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8/15/2019 Accenture Adding Value to Parcel Delivery
http://slidepdf.com/reader/full/accenture-adding-value-to-parcel-delivery 1/21
Adding Value toParcel Delivery
September 29, 2015
8/15/2019 Accenture Adding Value to Parcel Delivery
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Copyright © 2015 Accenture. All Rights Reserved. 2
Research Approach
A comprehensive analysis of CEP (Courier, Express & Parcel) industry
Includes B2B and B2C segments, domestic versus international shipping as well as overnight
and non-day, and time definite products segments under 150 pounds or 70 kilograms
Assesses historic performance, identifies future trends and determines shareholder value drivers
Examines current and new players in this market, including global integrators, postal organizations,regional players, shared economy and crowdsourcing actors, as well as retailers moving downstream
Sources include: public information, paid and proprietary primary and secondary research, internaland external subject matter expert interviews and extensive market and financial analysis
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Copyright © 2015 Accenture. All Rights Reserved. 3
Definition of CEP (Courier, Express and Parcel)
Market Definition
Time sensitivity: Usually consignmentsdelivered by a specified day and evenby a specified time
Size of consignment: Maximum weightusually considered to be about 31.5kg
(70lbs); Few exceptions.
Mostly Door to Door
Space represented by pure express playerssuch as UPS, FedEx and TNT Express; aswell as express and parcel arms of postalcompanies such as Geo Post (La Poste)and Purolator (Canada Post)Scope of Market = Courier, Express and Parcels
Source: TNT, Accenture Research
Same day &in-night
Time certain
Next day
Day certain
Dayuncertain
Document Parcel Freight LTL, FTL
>1kg 31.5kg 1000kg
Postal
Air/Road express
Priority Express
Deferred andOther Express
Air charter
Freight Forwarder
GroupageLTL
FTL
Express freight
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4Copyright © 2015 Accenture. All Rights Reserved.
Power shifting to the consumer
Internet driving growth, transforming the supply chain
Growing demand and increased volatility
Product mix means lower yields per package
Investments to grow capacity, yet declining ROIC
Sharing economy set to disrupt the last mile further
ParcelDelivery
B2C outgrowing and cannibalizing B2B
Parcel Delivery—Key Findings Summary
Most delivery organization know what to do, but need to do it better, faster, cheaper
The world is flat: rise of the micro multi-national
New technology will change the game
Home delivery becomes the new premium
Last mile is where the battle is taking place
Costs are rising faster than revenue
High fixed cost means less flexibility when it is key
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Rise of the digital consumer
Digitally enabled consumers driving most of the eCommerce demandsee bargaining power shifting toward them
Source: Accenture analysis
We have crossed barriers in choice, transparency, and service expectations
Advent of:
D e v i c e s
Data
Social networks
Greater choice
Low switching costs
Faster reviews
So they seek:
Retailers and Deliverers with:
More competition
Easier aggregation ofservices
Better visibility insupply chain
So they provide:
Consumers with:Empowers:
Presents:
Buying Paying
Receiving Returning
Lower prices
Greater convenience
Seamless experience
in
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Evolution of parcel delivery value chain
The parcel delivery value chain has expanded in scope.Roles at each stage have evolved toward a stronger service orientation.
