parcel volume in 2021.

In terms of average revenue per piece, China saw a 3% decline last year, according to Pitney Bowes, while it dropped in Japan by 5%. Pitney Bowes execs said carriers in China are willing to sacrifice revenue for volume to gain share within a fragmented market, where 65% of revenue is generated by smaller players. Also, China was challenged in 2021 by repeated lockdowns which slowed production and supply chains, increasing costs. Primary carrier Japan Post experienced a decline in revenue in 2021, driving down the per-piece figure.

In the U.S., however, the average parcel yield increased 9% to $9, while it was up 16% in Canada to $5 and up 4% in France to $5, as carriers in all three countries raised prices.

Gregg Zegras, EVP and president of global ecommerce for Pitney Bowes, said a strong U.S. dollar against other currencies means more buying power here but headwinds against cross-border sales from domestic companies.

“We’re seeing strong demand from U.S consumers for goods from Europe and the UK, but U.S. exports are softening as it’s harder for consumers outside the U.S. with their purchasing power decreased,” Zegras said. He added for those reasons, cross-border ecommerce from sellers in the UK and Europe to the U.S. is the strongest trade lane currently for Pitney Bowes.

Zegras said it will be interesting to see how mid-market retailers continue to adjust to the new reality of omnichannel as an imperative, driven by the massive pandemic-fueled digital shift. He also expects more major players to outsource their excess fulfillment and delivery capacity, as American Eagle Outfitters and Gap Inc. have done recently.

“Most of the big players are way past experimentation and have reached maturity, but we’ll watch to see how mid-market companies combat this,” he said. “I think we’ll see a lot more sharing of assets, taking advantage of large supply chains. It’s positive and a response to the changing needs of consumers. It’s also democratizing for others that can’t afford to do it on their own.”

The steady increase in global parcel shipping volume also runs straight into another issue — that of sustainability initiatives and mandates, and consumer preferences. Zegras said it’s forcing retailers to find more creative ways to address operational efficiency.

“There are for sure consumers specifically looking to shop that way, and clients are trying to be responsive to them,” he said. “They have to find ways to balance how they provide services. We’re an asset light model, so by default we have an advantage there, but still look for opportunities around solar to power buildings and offsets around clean fuel. Companies have to do their best to figure how to keep this path (of parcel growth) in a way that’s environmentally and fiscally responsible.”

Data sources for the Pitney Bowes index of include reports from eMarketer, Forrester, IDC, IBISWorld, Apex Global, The Colography Group and parcel carriers.