New York, May 02, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Saudi Arabia Courier, Express, and Parcel (CEP) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)" - https://www.reportlinker.com/p06074774/?utm_source=GNW
In 2021, as the restrictions were relaxed, there was a surge in all the sectors in Saudi Arabia, driving the CEP growth in the Kingdom.
E-commerce is one of the major factors driving market growth. With higher connectivity rates, a young working population, and advanced infrastructure, the country is one of the major markets in online retailing in the Middle East. The PickUp DropOff (PUDO) collection points are expected to gain popularity in the future. Currently, around 15% to 20% of the e-commerce orders are collected at a physical location operated by the courier companies or their partners. It also makes return management easy for the companies.
Saudi Arabia has been becoming an important market for domestic and international shipments, with major companies entering and expanding networks in the market. The international players are making strategic investments to establish a regional logistics network, such as opening new distribution centers, smart warehouses, etc.
Technology has become a key enabler for companies to be competitively aligned with market trends and dynamics. The logistics companies, especially in the CEP business, have to consider the technological investments that otherwise can disrupt the business. According to industry sources, maintaining the consistency of quality for service and managing cost at the same time is a challenge for all the industry players. As there is still a strong preference for cash on delivery while shopping online, interactive delivery management and customer communications are becoming more important.
Given the continuous growth in e-commerce and the fact that building one’s network is very expensive, more partnerships are expected to happen in the market due to pressure on cost reduction. In 2021, the revenue from e-commerce was USD 10,190 million, and it is expected to witness a CAGR of 18.95% during the forecast period. As e-commerce grows, the return deliveries also increase. Currently, the rate of returns is low in Saudi pertaining to the cash on delivery (COD) shipments compared to other countries in the region.
Key Market Trends
B2B Dominating the Market while B2C Set to Outpace Growth
In the B2B segment, with the growing emphasis on digitization and in order to compete at a global level, the firms are being driven toward greater adoption of e-commerce, helping them expand and reach new customers. In Saudi Arabia, the CEP market is dominated by B2B deliveries with more than 70% share. The key customers of CEP companies in the B2B segment include retailers, manufacturers, and other companies. The economic growth and development of trade and commerce in the Kingdom are expected to drive the growth of the B2B CEP market through the forecast period.
The fast growth in e-commerce has been resulting in an increasing share of B2C in the overall CEP market. E-commerce grew by 60% between 2020-21 due to changes in customer buying behaviors. At the same time, e-commerce has provided the CEP companies challenges, such as route and resource planning for fast delivery, technology and IT infrastructure, automation, etc.
The e-commerce segment accounts for the majority of the B2C CEP market. The banking and financial services industry and other document deliveries from education, telecom, or government and public services sectors also contribute significantly to the B2C segment apart from e-commerce.
The e-commerce logistics in Saudi Arabia is at a nascent stage compared to many other mature markets. More business models are expected to evolve involving outsourcing and focus on specific parts of the value chain, such as the first mile, long haul, and last mile. The majority of the customers of SMEs, around two-thirds of all customers, are individuals. This indicates the large addressable market for B2C CEP companies from these SMEs.
Healthcare Logistics - a Sector of Potential Opportunity
The population of Saudi Arabia is rapidly growing. By 2030, the population is expected to reach nearly 40 million. The demographic profile of the Kingdom is quickly changing. By 2030, those over 50 are expected to increase to approximately 12.5 million.
As healthcare spending increases, the logistics associated with this spending are costly and require specialized solutions for which express and parcel delivery providers and other logistics companies are competing to provide.
With increasing healthcare spending, optimizing the supply chain will be imperative for manufacturers/service providers. Saudi Arabia is investing heavily in the healthcare sector and is building several medical cities.
Healthcare services and training have become top priorities for the Saudi government. It is committed to investing in optimizing the local pharmaceutical industry and creating a robust healthcare infrastructure, which calls for improved cold chain management and perfect last-mile delivery.
Given that the sector is growing fast and the number of companies in Saudi that are specialized in this area of healthcare logistics is limited, it represents a potential opportunity for the new entrants to the market and existing players. Due to COVID, there was a surge to deliver the vaccines to the needy places in quicker modes. Many logistics companies like FedEx and DHL have a same-day delivery system. Some local Companies like Souq.com, Shipa, etc., provide same-day delivery in Saudi Arabia.
BookDr is a leading digital healthcare app that provides same-day ePharma delivery and home lab visits. It supports the supply of its integrated logistic services through its partnership with SMSA Express.
Competitive Landscape
The courier, express, and parcel (CEP) market in Saudi Arabia is fairly consolidated. The top five domestic and international players dominate the market, accounting for more than 65-70% of the share. SMSA Express, DHL, Aramex, and Saudi Post are the top players in the domestic CEP market, while DHL and Aramex have very high market shares in the international CEP market.
The digitally enabled logistics startups are rising in the country to capitalize on the high growth of the e-commerce sector and increase the operational efficiency in package delivery. For instance, Trukkin offers a seamless and powerful platform designed to enhance efficiency, consistency, transparency, and reliability in the transportation and logistics ecosystem. Also, the companies operating in the country are focusing on improving their digital capabilities.
Additional Benefits:
The market estimate (ME) sheet in Excel format
3 months of analyst support
Read the full report: https://www.reportlinker.com/p06074774/?utm_source=GNW
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