The Economic Impact of Express Carriers in Europe

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Back in 2011, The European Express Association published a report about The Economic Impact of Express Carriers in Europe. The executive summary is shown below.

What is the express delivery industry and what does it do?

• The core business of the express delivery industry is the provision of value-added, door-to-door transport and deliveries of next-day or time-definite shipments across the globe.

• The express delivery industry provides its customers with a comprehensive service: organising collection, usually at the end of the business day, allowing the sender access to information on the progress of shipments from pick-up to delivery, and providing proof of delivery.

• Furthermore, where shipments cross international borders, the express delivery industry handles customs clearance as well as the payment of duties and taxes as required.

• This report describes the size and reach of the express delivery industry within the EU27 economy, in terms of its contribution to employment and GDP.

• However, the most important contribution that the express delivery industry makes, is through its impact on the capabilities and competitiveness of other sectors of the economy.

579,000 European jobs and over €23.4 billion of EU27 GDP are supported by the European express delivery industry. The express delivery industry supports jobs and GDP in Europe through three main channels:

• The express delivery industry employs over 272,000 people and through its own activities generates €10.3 billion to EU GDP.

• Through purchasing goods and services from other European companies, the express industry supports a further 191,000 European jobs and generates a further €8.4 billion of GDP to the European economy.

• Spending on European goods and services by the 463,000 workers who are either directly employed by the express delivery industry or whose jobs depend on the industry’s indirect impact, supports a further 116,000 European jobs and generates a further €4.7 billion to the EU’s GDP.

• Furthermore, the express delivery industry contributes close to €3 billion to EU27 public finances, a significant contribution for an industry of its size. Almost all of this contribution is accounted for by corporation tax, income tax, and social security contributions (both employer and employee). The express industry plays an important role in Europe’s internal market…

• Based on industry data, we estimate that 269 million intra-EU cross-border express deliveries took place during 2010, with a wide spread in terms of country of origin and country of destination.

• Intra-EU trade is of increasing importance to Europe’s economy. Over the past decade, trade in goods has grown almost twice as fast as the economy as a whole. At the same time, the European express delivery industry sales revenues have grown at an even faster rate, suggesting that the sector continues to make an important contribution to the deepening of the Single Market.

• Express delivery helps small firms to export by providing rapid and reliable delivery services that they cannot provide themselves. Business surveys conducted for this report show that SMEs depend on express delivery services for 15% of their sales revenues. …and supports Europe’s international trade

• Express carriers are facilitating Europe’s trade with the rest of the world by investing in new delivery routes and services, connecting EU member states with over 90% of the world economy within 72 hours, and ensuring that European companies remain competitive, by growing their exports and investments.

• Business surveys show that around 20% of express shipments that originate from EU member states are sent to destinations outside the EU. Moreover, 77% of respondents consider express delivery services to be important for competitiveness in markets outside the EU.

• Good access to markets is of the utmost importance in influencing firms’ decisions on where to locate. For many firms, ‘good access’ to international markets includes the availability of next-day delivery. If allowed to grow in-line with demand, by 2020 the industry will directly employ a total of 300,000 people…

• Like many of its customers, the express delivery industry has been badly affected by the recession.

• Yet despite the uncertainty over the timing and pace of the recovery, we believe the long-term prospects for the industry are bright. Over the next decade, we expect the express delivery industry to grow by around 3.9% a year in real terms, around 1.8 percentage points faster than our growth forecast for EU27 GDP.

• By 2020, we expect the express delivery industry to directly employ 300,000 European people, compared with 272,000 today.

• Today, express delivery services are used to delivering around €4 trillion worth of goods, equivalent to 16% of European businesses sales revenue. By 2020, we expect this proportion to increase to over 20%.

• Many industries use express delivery services to transport time-critical goods. Express delivery services are crucial to many manufacturing businesses’ ability to operate just-in-time inventory management processes. The express delivery industry represents significant supply-chain value for EU businesses.

• 96% of EU27 companies indicate they use express delivery services because they need next-day and guaranteed delivery.

• Many European companies rely on nextday express delivery services because their company’s products are time-sensitive or perishable, especially where customers have streamlined production processes or have an urgent need for spare parts.

• Next-day delivery services enable European firms to maximize the efficiency of their production activities, reducing production shut-downs, enabling firms to implement best international techniques, such as build-to-order, and minimize their inventory costs. 36% of EU27 companies have production processes for which next-day delivery is very important.

Next day delivery has become an integrated part of modern manufacturing and business.

• The business survey revealed that 47% of companies believed they would be very badly affected if no next-day delivery services were available.

• For many firms, the loss of international nextday delivery would harm their sales. 43% indicated that orders could be lost because of longer delivery time, while 43% stated that they would need to increase the size of their inventories to meet customer demand.

• But production would also be affected. 42% of businesses said they would need increased inventories for production processes while 15% stated that the loss of next-day delivery services might force them to relocate.

• Through disrupting both their sales and production, the loss of next-day delivery services would undermine the competitiveness of European businesses. 74% of businesses surveyed stated that their international competitiveness would be harmed if international next-day delivery services were no longer available.

• Restrictions on express delivery services, therefore, would generate significant economic costs. We estimate that imposing a restriction that led to next-day delivery services no longer being available in the EU, would reduce EU GDP by around €30 billion a year.

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