Market Trends of Europe FMCG Logistics Industry
E-commerce Sales to Rise at a High Pace in Europe
Numerous e-commerce businesses witnessed more significant operational expansion even though they functioned on a shoestring initially. Third-party logistics allows retailers to unleash greater sophistication before their customers on the deals made through the e-commerce mode. According to industry experts, e-commerce will likely account for 25% of the total retail sales in the United Kingdom by 2023. In Western Europe, 10.2% of retail sales are online, while 5.0% are online in Eastern Europe. With only around 5% of the total retail sales currently made online in Spain and Italy, these two markets are expected to see the most substantial online retail sales growth of all the Western European markets over the next five years at 17% per annum and 21% per annum, respectively. Likewise, Central and Eastern Europe may witness an average growth of 17.5% annually, with Romania, Russia, and Hungary performing the strongest.
France and Italy are highly established premium markets that contribute to significant shares in the European market. More and more healthcare and pharmaceutical companies are entering the e-commerce world. As a result, they find themselves attempting to identify the most suitable way to meet ever-burgeoning demand while dealing with numerous regulatory restrictions. While wellness and beauty products, such as nutrition supplements and cosmetics, may be sold online with few regulatory restrictions (although there are still several critical requirements to inform potential consumers about the characteristics of the products and their prices), e-commerce of medicines is subject to considerably more conditions.
In some cases, legislation absence raises questions and creates a high uncertainty level for those considering entering the e-commerce field (e.g., those in the medical device industry). At the same time, authorities continue to enact oversight and enforcement. There are frequent reports of websites that are banned because they offer prescription-only medicines or even illegal medicines to Italian consumers (this includes websites operating abroad). Spain is the 13th largest market for e-commerce, with a revenue of USD 27.2 billion in 2021, placing it ahead of Italy and Russia. With an increase of 17%, the Spanish e-commerce market contributed to a worldwide growth rate of 15% in 2021. Like in Spain, global e-commerce sales are expected to increase over the following years. As new markets emerge, global growth will continue over the upcoming years. East and Southeast Asia will propel this development with their growing middle class and lagging offline infrastructure.
Impact of Brexit on the Logistics Market
The UK left the European Union (EU) after years of negotiations. Many experts say it could significantly affect Europe's supply chain and logistics sector. It will harm European trade.
Before Brexit, goods and supplies moved across Europe without much interruption, resulting in a smooth transition essential for the supply chain functioning. Post-Brexit, there will be economic, customs, and administrative changes, and additional charges and duties will be imposed on shipments. It will significantly affect the supply chain functioning.
The EU is the world's second-largest trading bloc, and Brexit will result in incremental costs in the supply chain. It will not only impact intra-Europe trade but also hugely affect the logistics industry in the region.
Road haulage is the dominant mode of freight transport within the UK. Most goods imported to and exported from the UK by road are handled by overseas haulers (with vehicles mostly registered in Poland, Ireland, and Romania). Conversely, the UK haulers account for 8% of the total haulage activity in the EU.
Those UK haulers could face several hurdles post-Brexit. Also, additional tariffs and customs clearance procedures cause delays in supply chains and increase costs for all transport modes.
The UK logistics companies operating through European ports will also lose the benefits they received while members of the EU. Similarly, other European maritime transport companies will adhere to new UK rules and regulations while shipping in ports in the country.
