Parcel Growth Around the Globe: How Ecommerce Sales Fueled the Parcel Market

While the freight market has dominated recent headlines due to delays, disruptions, and unprecedented capacity shortages, record-setting ecommerce sales have had the biggest—and perhaps most lasting impact—on the parcel market.

The dynamics of the parcel market and how worldwide trends impact B2B and B2C shippers are complex but there are trends today that are important for every shipper to understand.

1. Volume has exploded: Every second, more than 3,248 parcels circulate worldwide.

In 2013, 36 billion parcel shipments circulated globally, according to the Pitney Bowes Parcel Shipping Index, which measures small parcel volume and spend across 13 countries.

Fueled by the rise of online retail sales, global parcel volume has accelerated at a compound annual growth rate of 19% since then—surpassing 103 billion shipments in 2019. For perspective, 103 billion parcels translates to roughly:

  • 27 parcels shipped per person (across 13 countries surveyed)
  • 3,248 parcels shipped every second
  • 282 million parcels shipped per day

While the 2020 report has yet to be released, industry experts believe global parcel shipments amounted to 126 billion for the year.

2. The U.S. generates 37% of global parcel revenue, but ships less than 15% of the world’s parcel volume.

In 2019, China had the highest share of global ecommerce sales and shipped 84% of the total global parcel volume. The same year, the U.S. only shipped 14.7 billion parcels, yet generated $130 billion—more than a third of the total parcel revenue across 13 global markets.

E-Commerce Penetration Varies Across the Globe

That’s because it costs nearly five times as much to ship a parcel in the U.S. than in China due to the structure of the U.S. parcel market.

Unlike its truckload market—which is highly fragmented—the U.S. parcel market is dominated by three major players: UPS, FedEx, and USPS. Together, these parcel providers account for roughly 78% of the U.S. market share.

In a highly concentrated market, a small number of companies control the majority of the industry, and consumer costs are generally high—as is the case with the U.S. parcel market. Parcel markets outside the U.S. have a lower barrier to entry, making shipping costs cheaper.

3. Rising consumer expectations are driving innovative shipping technologies.

As consumer demand continues to outpace carrier capacity, expect to see an increase in technology-dependent shipping solutions.

When the pandemic first hit, nearly 50% of U.S. enterprises increased their parcel volume. To keep up with 2020 volume surges, UPS and FedEx each added more than 70,000 new employees to their respective companies.

As order volumes continued to rise, so did consumer expectations. More than half of consumers make online purchases based on whether they can secure free delivery, while 28% expect next-day delivery.

Parcel carriers are turning to new, innovative technologies to satisfy this overwhelming appetite for same-day, next-day, and free delivery services.

A handful of larger carriers are already utilizing warehouse robotics, autonomous vehicles (like the FedEx SameDay Bot), and drone delivery (such as the UPS Flight Forward™ Drone) to maximize operational efficiency.

4. The global parcel market will double in size by 2026.

Over the next six years, experts expect the parcel market to more than double in size. Early projections place the annual parcel volume above 220 billion by 2026. That’s more than 8,000 packages per second.

While ecommerce activity is the largest indicator of parcel market growth, a combination of factors inform overall ecommerce and parcel market growth—such as the prevalence of remote work, which played a key role in driving online sales in 2020.

To best anticipate parcel market growth, keep an eye on emerging ecommerce trends, such as total sales revenue and order volume. In 2020 alone, consumers worldwide spent $4.29 trillion online—an increase of 46.4% since 2018. By the end of 2021, global ecommerce revenue is expected to reach $5 trillion.

As ecommerce continues to grow, parcel shippers must prepare for capacity crunches.

As ecommerce revenue continues to rise, both shippers and carriers across the parcel industry must adapt. Already, parcel capacity is tight—some U.S. regional carriers are already completely booked through the end of this upcoming Peak Season.

In preparation for ongoing volume spikes and resulting capacity crunches, here are a few tips for U.S. shippers:

Make sure you have enough parcel carriers in your network. Now is the time to add a mix of regional and nationwide providers or trust a provider like Inxeption to secure dependable, diverse capacity on your behalf.
Ensure that your network forecasting is accurate. Lead times for freight and parcel shipping are especially high, especially as we head into Peak Season. Make sure you communicate your shipping needs to your providers well in advance of pick-up and delivery dates.
Implement time-saving technologies. Make sure you have software in place to help you manage inventory levels and order volume, automate processes, and track your shipments in real-time.

Innovative Software + Dedicated Logistics Expertise

If you have questions about how to prepare your network for capacity constraints or want to find out how Inxeption’s fully integrated digital dashboard can help you manage the full lifecycle of your shipments, we can help. You can connect with us online or give us a call at 888.852.4783 Ext. 1 to speak to one of our dedicated shipping specialists.

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