- THE MAGAZINE
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The global contract logistics market had a strong start in 2011 and, despite a slowdown in the second half, still achieved 4.5 percent growth, according to Global Contract Logistics 2012, a new report issued by Transport Intelligence.
According to John Manners-Bell, CEO of Transport Intelligence, the market is delicately poised. "The contract logistics sector is very robust in the face of economic challenges," he said. "However the growth and profitability of the market will rely heavily on whether Europe can sort out its financial mess."
In addition to the slowing global economy; increasing fuel prices, the earthquake and tsunami in Japan, floods in Thailand and political turmoil in the Middle East and North Africa all took their toll, according to Transport Intelligence. However the contract logistics industry in emerging markets continued to outperform those in the developed world, although these countries were not completely immune from global events.
The report shows there was considerable variation in regional growth rates. The development of the European contract logistics industry was largely dependent on the level of exposure to the 'distressed' southern European economies. Germany and northern European markets on the whole performed well, whilst logistics service providers found the environment in Spain, Italy and France challenging. Overall the region's contract logistics market grew by 3.1 percent, said Transport Intelligence.
In Asia, contract logistics growth moderated in 2011 to 7.4 percent, due to weaker demand in Western markets and especially the impact of the Eurozone crisis. However investment overall increased and consumption remained buoyant. Of course the whole region was affected by the Japanese earthquake and Thai floods, and supply chains were still recovering in the first quarter of 2012.
Growth in the North American contract logistics market slowed considerably in 2011 to 2.8 percent. The logistics spend in the sector remained just below the peak of 2008. The U.S. economy struggled throughout most of the year and it was not until the end of 2011 that the country started to see some positive signs, said the Transport Intelligence report.
There was, however, good news in terms of the sector's profitability. Weighted average operating margin, tracked by Transport Intelligence for six years, rose slightly from 3.2 percent in 2010 to 3.4 percent in 2011. It is now at its highest level since 2007. Cost control, higher volumes and the ability of many companies to pass on fuel costs to clients contributed to the rise.