Customers are willing to pay more for a faster freight delivery service. This is the result of the study conducted by McKinsey & Company in their report, “Parcel delivery. The Future of Last Mile.”
In this study, over 4,700 consumers in the US., Germany and China were surveyed and it showed that the trend toward buying goods online is fast increasing.
With this in mind, same day and instant cargo delivery are expected to account for around 20% of the standard parcel revenue by 2025.
Cost-effective and faster freight delivery
Demand for faster freight delivery to grow by 40% annually
Based on the same paper, parcel delivery is expected to grow 9% annually to more than US$343 billion globally by 2020. What’s even more exciting is that it is set to double with around 25 billion parcels sent each year by 2025.
This infographic below further explains it:
Faster freight delivery as parcel market set to double in 2025
Continuous rise of e-commerce pushes for faster freight delivery service
E-commerce is already a $220 billion market in the USA. It is so huge it has an annual rate of 17% in the last decade, with American consumers being the primary target audience of e-commerce around the world.
US E-Commerce logistics demands faster freight delivery
The shift from B2B to B2C and the call for faster freight delivery service
E-commerce has shifted market share from Business to Business (B2B) to Business to Consumer (B2C) segment. This has greatly expanded the target market. As a result, the demand for faster parcel delivery market has also rapidly increased.
This latest research made by Accenture shows how much parcel delivery market evolved due to digitally-connected consumers.
Evolution of parcel-delivery chain and the call for faster freight delivery service
What are digital consumers really looking for?
Digitally-connected consumers are always looking for the following when buying, receiving and returning products:
- Lower price
- Great convenience
- Seamless experience
Digital consumers and faster freight delivery
Further research also shows the future of B2B and B2C in the next five years:
- Business to Consumer (B2C) will continue to grow in significance around the world
- B2C will surpass Business to Business (B2B) in terms of parcel volumes in Asia and in North America
- B2C will continue to grow revenue at an estimated:
- 6 percent per year in North America
- 5 percent per year in Western Europe
- Nearly 14 percent per year in Asia Pacific
The future of parcel delivery business, five years from now
Firms around the world are scaling up to meet the future demands of consumers. This includes expanding the capacity of delivery business by modernizing networks such as the use of new technology in the transport process.
Cost and faster freight delivery time
It’s 100% clear. Customers want faster freight delivery time. But how much are they willing to pay for this faster delivery service?
Regardless of age, those who would most likely pay more will still choose the cheapest standard delivery to their home. This means an additional $1 wouldn’t hurt their pockets. Nevertheless, one out of six is willing to pay as much as $3 to $5 for faster delivery.
“The cost factor plays a crucial role in the growth of the same-day delivery segment: 50% of delivery costs for a standard parcel are incurred in the last mile when the parcel is delivered directly to the front door.” said Florian Neuhaus.
Given this fact, most considerations and amendments must be done on the last-mile delivery to cut-off large expenses.
The future of last-mile delivery
One challenge every freight forwarding company must overcome is the management of the last-mile delivery. This is exactly where the competition lies. Thus it is important for you to look beyond what the quote of freight forwarding companies is saying.
You should look closely at what you are paying. Otherwise, you’ll find yourself caught off-guarded with so many hidden and surprise fees added to your quote.
Stop worrying about hidden fees and surprise fees. Use our online calculator 24/7 and receive freight quotes without any of these additional fees.
Cost-effective and faster freight delivery via FFQO
FFQO is committed to giving its customers the best service it can at the lowest cost possible.
Watch this short video clip to learn more about us:
We ensure you receive free quotes online without any surprise fees. We even give 5% off to those who will book their cargo 24 hours after receiving our quote request. Learn more about it. Call us at 1-877-901-2004 or send us a message.
