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Report explores prospects for logistics industry
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06/05/2009
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The global contract logistics market grew at 5% in 2008 according to the latest report published by Transport Intelligence (Ti) - Global Contract Logistics 2009. This represents a significant weakening of the market after several years of growth of around 10%.
Most worryingly for the industry is that the majority of this growth occurred in the first three quarters of the year, with logistics companies really noticing a drop off in volumes during the ‘peak shipping’ season. This downturn has been felt well into 2009, although there are signs that the fall in volumes may well have bottomed out by the end of the first quarter, the report suggests.
The highest rates of growth were seen in developing markets such as Asia Pacific, Central & Eastern Europe and Latin America. China’s market development cooled, but with GDP growth still in the high single digits, and a $585 billion stimulus package taking effect, underlying economic activity will continue to drive its logistics sector.
The report’s authors say that in such volatile times, forecasting the next five years is highly problematic. However taking into account the significant falls in contract logistics revenues being experienced in 2009 and also the latest economic forecasts which do not expect a significant recovery until 2011, Ti believes that the market will grow at a compound annual rate of 2.4% between 2008 and 2012.
According to John Manners-Bell (pictured), CEO of Transport Intelligence, 2009 will be a tough year for the industry, despite the contract logistics sector having more defensive qualities than some others.
"Contract logistics companies have a higher degree of protection from market volatility due to the agreements and relationships they have in place with their clients. However with a melt down in sales, manufacturers and retailers will be looking to reduce their supply chain costs and contract logistics companies will increasingly find their margins squeezed at the same time as their underlying revenues weaken. Logistics providers will have to work hard at increasing their value proposition to clients if they are to avoid the worst excesses of the recession."
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Author
Ken Hurst
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