Monday 24th Oct 2016 - Logistics Manager

Express networks face structural change, warns analyst

Structural changes in the express industry in terms of geographic focus, distribution models and customer preferences will force the major players to reorganise their networks, according to industry analyst Datamonitor.

Erik Van Baaren, Datamonitor logistics and express senior analyst, said: “This implies shifting the geographic focus to emerging markets (such as South America and the BRIC countries), and improving their road networks to cater for customers requiring alternative transport modes. The rise of e-commerce has been another fundamental change in the distribution models used by express customers, which has prompted express firms to increase their home delivery distribution capabilities and exploit one of the few remaining growth engines of the express market.”

Datamonitor said that despite severe cost cutting programs, the integrators (DHL, TNT, FedEx and UPS) had all recorded a major drop in profits in the last quarter, largely due to lower volumes as well as customers opting for cheaper alternatives. However, it said, both DHL and UPS had gained some ground on their competitors also affected by the recession and remained cautiously optimistic.