Couriers under pressure as consumers demand better delivery control

Express cargo and

courier companies

are being forced

to think out of

the box in the face of

growing demand for lower

prices and faster, seamless

deliveries.

While the

sector in South

Africa may

not have seen

significant

growth in the

past few years

– attributed

to the tough

macroeconomic

environment

– it has seen

some major

market shifts,

according to

Garry Marshall,

CEO of the South African

Express Parcel Association

(Saepa).

“There have been

some very interesting

developments,” he told

FTW. “There have also

definitely been segments in

the market that have shown

real growth, the business

to consumer (B2C) sector

being one of these.”

And it’s expected to

continue to grow in

significance around

the world – ultimately

surpassing the business to

business (B2B) sector in

terms of parcel volumes at

some point.

Not

only is the

volume

of cargo

moving

from B2C

expected to

grow – but

so is the

revenue

generated.

This

sector,

however,

must

not be

confused with e-commerce,

said Marshall.

“E-commerce in itself

is growing at a rapid rate

around the world. In South

Africa the growth rate is

also very high but locally it

is still a very small market.”

According to Marshall

there is increased demand

for retailers to offer

customers multiple

delivery options while

at the same time

there is a move from

the traditional B2B

model to deliver

directly to the end

user.

“Pharmaceuticals

in South Africa are

a good example of

this trend. They are

increasingly being

delivered directly

to the door of the

recipient rather than to

the nearest pharmacist or

doctor’s rooms as was the

case a few years back.”

He said more and more

consumers were also

demanding better delivery

control.

“The last mile

component is starting to

become very relevant to the

industry as consumers are

demanding a better service

in this regard,” he said.

While consumers

were taking control of

how, when and where

their parcels were being

delivered it was placing

courier companies under

pressure, said Marshall.

“The last mile in the

South African context can

be very challenging – from

having to get into security

estates to reaching rural

areas where not a lot of

volume is moving,” he said.

And ultimately there were

fewer players in the market.

“Another trend in our

industry is that we are

seeing more and more of

the smaller companies

being taken over by the

larger role-players,” he

said. “Servicing the express

cargo/courier market

at present requires an

extremely good

network and

density. It is

about having

the volume to deliver to the

areas you are servicing and

the demand is very high

that those areas are not just

the main centres but also

the far-flung, out-of-reach

places.”

He said more often than

not smaller players were

just not able to do this

cost-effectively – and while

not many businesses were

closing down, they were

seeing more acquisitions

than before.

INSERT AND CAPTION

We are seeing more

and more of the

smaller companies

being taken over

by the larger roleplayers.

– Garry Marshall