Source: Accenture analysis
Past—Deliver Present—Digital, Transparent, Fast and Flexible Delivery
Need to develop new resources and capabilities to deliver on service expectations at each step of the value chain
Pick up
Delivery
Transportation
• Less visibility intodemand for services
• Limited influence ondemand
• Low C2C and B2C• Less transparency• Easier timelines
• Limited competition• Recipients with low
bargaining power • Low service
expectations
Warehousing
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Last mile delivery models
The last mile, which holds key to the consumer experience, haswitnessed an emergence of multiple delivery models
Source: Accenture analysis
Consumer convenience and cost reduction have been primary objectives guiding the change
D) Lifestyle/Crowd-shippers
Warehouses
Retail stores Parcel lockers/Access points
A) Postal mail-run
B) Courier delivery 2
C) Courier delivery to lockers
Lifestyle/Crowd-shippers’ delivery to homes similar to courier
Crowd-shippers delivery to lockers
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Courier-Express-Parcel (CEP) market size and growth
The challenge of increasing service needs is exacerbated by thegrowing delivery demand calling for scale up of infrastructure
Source: Accenture research, Transport Intelligence
USD billion, %, 2008-2020F
Global market sizeUSD billion
Customer segments
Fixed cost heavy model: The growth has significant investment implications to meet demand
Domestic
International
B2B
B2C
Routes
Geographies
Slower than B2C with close to GDP growthbut significant share and higher margincontribution
Close to eCommerce growth rates andgrowing in significance
Faster growth (~5.4%, 2013-2017) thandomestic primarily due to growing cross-border eCommerce
Continues to be >75% of overall marketwith ~5.0% growth (2013-2017)
APAC N. America Europe Rest Middle East S. America AfricaW. EuropeMarket
30% 5.3% 4.1% 2.5% 1.9%19%38%2020 share
9% 8% 7% 5% 10%5%15%2013-20 CAGR
+4%
2020F
343.1
237.9
2008
194.8
+5%
2013
33% 5.7% 3.5% 2.5% 1.5%23%32%2013 share
C2CEmerging segment from growth in auctionsites and the circular economy
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Courier-Express-Parcel (CEP) market size and growth
eCommerce is driving growth in domestic and international markets
Notes:
Size of the bubble represents market size. Previous point—2013, Leading point—2017F. Total market expected to move from US$ 237.9 billion to US$346.0 billion.Source: 1 Transport Intelligence, 2 https://badgeville.com, 3 “World Urbanization Prospects” UN Report, 4,5 www.digitalbuzzblog.com, 6 eMarketer, 7 Ernst & Young
USD billion, %, 2010-2013 and 2013-2017F
Fixed cost heavy model: The growth has significant investment implications to meet demand
0%
5%
10%
15%
20%
0% 5% 10% 15% 20%
346.0
237.9109.4
77.4
131.9
75.4
81.6
67.4
Domestic growth (2010-2013 and 2013-2017 CAGR)
I n
t e r n a t i o n a l ( 2 0 1 0 - 2 0 1 3 &
2 0 1 4 - 2 0 1 7 C A G R )
Global
Europe N. America
APAC
Domestic vs. international growth—Historical and Future1
46%
Smartphone penetration in mobile phones by 2017449%
Internet penetration in population by 20175
55% Urban population out of total by 20173
Of worldwide spending by millennials by 2020270%
27% International eCommerce out of total by 20176
12% Middle class growth rate in APAC 2009-20207
Drivers of growth
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CEP market size and growth—B2B vs. B2C
B2C will continue to grow in significance across geographies,driving growth and presenting challenges
Notes:1 Size of the bubble represents total market size in 2020. Total market expected to move from US$237.9 billion to US$343.1 billion.Source: Accenture research, Transport Intelligence, Accenture analysis
USD billion, %, 2013-2020F
B2C focused delivery networks call for different focus areas vs. B2B
0%
5%
10%
15%
0% 5% 10% 15%
North America
Western Europe
Asia Pacific
Global
B2B (2013-2020 CAGR)
B 2 C l ( 2 0 1 3 - 2 0 2 0 C A G R )
B2B vs. B2C growth1
Challenges:
Drivers of growth
Volatility Last mile Yields Returns
46%
Smartphone penetration in mobile phones by 2017449%
Internet penetration in population by 20175
