Sector Overview: Transport & Logistics

Parcels of Growth: Expansion In The Courier Services Industry

By Koketso Mamabolo

Within the transport and logistics sector, courier services such as the express parcel industry have rapidly grown, as have their importance to economic activity. This was even more evident during the worldwide lockdowns which saw much of the activity brought to a halt, mitigated by the existing networks of courier services which could quickly scale and seamlessly deliver goods to people’s homes.

E-Commerce On The Rise

Shipments made within 48 hours are considered “express”. According to South African Parcel Association (SAEPA) CEO, Garry Marshall, the express parcel industry almost doubled in the previous decade. In 2021, he noted that the industry had a R8-billion turnover in 2012, but had ballooned to R20-billion in the space of nine years. Even before the pandemic, the industry was on the rise. Covid-19 only tested how robust it was to rapid change, and ultimately ushered in a new era of business.

Given how many businesses are taking their products online, allowing consumers to order from the comfort of their homes, this evolution is set to enable widespread growth. at the height of the pandemic, Economic Development Minister Ebrahim Patel said, “e-commerce can be a critical enabler to opening the economy through contactless transactions which can reduce the movement of consumers, and the density of shoppers in retail spaces.”

The view from the private sector is the same, and the expansion is bound to draw the attention of investors. “e-commerce is the fastest growing segment of the express logistics business,” declared Marshall.

Courier Services Industry

• 18 000 formally employed

• 10 000 vehicles

E-Commerce in SA

• 66% growth in 2020 (iKhokha e-Commerce Trends for 2022 Report)

• 41st largest e-Commerce market

Couriers are regulated by the Independent Communications Authority of South Africa (Icasa). Packaging weighing less than 30kgs is classified as a postal article.

Courier Services Industry Growth Potential: South Africa and Global

• $2.2-billion in 2020 (South African Courier, Express and Parcel market size)

• $3.5-billion by 2027 (South African Courier, Express and Parcel market size)

• 7% Compound AnnualGrowth Rate (2021 - 2027)

• $706-billion by 2027 (Global Courier, Express and Parcel market size)

• 5.7% CAGR (2021 – 2027)

(Projections by Market Research)

Potential For More Growth

Marshall believes that in some cases the market grew by as much as 80% in 2020. “What we saw in the early stage of the Covid-19 pandemic is that B2C sales skyrocketed in South Africa.”

What the industry offers consumers is convenience. it even has a role to play in the consumer-to-consumer sphere, for goods brought on platforms like Facebook Marketplace. The informal sector also holds untapped potential for growth. speaking about the potential e-commerce holds, Minister Patel went on to say, “Further it can accelerate innovation, support local manufacturers and increase access by the informal market and poorer South Africans.”

According to a report by Mordor Intelligence, distribution models have to be improved constantly, and businesses have to think more clearly about bringing stock closer to consumers to reduce inefficiencies. The report states: “in south africa, requirements for new, modern, and efficient distribution centres remain stable, and demand has outperformed all other asset classes and industrial sub-segments, resulting in an overall income return of 9.2% and capital growth of 0.8% in 2020-2021.”

The wider transport and logistics sector is being bolstered by developments in South Africa’s trading partners. The demand for local products has risen, due to increased growth with the countries South Africa trades the most with. “South Africa is experiencing a record trade surplus in the wake of the Covid-19 pandemic, with exports far outpacing imports.”

Sources:

Engineering News | Daily Maverick | Market Research | Mordor Intelligence | iKhokha | ecommerceDB | IOL