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Postal sector growth slows in first half of 2017

International Post Corporation’s (IPC) Global Postal Industry Report has shown growth of 1.4% in the postal industry for the first half of 2017, a slight decrease when compared with the 2% growth recorded for the same period in 2016. The performance gap between business units also widened for the first half of 2017 compared with the previous year, with mail revenue declining by 1.3% and parcels revenue increasing by 11.4%.

In spite of the ongoing decline in mail volumes, industry revenue and profitability remain robust as posts continue to focus on growth, diversification and efficiency. Steady growth in cross-border online retail also continues to boost demand for parcel delivery services worldwide.

Holger Winklbauer, CEO of IPC, said, “Fueled by the rise in e-commerce, the parcels and express segment remains the postal industry’s key growth area. Increasing demands from online shoppers for faster, cheaper and more convenient deliveries, as well as returns, remain important challenges for the industry, as does growing competition in the delivery market. But at the same time, it offers many opportunities. Although mail remains the industry’s core revenue source, posts continue to diversify, either by investing in other business areas or by acquisitions, joint ventures or partnerships, both domestically and abroad.”

E-commerce and digitization continue to drive change
Throughout 2016, parcels and express revenue increased by 6.5% on average, against a 7.8% volume increase year-on-year. As online shoppers become more comfortable buying from retailers abroad, cross-border delivery presents a key opportunity. Today, international items represent less than one-fifth of total parcel volumes on average, but many operators report increases in cross-border deliveries and expect strong growth in the future. As posts compete directly with a diverse array of players, they are also teaming up with integrators, e-retailers and startups to further grow volumes. To strengthen their positions, posts are investing in upgrading their networks – from modernizing sorting hubs and installing parcel lockers, to further developments in IT and new technologies.

“As the mail share of industry revenue continues to decline, posts are strengthening their positions in other segments,” added Winklbauer. “Posts are increasingly investing in new and existing assets to foster future growth – from modernizing mail operations to buying innovative startups. Many posts have looked to acquisitions to gain firmer footholds in new business areas and international markets. Within the parcel delivery market, posts are leveraging their trusted brands, strong expertise and nationwide networks, and are looking to grow their share of both domestic and cross-border markets.”

The above insights provide a distillation of data and analysis from the full IPC Global Postal Industry Report 2017. Published annually and now in its ninth edition, the report covers 48 postal operators from Europe, North America, Asia Pacific and BRICS countries, as well as integrators UPS and FedEx.

December 4, 2017

Written by Daniel Symonds

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