AMZN: A TOP PICK KNIN: GOING WITH THE FLOWDSV: RISINGMAERSK: SOARINGMAERSK: HOLDING MSS DISPOSALWMT: FOCUS ON COREUPS: STAFF CUTSGM: TOP SALESGXO: LEGAL RISKAMZN: AI-DRIVEN VALUETSLA: UP SHE GOESUPS: LOOKING FORWARDUPS: LOWERING EPS ESTIMATESEXPD: UNDER PRESSURE CHRW: JOB CUTS REPORTEDWTC: ANOTHER DEAL
AMZN: A TOP PICK KNIN: GOING WITH THE FLOWDSV: RISINGMAERSK: SOARINGMAERSK: HOLDING MSS DISPOSALWMT: FOCUS ON COREUPS: STAFF CUTSGM: TOP SALESGXO: LEGAL RISKAMZN: AI-DRIVEN VALUETSLA: UP SHE GOESUPS: LOOKING FORWARDUPS: LOWERING EPS ESTIMATESEXPD: UNDER PRESSURE CHRW: JOB CUTS REPORTEDWTC: ANOTHER DEAL
The global contract logistics market reported positive trends last year, and is expected to continue this upward trajectory, according to Transport Intelligence (Ti) – but challenging external conditions could pose a threat to growth.
A recent Ti report found the global contract logistics market grew by 3.5% in real terms in 2023, up from 2022’s 3% growth, which Ti said signalled a return to “a more normalised, pre-pandemic state of demand growth”.
Real-term growth shows underlying demand and activity, stripping out inflation. The market recorded a value of €284bn ($308.9bn) in 2023, this was almost 12% above its pre-pandemic value.
And the intelligence platform predicted that the contract logistics market would grow by 4.2% y-o-y in 2024 to reach a value of €296bn. And by 2028, Ti forecasts, it will reach €348bn, and cites ecommerce as “a long-term growth opportunity”.
Indeed, according to DHL, structural e-commerce trends are offsetting weaker consumer spending.
And GXO chief automation officer Adrian Stoch told The Loadstar ecommerce growth was changing customers’ warehousing and logistics requirements.
“In the retail apparel space, for example, companies will need to be very strategic about how they design their warehouse network; you must be as close to your end consumer as possible… same-day fulfilment is a big part of our online buying decision these days.
“And the management of separating out what’s in a single case to go to different stores is a very different type of process than fulfiling to an end customer,” he explained.
In its global contract logistics market sizing report, Ti warned of the risks that could pose a threat to predicted growth. It said: “External factors such as high inflation, uncertain economic developments, geopolitical conflicts and labour shortages all contributed to increased complexity for businesses and adversely impacted demand.”
However, it noted that contract logistics operations and the multi-year contract business model are increasingly proving to be resilient.
“Providers have largely mitigated inflationary issues by operating open or hybrid contracts where costs are transparent, and increases can be passed on to clients directly,” it said.
The world’s largest pure-play logistics contract provider, GXO, said that around 45% of its contracts are open book, while around 55% are ‘hybrid-closed book’, meaning they are partly cost plus and partly fixed price, while Wincanton operates around 73.5% of contracts under open book terms.
Ti’s Contract Logistics Procurement Survey 2023-2024 shows that some 51% of shippers have a hybrid contract with their primary contract logistics provider, while 32.7% have an open book contract.
Navin Yadav
The growth of the global contract logistics market is promising, driven by the robust expansion of e-commerce. However, potential threats like high inflation and geopolitical conflicts could disrupt this upward trend. Companies must adapt strategically to maintain resilience amidst these challenges, as highlighted by Ti’s report.
Thanks,
Piyovi Shipping Software Solutions
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