Delivery businesses continue to maintain momentum in 2021
Data analyzed by the ParcelTrackr (Trackr) App team reveals that in spite of the challenging economic environment, four leading logistics companies–UPS, DHL, USPS (United States Postal Service), and FedEx – report over US$ 300bn in revenue for the financial year 2020.
The data was analyzed from official press releases from the top four selected companies to find out what impact the pandemics outbreak and e-commerce boom have made on the logistics sector, and provide an outlook for 2021 and beyond.
Logistics companies outperform their earnings guidance
From the data, UPS reports the highest revenue increase of 14.20%, resulting in US$ 84.60bn. DHL’s revenue reaches a staggering US$ 80.41bn, followed by USPS that has also experienced a boost of nearly US$ 2bn (from US$71.15bn in 2019 to US$73.10bn in revenue), leaving FedEx with US$ 69.20bn behind.
However, the companies had to also overcome the challenges brought by the pandemic and the surge in e-commerce. 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.
Volume surge
Even so, USPS states that the package volume has increased by almost 1.2bn pieces, or 18.8% compared to 2019, which reflects a clear shift in consumer behavior.
Although the future is still unclear, companies project a positive outlook for 2021 and beyond. DHL and UPS, in particular, have been actively participating in the distribution of Covid-19 vaccines worldwide, aside from their daily activities.
“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,” affirmed Ernestas Petkevicius, Co-Founder, Trackr app.
“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,” he added.
Companies project a positive future outlook
Given the pandemic-related rise of e-commerce, the logistics industry seems to be going through its golden age that will likely continue in 2021 and beyond. Both local and cross-border deliveries have never been so crucial to people’s everyday lives, considering not only the shipment of various goods but also playing an essential role in coping with this global health crisis.
The most common issues highlighted by industry leaders were disruptions in the workforce, fast changes in the marketplace and the urgent need for supplements for safety precautions.
USPS also states that the package volume has increased by almost 1.2bn pieces or 18.8% compared to 2019, which reflects a clear shift in consumer behavior.
However, the numbers show that selected logistics companies 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$ 7.8bn while DHL Group has outperformed their earning guidance of US$ 4.96bn by improving operating profit (EBIT) to US$ 5.85bn.
Moreover, since the beginning of the pandemic outbreak, DHL Group’s free cash flow has increased to US$ 3.01bn which exceeded last year’s result by a whopping 188.35% as well as surpassed the market estimate. Meanwhile, UPS has reported a free cash flow of US$ 5.1bn, once again leading the quad squad.
No signs of e-commerce boom slowdown
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,” observed Petkevicius.
