In an international world, with a growing population, more people means ever-more movement of goods and produce around the world. The international logistics industry that delivers these items is now worth a staggering 䚺.7tn.
Logistics execution leads the way – particularly road transport, which sees around 䚹.4tn of business each year. Sea transport has encountered choppy waters in the last few years, but still managed to rack up ꄘbn in revenue.
A recent report on the growth of the industry explored the developments in various parts of the market for logistics-related activities,with the Boston Consulting Group (BCG) pointing out that while turnover is growing strongly, profit growth is somewhat slower. Many of the companies that decided to grow by acquisition failed to see the kind of profit growth they were seeking.
The winners understand logistics megatrends
It is not all gloom – the top ten companies in the different logistics market segments did see their profits increase. The BCG found that the top performers were set apart by two markers: they understood what made for success in today’s market and they knew how best practice could help to achieve this success.
They also had a heightened awareness of the megatrends currently ripping through the transport and logistics industry, including the continuing urbanisation throughout the world leading to pressure on transport infrastructure and consequent congestion. The impact of e-commerce has been to make the logistics challenge far more complex that it was previously. ‘Last mile fulfilment’ is the big problem – the need to get numerous small deliveries to individual households.
Digitisation is another megatrend that has revolutionised the tracking of consignments. Analytics are widely used to optimise the routes that will be used and cloud-based transport management has finally become a reality; for example, pallet racking suppliers and garage shelving such as https://www.garage-shelving.co.uk are seeing growth from these change drivers.
Growth alone will not yield profits
It is clear from the BCG report that profits will not simply arrive once sufficient growth is in place; instead, companies will have to be smarter about identifying profitable opportunities and capitalising on them. The existing corporate business models will need to be changed to deal with the complexity and competition that are now key elements of the logistics industry.