2019 Economic and Financial Recap & 2020 Market Outlook
How E-Commerce Is Disrupting Last Mile Logistics
Rising e-commerce volumes are increasingly becoming the dominant share of small package delivery volumes, pressuring operating margins and ROICs for related companies. The biggest driver of profitability for the industry is drop density, which is significantly lower for residential deliveries than for business deliveries, and we see no reasonable path toward improving B2C (business-to-consumer) drop density. Incumbent delivery companies are further challenged by Amazon, as its strong buying power and logistics capabilities have allowed it to set service standards and pricing for B2C deliveries.