2023 CEP Review: The techs and topics trending in the industry last year

The global Courier, Express & Parcel (CEP) services market was worth $315.1 billion in 2022, according to a report released in late October, and this will grow at an estimated CAGR rate of 4.3 percent from 2023 to 2029, by which point it will be worth $405.4 billion.

The projections look healthy, but they are yet another downgrade. In August 2023, another industry report predicted a CAGR of 6 percent between 2023 and 2028, which itself was two percentage points lower than the 8 percent it predicted in August 2022.

This downward trend could be seen in the way the stagnation of 2022 continued into 2023 as global parcel volumes flattened out. E-commerce went into overdrive during the Pandemic, but some countries have proved to be relatively immune to the joys of buying online.

Among the key markets, China’s parcel volumes only edged up 2 percent in 2022 – its slowest ever growth rate – while the US suffered a huge fall in imports in 2023. A key indicator of US industrial output, the PMI Index, hit 46.0 in June 2023 – a three-year low.

Limited investment due to uncertainty

The global uncertainty carried into 2023, as did climbing interest rates, the increased cost of living and reduced global spending – so most CEP operators continued to consolidate, avoiding investments that might be regarded as risky.

The operators know the industry is going to pick up again, but most of them would rather see this happen before they start seriously investing again, citing:

  • High inflation and interest rates
  • High fuel and raw material prices
  • Capacity constraints across multiple modes
  • Supply chain unreliability
  • Surcharge and accessorial increases
  • Delayed orders and longer lead times
  • Shipping container imbalance

A US report this year revealed how 23 percent of US material-handling system operators are holding off investing, compared to 16 percent last year. Over the next 2-3 years, only 49 percent predict they will increase spending, compared to 57 percent in 2022.

But there was a silver lining as more are investing in their information systems: 26 percent compared to 22 percent in 2022. And this has coincided with falling steel and electrical component prices.

Looking for profits from within

So 2023 has once again been a year in which profits are being squeezed by parcel volume stagnation, leaving CEP operators with limited options to improve their bottom line.  In an increasingly competitive industry, they can no longer pass on the increasing costs of their labour and raw materials to their customers.

Instead, profits must come from within: through the digitalisation and optimisation of their systems, resources and networks.

In order to achieve this in their distribution centres (DCs), CEP operators are adopting intelligent solutions such as automation (for bulk handling), cloud-based OCR (to minimise unreadable label problems) and digital twins (to better deal with capacity demands).

In the Last Mile, meanwhile, the main driver has been sustainability. Customers are becoming increasingly vocal about the carbon footprint left by the delivery of their goods, and the challenge facing the CEP operators is how to become more sustainable with limited investment.

Invariably, the answer is data. Understanding what customers want in terms of sustainability, and also transparency, can enable them to thrive in the future.

Growing commitment to sustainability

Sustainability was a key focus in the 2023 DHL report urging CEP companies to embark on the road to decarbonisation by improving their supply chain optimisation, using sustainable fuels and adopting the latest technologies.

The report underlines the importance of total transparency – urging CEP operators to maintain an ESG outlook without greenwashing – and embracing digital technology.

Meanwhile, another DHL report – based on surveys carried out in nine major European countries – reveals that over half of all online shoppers value sustainability to the extent that 69 percent are prepared to pay more for green delivery options, while 58 percent would wait longer for a green delivery

Certainly in 2023, the number of greener delivery options is growing, but are CEP operators and e-tailers doing enough to find out what their customers really want?

For example, end-consumers are increasingly prepared to forsake the holy cow of doorstep deliveries and instead walk a ‘Slipper Distance’ to a pick up drop off (PUDO) outlet such as a locker centre.

But if this isn’t given as an option to the buyer, then the package will invariably end up on the doorstep – and even if it’s delivered by an electric truck, it’s generating 10 times more emissions than a delivery to a PUDO.

Another problem slowly being addressed are serial shoppers who take advantage of no-cost returns to send back goods without reason. A 2022 report highlighted how the practice results in untold emissions and discarded goods, but 2023 has seen many companies rescind or alter their policies.

Ultimately, CEP operators are in 2023 waking up the notion that they are best advised to cut services that only benefit a select few – like Sunday or same-day deliveries – or make them a premium service.

What else was trending in 2023?

Nevertheless, the improved focus on sustainability comes at a time when many CEP operators are losing Last Mile market share to startups – in both the US and Europe.

Typically they are local couriers (with a niche or contract to fulfil) delivering late in the evening to ensure a same-day service, or marketplaces taking full control of their customers’ experience.

Cost will always be a big influence, but how badly do end-consumers want same-day deliveries? Is it an ongoing battle for market share that will inevitably fizzle out once the end-consumer takes full control of their delivery?

Among the other trends and techs to show their hand in 2023 are:

Transport of air – limiting the amount of space not taken up by parcels in loads (so loose instead of caged) taken from transport hubs to DCs, and vice versa. But will it take off as an environmental indicator when loose loads take far more time to load and unload and the increased labour costs outweigh the benefits of packing tightly?

Merging letter mail with parcels – major CEP operators, including some of the national postal carriers, are questioning whether they should be tweaking their sortation systems to handle letter mail alongside parcels. Certainly, new tech to seamlessly incorporate letter mail back into deliveries has been launched this year.

Cloud-based OCR – if 2022 was the year of the digital twin inside the DCs, then 2023 belongs to the cloud-based OCR, a tech that can read as many as 60,000 barcodes an hour, reducing the percentage of undefined barcodes down from 5 to 2 percent of the total. Some 71 percent of companies say the cost of automation puts them off investing – but beyond a small installation fee, the OCR is strictly pay as you use.

Smart locker technology – 2023 has been a breakout year for lockers. Offering increased security, delivery simplicity and transparency, along with a guaranteed pickup and an easy-to-reach location with 24/7 access, CEP operators can service the lockers with one single delivery – a big plus for their carbon footprint. Nevertheless, lockers are not popular in countries where cars have shaped urban planning.

Dynamic Parcel Networks – the possibility of CEP operators with a global or national overview rendering deliveries as one seamless, touchless process. By using the latest tech to aggregate data and build forecasts, the operators can improve the symbiosis of their distribution network to cope better with demand fluctuations. Most of the tech needed to achieve this is already here.


A quick glance at the 2023 figures for the CEP industry suggests it was very similar to 2022. But coming to the end of the year, there is certainly more optimism than 12 months ago that more has been achieved, and that 2024 will be ‘the year’ when the wheel of fortune starts to turn again.

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