Express still strong in emerging markets

Asia - The rest of the world may be suffering from the US financial crisis, but emerging markets including China and India are expected to still record strong growth in the express sector, says a Datamonitor report.

Together with increasing in oil prices, the US subprime mortgage crisis has had a direct impact on the express industry with several express companies announcing lower profits and issuing cost cutting measures, but the effect of this is fragmented across the globe, the report said.

"The credit crunch has hit individual markets and companies differently, leaving those relying on the US and intercontinental routes the most exposed," says Datamonitor logistics and express senior analyst Erik Van Baaren.

In Europe, the express and parcels market is forecast to grow at a lower rate than in previous years, but it is still expected to record an average annual growth rate of 3.5% in the next five years, above GDP growth, he said. The industry is buoyed by a strong demand for international and home delivery services, despite rising fuel costs and the global economic slowdown dampening its potential.

The relocation of manufacturing facilities to Asia has also helped maintain the European express market, the company said.

"The rationalisation supply chains and the relocation of manufacturing and distribution activities are the other main growth drivers still fuelling the express and parcels market, with Eastern Europe and the Far East acting as the catalysts for this development," the company said.

Van Baaren believes the outlook for the express industry over the next five years remains uncertain as the full impact of the financial crisis is not entirely visible, but that emerging markets including China and India in Asia will remain sturdy.

"The outlook for the European parcels and express market remains cautiously optimisic, while emerging markets, Brazil, Russia, India and China, the Middle East and Eastern Europe are still recording strong growth levels.