Even if the growth rates - like those in the 1990s - are no longer double digits, the CEP sector is continuing to grow. This rise is related to the positive development of Internet retailing and the reduction of warehouse space as a result of supply-chain optimization and the expansion of just-in-time production. In addition, the demand for fast CEP services is rising, driven by globalization and the integration of markets. But, CEP services are also affected by macroeconomic factors. An economic slowdown could apply the brakes to the CEP sector.
CEP services for private customers
For most CEP (courier, express and parcel) service providers, the share of B2B (Business to Business)customers is about 90 percent at the moment. Placing the focus on private customers creates major opportunities as well as new challenges for CEP service providers. For instance, service to private customers generally involves delivering one package per stop. Furthermore, routes that previously concentrated on commercial areas have to be expanded to other places like residential neighborhoods. Another factor is that private customers are more difficult to reach - this means that, under certain circumstances, an attempted delivery must be made several times, resulting in higher costs. For this reason, innovative solutions like the national introduction of parcel stations are required. Such options allow round-the-clock pick-up.
With the expansion of e-commerce, business with private customers is expected to continue growing. Current estimates show that every fourth parcel results from Internet retailing. Returns management is also becoming increasingly important as a result of the consumer-goods service provided to private customers. For clothing, the return rate is about 40 percent.
Globalization as a challenge
The CEP (courier, express and parcel) sector is being shaped by powerful and rapid change. One major job faced by the sector’s companies is creating extensive networks and carrying out international expansion. The need for internationalization is arising because shipment volume is growing faster in European countries than it is domestically.
The CEP (courier, express and parcel) service providers are responding to this need through steps such as creation of their own air fleets that provide regular service to other countries and continents. At the same time, they are trying to provide a high level of reliability, quality and predictability in as many countries as possible. This requires the use of instruments for shipment monitoring.
The creation of international networks has also triggered a wave of consolidation in the express and parcel market. Acquisitions made as part of this trend have resulted in integration problems at some providers in recent years. Not all of these issues have been resolved yet.
The trend of globalization and faster shipments faces a challenge created by growing security inspections that can slow the speed-conscious CEP (courier, express and parcel) sector. Just about every parcel bound for the United States is x-rayed before it may be transported any farther - certain parcels must even be stored for 24 hours. To retain their time edge over providers of traditional services, CEP companies have developed a close working relationship with customs officials. For instance, important processing information is sent to customs officials by system integrators before shipments arrive in the country of destination.
Competitive edges created by additional services
Individual CEP (courier, express and parcel) companies try to develop competitive edges by creating differentiation, focusing on the customer and offering new value-added services. One part of this approach is tapping new markets and conquering market niches. This results in increased customer service and individualized production for customers. Innovations like package shops, parcel stations and delivery on Saturdays are used in an attempt to increasingly address customers’ needs.
Business customers are primarily interested in services provided from a single source. They frequently want integrated, all-around service with a continuous transport chain from door to door. Value-added services such as proactive shipment information provided by text message or e-mail, identity checks or department delivery are additional trends in the CEP (courier, express and parcel) sector. At the same time, the line between transport services and contract logistics is disappearing.
A problem that all CEP (courier, express and parcel) providers face is their services’ strong link to the state of the economy. Shipping volume rises and falls tremendously as the economy climbs and dips. For instance, when the media industry in Germany suffered a major setback in 2001, courier services lost about 30 percent of their business.
Recommended reading
Logistik | Vahrenkamp 2007References
Revolution im KEP Markt | Fluri 2007.
Der Markt für Paket- und Expressdienste | Helmke 2005
dhl - discover logistics
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