EUROPEAN CEP MARKET OUTLOOK 2023-2026

THE EUROPEAN CEP MARKET OUTLOOK FROM 2023 UNTIL 2026

Published on 21/12/2022

Effigy Consulting is thrilled to announce that Philippe Masquelier, its CEO, was interviewed by CEP Research.

The European Courier, Express and Parcel (CEP) Market remains on the long-term growth path. In this second part of an Expert Analysis for CEP-Research, Philippe Masquelier, owner of Effigy Consulting, looks at the prospects and trends for the coming years, based on the specialist market research company’s latest European CEP Market Report. 

CEP-Research: What is the outlook for the European CEP market in the next few years given the current economic uncertainties? What major trends can be expected? What are the main opportunities and challenges for CEP companies in Europe in the next few years?  

Philippe Masquelier: I believe that the pandemic has cemented the strategic importance of effective, flexible, and robust logistics in the minds of both governments and consumers. This opens opportunities for greater input and influence in the creation of transport policy in Europe. Greater transparency on the transport network performance is a topic of increasing concern to administrations as they adjust to changing circumstances such as onshoring, sustainability, labour shortages, infrastructure implementation and social planning for logistics infrastructure in urban areas.

Secondly, Europe has a low conversion rate in e-commerce that impacts the number and value of packages being consigned to the delivery networks. Assisting e-retailers to optimize their sites and processes can help raise conversion rates, increase loyalty and help maintain or grow CEP parcels in these recessionary times.

Thirdly, the provision / use of more Out of Home (OOH) capabilities in convenient locations such as PUDO and Lockers is an opportunity to reduce delivery costs, increase convenience and improve network effectiveness. Exploring and implementing new service types to assist consumers and businesses in managing costs is another opportunity. This could include consolidated lower cost deliveries, delayed delivery, designated delivery days, incentivised use of OoH capabilities, and more effective returns management.

Greater transparency on the cost elements of transport may also be useful in ensuring that consumers and businesses realise what they are paying for especially in times when core and supplementary costs are rising rapidly.

CEP-Research: What about sustainability?

Philippe Masquelier: Sustainability is of course the key challenge for the CEP and logistics in general. I believe we are only at the very early stages of the transformation required to comply with the sector targets in the EU Green Deal, The EU circular economy strategy, the impending EU new waste legislation, fuel taxes on all transportation, EU Carbon border taxation and ETS 2 (revised carbon trading rules).  The emergence of different rules and regulations by local administrations in urban areas for the operation of delivery vehicles and the placement of sub-facilities causes preparation and last mile issues and inefficiencies.
Slow, unsympathetic and inconsistent spatial planning will continue to impact the ability of transporters to improve the effectiveness and efficiency of their urban networks and reduce the ability to move to cheaper forms of urban delivery such as cargo bikes and also tailored urban delivery routings. The slow roll out of infrastructure related to supporting the electrification of transport will remain a major challenge until or unless electric vehicles emerge with similar and equivalent fully loaded milage compared to fossil fuelled vehicles.

Then of course there is the pressure on consumers. The rise in the cost of living and the erosion of savings accumulated during the pandemic and the cessation of pandemic supports will all contribute to a more cautious consumer. This is likely to reduce the levels of cross border shopping, increase domestic demand, lower the average basket value and also increase the frequency of online shopping.

In conclusion, businesses and consumers face unprecedented difficulties in the coming 18-36 months. Disposable earnings will contract, discretionary spending will decrease, business costs will rise and enterprise risks will increase. On both the demand and supply side, CEP operators will be under constant price and volume pressure. What is clear is that the CEP market and its operation are likely to undergo some radical changes even before the issues of sustainability are addressed and implemented. Still one positive aspect being the revenue is expected to grow faster than volume inducing quality deliveries for the consumers.

CEP-Research: Let’s create a watchlist. Which topics and issues are likely to influence and impact the European CEP market most in the coming years?

Philippe Masquelier: The topics are already well known today and include:

• Supply chain disruption
• International trade relations
• Chinese Covid regulations impact on production
• Closure of the Europe to Asia rail links via Russia
• Contracting consumer spend in the expected shallow but long (Mid 2024 ) recession
• Environmental legislation
• Loss of trust due to greenwashing
• Labour availability of all types
• Reduced and aging populations
• Rising factor costs in business
• Warehousing issues
• EV vehicle availability and infrastructure support for EVs
• Expanded role for customs.
• Increased importance of Out-of-Home delivery (locker and parcel shop)

For more in depth information, please refer to our European CEP Market Report Section.