55% Urban population out of total by 20173
12% Middle class growth rate in APAC 2009-20207
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Mergers and acquisitions
Many firms have pursued the inorganic route to build scale andacquire new capabilities to widen the scope of their business
Notes:1 Firms included are DPDHL, Austrian Post, Canadian Post, La Poste, PostNord, SingPost, Australia Post, UPS, Fedex, Bpost, Swiss Post and Itella.Source: Financial reports, Accenture analysis
Number of deals by year 1
2009-2014Number of deals by business (Last five years)2009-2014
Acquisition strategy would be key in acquiring the right assets and maximizing effectiveness and efficiency
Real Estate 6
Mail 6
Financial Services 9
IT Services and Software 14
Marketing and Sales 17
Parcels and Express 38
Logistics and Transportation 89
2014
14
2013
34
2012
42
2011
45
2010
22
2009
20
Trend is continuing in 2015 with
the FedEx €4.4bn bid for TNT
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Total funding in sharing economy start-ups
Sharing economy start-ups are witnessing an upsurge in venturecapital interest across industries
Source: Sharing Economy Landscape 2015, Tracxn research
60 96283
357
116
958
2014201120102009 20132012
800
645
273
51
16
11
4
0
Private Spaces
Business Equipment
Logistics
Transport
Personal Goods
Storage
Stay
Food
Top funded companies
Airbnb($776.4M), Wimdu($90.0M)
Lyft ($333M), RelayRides($53.2M),Boatbound($5.3M)
Chegg ($252M; IPO at $1.1B).Bag Borrow or Steal($20.0M)
LiquidSpace($26.2M),PivotDesk($6.7M), Storefront($8.9M)
Getable($3.2M), Yard Club($1.6M)
EatWith ($9.2M), Suppershare
Friendshippr($1.2M), WeDeliver($0.8M)
Roost($160k), StowThat($50k)
Top investors
Sequioa, TPG Growth
Trinity Ventures, Shasta Ventures,Google Ventures, August Capital
N/A
Shasta Ventures, Roth Capital Partners,Lucas Venture Group, Spark Capital
N/A
GreyLock
N/A
N/A
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List of promising start-ups by business segment
New entrants are drawn to a growing but underserved industry andare enabled by technology
Source: www.jonathanwichmann.com
Creating new challenges and opportunities for legacy companies
Transportation SystemsFuturistic shipping models
Matternet, Google drones, Amazon drones
Freight RatesTransparent shipping costs
Freightos, Tanspoteca,iContainers, Freight Filter,Xeneta, Shippo, ShipHawk,
ContainersContainer packing innovation
Staxxon, Holland ContainerInnovations
Crowd ShippingFlexi-cost last mile shipping
PiggyBee, Friendshippr, RoadieBarnacle, Nimber, Zipments For You,Bringrs, UberCARGO
End-to-end ShippingUber of shipping in C2C space
Shipster, Shyp, Shipbob,Schlep, MinFragt.dk
3PL and Other ServicesEnabling shippers
Shipwire, Cloud Fulfillment, Scurri,Metapack, 71lbs, Axida
Local DeliveryLow-cost urban delivery models
Swapbox, Boxc, Postmates,DoorDash, Zipments, Deliv, Sidecar,Uber, ParcelBright, Parcel
StorageCrowd-sourcing storage space enablingflexi-delivery
Lockitron, MakeSpace, Boxbee, Cubbyhole,Parcel Pending, ShareMyStorage, Roost
TruckingTracking and management
Cargomatic, TruckTrack, KeepTruckin,Youtruckme.com, Keychain Logistics,uShip
Last Mile
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Start-ups—Last mile
The new entrants in last mile are mostly asset-light and utilize thepower of crowdsourcing to achieve outcomes at lower costs
Source: www.jonathanwichmann.com, Accenture analysis
Operationally flexible models generate cost advantage for new entrants but scalability remains to be evaluated
Crowdshipping enabling asset-light, low fixed-cost models tosolve the last mile delivery.
Potential partners for parcel
delivery companies that do notwish to grow investments in lastmile.
CrowdShipping
LocalDeliveries
Localized, urban delivery modelsoffering delivery solutions atlower prices than legacyplayers and enabling offlineretailers to add delivery
services.
They are competitors andpotential partners.
Storage
Storage solutions mostly basedon crowdsourcing spaces. Offertemporary storage for laterdelivery and collection.
Present opportunities tomanage flexible deliveries while
minimizing travel costs.
