European postal operators: banking on parcels and freight

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European postal operators: banking on parcels and freight sectors

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Source: Datamonitor)Although a recovery in the logistics and express markets appears to be underway, 2010 is still likely to represent a challenging year for the industry. This is particularly true for European postal operators which are coming under increasing pressure to diversify and establish a share in the parcels segment in order to cope with the liberalization of their core markets.

Global air cargo demand rose by more than 28% in January compared with last year according to recent research published by IATA. There was also an encouraging month-on-month growth increase from December to January, suggesting a relatively optimistic outlook for the sector. The data also serve as a partial yet positive indication that the global economy is finally on the mend.

Further positive news came from TNT, which in its annual report confirmed an increase in volumes within the express sector for the first time since the economic decline that hit the market during the second half of 2008. However, the company, as well as the logistics and express industry as a whole, is still facing a tough year ahead and there is no confirmation that the economic recovery is either structural or simply a temporary effect of restocking of inventories by its customers.

Furthermore, the recovery in air freight as well as other sectors of the industry has been driven by strong growth in Asia and other emerging markets. This is problematic for companies that are based in Europe and especially for those with a strong dependence on the postal sector (Deutsche Post DHL, La Poste and TNT). The mail market is facing a structural decline in volumes due to electronic substitution. To make matters worse, as these postal markets are liberalized, the incumbent operators are faced with increased levels of competition in their most profitable areas.

These developments combined are placing considerable pressure upon the European postal groups. They have to defend their domestic strongholds, but also pro-actively position themselves in the European market place. This is reflected by TNT's strategic focus on ecommerce, road networks and the European parcels market. Indeed, the creation of a pan-European parcels network to take advantage of rising levels of ecommerce in and between EU countries represents a key battleground in the near future and this is expected to decide the fate of the major European postal companies in terms of their 2010 operational and financial results.

A service of YellowBrix, Inc.