Global post and courier service turnover increased by a CAGR of 3% in 2009-2014. The US plays a significant role in the global post and courier business, accounting for 34% of total earnings in 2014. In comparison, developed European countries such as UK or Germany generated just 8% and 6% of total revenue in 2014, respectively. China is catching up, with a 5% share, and its growth of 15% in 2014 shows the potential of China in the global market.
Chart 1 Largest Post and Courier Industries in Terms of Value and % Growth: 2014
Source: Euromonitor International from national statistics
Post and courier services gain importance in the industry
During the 2009-2014 review period the US post and courier industry recorded a CAGR of 4% and it is expected to expand further by a CAGR of 3% in 2014-2019. However, it is being challenged by new consumer habits and has had to adapt new technologies.
The post service lost part of its key role after technologies changed communication channels. On the other hand, the opposite situation was observed in courier services. Online trade is continually gaining in importance, with the US internet retailing market size reached US$240 billion in 2014, as it expanded by a CAGR of 16% in 2009-2014. All these changes generated positive effects in this industry and managed to offset any negative influences from the post service perspective.
These changes are reflected in the US post and courier service industry structure. The courier services share grew from 52% of total turnover in 2009 to 59% in 2014, while post services contracted by seven percentage points over the same period to 41% of the total value of US$160 billion in 2014.
As a result of growing demand for parcel services, the post and courier service industry is investing more in technologies and in other computer service-related industries. New technologies and technological solutions are replacing manual work, consequently reducing the number of employees in the industry.
Moreover, the number of companies in the post and courier service industry is growing in the US. In 2014, the total number of companies in the industry reached 233,77, an increase of 6% in comparison with 2013, while the number of employees contracted by 2% in 2014. This confirms that employees are being replaced and more efficient processes are being implemented, thus this industry is becoming more capital intensive but less labour intensive.
Investment flows directed towards computer-related services to boost efficiency
Capital investments have a strong influence when analysing changes in the post and courier services industry. Compared with 2009, total capital costs grew significantly in 2014. Almost one half of the total investment flows were dedicated to computer and related services, and this amount is growing each year. Also additional funds have been dedicated to mobile phones, radio transmitters and television cameras as well as to improving or maintaining vehicles and their conditions.
Packages, letters or other items are increasingly being delivered worldwide, so the integration and globalisation of the post and courier service is being relocated from the local to the world arena. Due to fast-growing e-commerce and globalisation, these trends are expected to be even more marked in the future. Investments into new technologies are expected to accelerate, helping to sustain stable profit margins, reduce operational costs and withstand international competition as a result.
Competition in post and courier service industry intensifies
The US post and courier industry competitive environment is becoming more intense. The government-owned player United States Postal Service has maintained its leading position in the industry, accounting for 44% of total revenue in 2014, but this share is decreasing year on year. Other well-known major players, such as United Parcel Service Inc and FedEx Corp, increased their importance during the 2009-2014 period, generating 50% of turnover between them in 2014.
As the industry is searching for ways to become more efficient, the main market players turned their attention to reviewing processes and, if necessary, changing or replacing them to introduce more value-added or more efficient activities. Since these improvements related to both government and non-government players, the situation is not expected to change to any great degree.
United States Postal Service is likely to remain the main player in the industry as the company is making efforts to boost efficiency and also benefits from the wide range of services provided. Nevertheless, the growing courier service sector will offer new opportunities for such companies as United Parcel Service Inc and FedEx Corp, thus more competition and more mergers are to be expected in the courier service industry.
Chart 2 % Share of the US Post and Courier Service Sectors in Terms of Turnover: 2014 and 2019
Source: Euromonitor International from national statistics