Germany Last Mile Delivery Market - Growth, Trends, Covid-19 Impact, and Forecasts (2022 - 2027)

Germany Last Mile Delivery Market - Growth, Trends, Covid-19 Impact, and Forecasts (2022 - 2027)

Germany's Last Mile Delivery Market is expected to grow at a CAGR of more than 4.5% during the forecast period (2022 -2027). Since the directive to limit social interaction and shut down non-essential commercial operations in Germany, freight traffic on German rail and roads has decreased by about 20%, according to the German Federal Ministry of Transport. The bulk of online retailers was likewise impacted by Covid-19's impacts. A daily average of 5.2 million parcels are typically delivered, according to Deutsche Post. During the lockdowns, Deutsche Post moved more than eight million packages and deliveries per day. The corona crisis has resulted in a rise in the need for storage space in Germany, which is not surprising given this surge.

Delivery by road transportation faced numerous significant obstacles in the months after the COVID-19 outbreak, including heightened safety procedures, tight deadlines, and changing customer preferences and expectations. Today, after more than two years of COVID-19 lockdowns, the logistics industry is navigating a series of new challenges regarding the need to decarbonize. Doing so entails addressing ambitious climate targets aimed at lowering greenhouse-gas emissions, which have led to changing regulations and fuel taxes, as well as increased electrification of fleets and increased demand for sources of clean energy.

Over the course of the epidemic, Germany experienced unheard-of e-commerce development, as with almost every other nation in the world. Along with the e-commerce boom, out-of-home delivery options like parcel lockers and collection stations have become more popular nationwide. With ambitions to boost that number to 12,500 by 2023, Deutsche Post alone currently runs about 8,500 automated parcel machines.

Key Market TrendsGrowth in E-commerce Driving the Market

In 2021, German e-commerce saw rapid growth. Gross sales of products sold through e-commerce were EUR 99.1 billion, up 19% from 2020. Online purchases made by German consumers for household expenses accounted for almost every seventh euro. German customers are constantly looking for easy shopping options. In order to cater to this demographic and inclination, retailers are increasingly developing customized services based on customer requirements and information. Online fashion sales in Germany have decreased by 9% since the start of the war in Ukraine. Online transactions in the renowned steady category of interior design also slowed down. However, overall e-commerce sales increased by 8% in the first quarter of 2022.

Although online sales as a whole grew more than 8 percent, different segments have experienced stagnation since the Russia-Ukraine war started on February 24th. A post-pandemic shift in consumer behavior may possibly be the cause of the decline in internet sales. It's interesting to note that at this time, online retail of medicine sales has skyrocketed. The rise in medication sales began during the pandemic, but since late February 2022, orders have increased by a whopping 40%. Additionally, during the first three months of 2022, sales for travel and events increased by almost a third (64%) overall.

The parcel boom in Germany continues. Even in the second Corona year 2021, the number of shipments grew strongly and reached around 4.5 billion. That was 11.2 percent more than in the previous year, the main reason last year was online trading. Again in 2021, corona-related contact restrictions helped households to have more goods delivered. Shipments to businesses also picked up again after a slight decline in 2020, with growth slowing over the course of the year due to supply chain issues and material shortages.

Government Investment in Transport Infrastructure Supports Last Mile Delivery

There is a huge strain on roads, bridges, and tunnels in Germany. For this reason, they need to be constantly repaired and maintained. On a considerable part of the country's Autobahn network, Germany aims to upgrade the bridges. The A45 Autobahn corridor, which connects the Ruhr region with the significant business center of Frankfurt, will be given top consideration. Many of the bridges along the route are in bad condition and require urgent maintenance, repairs, or replacement. Due to worries about its construction, the bridge that crosses the Rahmede Valley had to be closed to traffic in late 2021. A budget of EUR 530 million has been set by the German Government’s Road firm, Autobahn.

The expansion of the B247 becomes the largest infrastructure project in Northern Thuringia. The project consists in building two to four new lanes on a 22.2 km road section, including two new bypasses, 31 structures, including 2 bridges and 5 railway bridges, 8 junctions, and around 6 km of additional state and federal roads. The works will be completed by mid-2025 by subsidiaries of the VINCI Group in Germany (Eurovia, VINCI Construction Terrassement, and Via Structure) in local partnership with Thuringian companies.

Competitive Landscape

The Last Mile Delivery Market of Germany is fairly fragmented in nature with a mix of global and local players, this makes the sector highly competitive. Some of the strong players of the country include DSV, UPS, DB Schenker, Deutsche Post DHL, and FedEx. Companies in the industry are concentrating on growing in terms of incorporating new technologies like drones, electronic vehicles, transport management systems, and artificial intelligence. The German logistics players are facing difficulties due to increased labor costs and dwindling labor availability in the sector.

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