The courier, express and parcel (CEP) market is booming. So who (outside the obvious) is going to benefit?
Between 2016 and 2018, the number of parcels shipped in Australia grew from 778 million to 841 million.
Driven by rampant online shopping and a booming eCommerce sector, parcel delivery generated a sizable $9.2 billion in revenue in Australia in 2017, an increase of 6.2 percent on the previous year.
This growth is paralleled around the globe, with the Pitney Bowes Parcel Shipping Index estimating that parcel shipping generated $279 billion in global revenue last year – an 11 percent increase from 2016.
Polling of online shoppers shows that consumer expectations around delivery time are also on the rise.
Around 20 to 25 percent of consumers pick same-day or instant delivery when it’s available at low prices, with shoppers across the board expecting to receive international deliveries within three business days.
Increased demand for fast delivery services is putting an ever greater demand on delivery infrastructure and transport logistics.
This pressure is most acutely felt in the final phase of the CEP supply chain, ‘last mile’ delivery, which currently accounts for around half of supply chain costs.
Highlighted in a 2018 McKinsey and Co report into the future of last-mile transport logistics, one of the key challenges facing CEP service providers is the question of how to expand their delivery networks while keeping fuel costs down and carbon emissions low.
“As cities tighten their emissions standards, it makes sense that the deployment of electric vehicles (EVs) in last-mile delivery will be among the first technologies to achieve significant adoption.” the McKinsey report commented.
“This change is currently underway, as these technologies are already market-ready and scalable, with each of them contributing to cost effectiveness, customer convenience, or regulatory compliance,” said the report.
One ASX listed company well placed to cater to these needs is global manufacturer and distributor of electric two wheel vehicles, Vmoto (ASX:VMT).
The company’s marquee product is its E-Max scooter range, a low running cost, low emissions delivery vehicle designed with the ‘last mile’ delivery market in mind.
Vmoto’s E-Max electric scooters have already secured trials and in use by Deliveroo in the UK, DAO in Denmark for newspaper delivery, Greenmo in Netherlands, who supply to Domino’s and post office in Netherlands, and U’mob in France, who supply to Pizza Hut and a number of food delivery companies in France.
Last year the company generated revenues of $19.6 million, a 30 percent increase on its 2017 figures.
In the fourth quarter of its 2018 financial year, Vmoto sold 1,689 electric vehicle units to Europe, a 141 percent rise on the previous quarter and a 587 percent increase on the prior corresponding period in 2017.
Vmoto also boasted cash-flow positive status in 2018, and achieved a positive EBITDA of $18k.
Since the start of 2019, Vmoto’s share price has risen an impressive 19 percent, following the release of solid 2018 financials.
The figures reflect a growing confidence in the Vmoto product range and the company’s strong positioning in relation to the growing CEP market and the needs of last mile delivery services.
This content is produced by Star Investing in commercial partnership with Vmoto. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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