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Parcel Delivery— Conclusions – 9 Value Drivers
3
Underserved& Growing
Power shifting to consumers
1
Consumers’ Wishlist
2
4
To deliver onconsumers’ wish-list
Go BeyondTraditional
Brand andSegment
Focus on
theRecipients
GrowInternational
Disaggregatethe Value
Chain
Variablize
Costs
IncreaseEfficiencyand
Productivity
Mergers andAcquisitions
To build sustainableoperating model
6
To succeed in executingmarket strategies
5
DeployStrategicPricing
To support marketstrategies
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Brand andsegment
Grow international
Go beyondtraditional
Focus onthe recipient
Deploy strategicpricing
Executive TakeawayParcel Value Drivers (1 of 2)
Rationale/Why? Description Benefit/Value Description
• Segment growth• Rise of delivery
options• Expansion of services• Blurring of player lines
• Segmentation• Vertical specialization
• Brand positioning• Product portfolio
management
• Greater market share• Lower price sensitivity
• Higher revenue• Higher margin
• UPS SCS• Austrian Post and
Fiebra brands• La Poste
• Rise of micromultinational
• Lower barriers to X-border
• Access to Internet• Growing middle class
• Cross-borderpartnerships
• E2E visibility• Customs integration• Global trade tools
• Revenue growth• Higher yield per
package• Higher margins• Diversification of risk
• FedEx (Brazil, Mexico,TNT)
• Austrian Post (EEC)• Japan Post / Toll
Priority
• Transportation acommodity
• Growth of eCommerce• Supply chain
disruption• Declining yields
• Value added services• eLogistics and
warehousing• Returns management
• Delivery options
• Additional revenue• Customer stickiness• Long-term contracts• Diversification of risk
• UPS SCS• SingPost• FedEx/Genco
• Rise of digitalconsumer • Mobile lifestyle• Competition for last
mile• Auto-replenishment
• Relationshipw/recipient• Two-way
communication• New products/services• Monetize preferences
• Better customerexperience• Market share retention• Lower cost to serve• Incremental revenue
• UPS MyChoice• Australia Post• La Poste
• Declining yield perpackage
• Poor pricing practices• Costs to revenue
increasing• New products/services
• Subscriptions services• Analytics• Competitive pricing• Surge/cost-based
pricing
• Higher margins• Incremental cost
coverage• Greater revenue• Greater market share
• Amazon Prime• FedEx and UPS
pricing (residential andfuel surcharges
• Uber peak pricing• Airline pricing
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Mergers andacquisitions
• Stagnant B2B growth• Declining package
yield• Excess capacity• Need for
specialization
• Market assessment• Target identification• Post-merger
integration• Synergies realization
• Revenue growth• Speed to market• New capabilities
or geos• Cost synergies
• Austrian Post• DHL• FedEx• Sing Post
Disaggregatethe value chain
• Declining assetutilization
• Shared economygrowth
• Last mile competition
• Value creation• Capacity expansion• Asset utilization• Build ecosystem
• Higher ROA• Faster speed
to market• Higher revenue• Higher margin
• SingPost Books• GXG @ USPS• Uber Last Mile
Variabilize
costs
• Growing peaksand valleys
• Declining asset
utilization• High downside ifrevenue declines
• Outsourcing• Lease vs own• Labor strategies
• Asset divestment
• Lower/avoidedCAPEX
• Cash generation
• Higher margins• Speed to market
• Innovapost• Lasership• Deliv
Executive TakeawayParcel Value Drivers (2 of 2)
Increase efficiencyand productivity
Rationale/Why? Description Benefit/Value Description
• The firms needto build capabilitiesto succeedat implementingmarket strategies
• Big data• Analytics• Technology• Leading practices
• Higher margin• Greater supplychain agility
• Cost avoidance• Greater
revenue/share
• Purolator • bPost• FedEx Express
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C i ht © 2015 A t All Ri ht R d 21
Contact Details
For more information, please contact:
Tim Bateman
Global Parcel Lead
+44 7774 299 350
Brody Buhler
Global Managing Director
Post & Parcel Lead
+1 703 405 1253
Andre Pharand
Global Post & Parcel Management
Consulting Lead
+1 917 755 5551