CONSIDERING how the global pandemic has significantly boosted the e-commerce sector, it is only natural that the logistics industry stood to gain from it, being the gears that kept the e-commerce sector going.
Based on the data from Trackr, four leading logistics companies reported over US$300 bil in revenue for the financial year 2020, namely UPS, DHL, USPS and FedEx.
The surge in e-commerce enabled UPS to take the lead with the highest revenue growth among these four compared to last year’s data.
The company was able to increase its revenue by 14.20%, resulting in a staggering US$84.60 bil.
Meanwhile, Deutsche Post DHL Group reports an impressive US$80.41 bil in revenue for FY2020.
As a result of a higher package demand, USPS has also experienced a boost of nearly $2 bil (from US$71.15 bil in 2019 to US$73.10 bil in revenue), leaving FedEx with US$69.20 bil behind.
In fact, even the companies’ leaders admitted that the company’s performance in 2020 exceeded their expectations, which in turn brought significant changes to the stock market as well.
FedEx managed to improve its stock price to all-time highs of US$254.36 for the period of Feb 10, 2020 to Feb 10, 2021, increasing its return-of-investment (ROI) by 60.35%.
UPS grew by 53.25% during the same period and its stock price is now US$162.37 while DHL experienced 36.04% growth, resulting in a stock price of US$45.25.
Industry outlook positive, amid challenges
Apart from the usual cross-border e-commerce deliveries of various goods, two of the four companies, DHL and UPS, have been actively participating in the distribution of COVID-19 vaccines across the world, which started in the fourth quarter of 2020.
Due to this, it is expected for the companies to experience further growth in revenue the following year.
Obviously, success does not come without obstacles and challenges. Having said that, the challenges caused by the pandemic was nothing short of disruptive towards the sector.
The most common issues highlighted by industry leaders were disruptions in the workforce, fast changes in the marketplace, the urgent need for supplements for safety precautions.
USPS also states that the package volume has increased by almost 1.2 billion pieces, or 18.8% compared to 2019, which reflects a clear shift in consumer behavior.
As a result, online shoppers became more demanding about speed and transparency, thus raising another challenge of making seamless shipment tracking and collaborations with reliable service providers crucial.
However, data also showed that selected logistics companies have managed to deal with most of these issues and allocate both physical and financial resources accordingly.
For instance, in 2020, UPS’s operating profit reached US$7.8 bil while DHL Group has outperformed their earning guidance of US$4.96 bil by improving operating profit (EBIT) to US$5.85 bil.
E-commerce not slowing down anytime soon
Although the future is still unclear, raising trends and predictions can already shape the image of further development of the logistics sector and e-commerce industry as a whole. Businesses will continue to feel the pressure of fulfilling orders faster while trying to stay on top of their quality standards.
“As more and more logistics-related tasks are shifting online, one of the biggest challenges in the next 10 years will be the expansion of logistic centers and their ability to adapt,” said Trackr co-founder Ernestas Petkevicius.
“We have already witnessed leading carriers reporting record-breaking numbers, and this is likely the direction that e-commerce-related sectors will continue to follow while having to deal with constantly arising new challenges,” Petkevicius added.
Supporting this claim, real estate consultancy company Savills reported that Europe has been experiencing shortages of warehouses, to the point that the vacancy rate reached a record-low of around 5%.
Savills also reported that the investment volumes for warehouses have increased by 121% on the long-term average, reaching US$6.47 bil.
Moving forward, UPS expects to continue on the same path while DHL Group forecasts EBIT to further grow not only during this financial year but also to be even higher in 2022. – May 17, 2021
