Freight: A Growing Industry

Global logistics network concept and wireless communication network

While much of the world’s economy struggled during the pandemic, there’s one industry that thrived: the postal service. Having already achieved high growth between 2008 and 2018, the industry hit a value of $499.5bn in 2020. That’s an increase of $23.1bn on the year before. This is why many investors are seeing freight companies as the perfect place to funnel their cash. Here’s why the postal service is so strong right now.

More Parcels Than Ever Before

The postal service depends on individuals and companies sending packages to one another. If this ceases to happen, then the industry will fail to be cost-effective. Fortunately, the number of items being shipped around the world is only on the increase. There are now more packages and parcels being sent than ever before.

In 2020, the world saw a 30% rise in the number of items being shipped. Of course, this was spurred on by the pandemic, but it still follows a trend that we’ve been witnessing for many years. This amounted to a staggering 131 billion parcels being sent in 2020. For an industry that depends on economies of scale, this is music to the ears of freight investors.

A Bastion of Technological Innovation 

Another reason that makes the postal service such a profitable and investible industry is the rate at which it is able to adopt new technologies. The more it does so, the better postal services become while spending less money at the same time. Few other industries are able to achieve this ideal scenario.

Buying an item online is now as simple as clicking a couple of buttons. Apps and online tracking allow customers to see exactly where their package is. In many cases, it will arrive within 24 hours, making it almost as convenient as going to the store. We’re still in the age of human delivery drivers, though. Once the drones take over, speed will go up while cost goes way down.

More Choice for Consumers

The success of an industry often comes down to how much choice consumers have. In the past, there was only one real option for sending packages. This was USPS in the USA and Royal Mail in the UK, with each country having its own alternative. This meant there was no competitive incentive and sending mail was generally slow and inefficient.

In recent years, customers can easily look online for the most tailored service to suit their needs. Using price comparison sites, you can discover new freight companies that may potentially offer a better service at a lower price. As long as this growth in options continues, the mail industry is likely to always be a success.

There are many struggling industries out there, but the postal service is one that is only going from strength to strength. Consumers have been quick to use the service, which is partly due to there being more options than ever, not to mention the technological improvements. That’s why many financial investors are choosing to pump more money into freight companies.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.