Outsourced Logistics Industry Shrugs Off Economic Gloom

According to a report by Transport Intelligence, the contract logistics industry worldwide has so far largely managed to avoid the economic downturn which has affected some other transport and logistics sectors.

The worldwide contract logistics industry grew by 9% to just over €140billion ($221 billion) in 2007, according to new figures published in Global Contract Logistics 2008. The increase came despite worries that a worldwide economic slowdown would have a serious impact on volumes and revenues.

The sector was helped in Europe by strong low double-digit growth in the UK, Europe’s largest market. Finland, benefiting from its strategic location as a gateway to Russia, was also one of the fastest growing markets. All the markets in the Central & Eastern European region expanded significantly faster than their western counterparts, as foreign investment in manufacturing facilities and the trend towards ‘near-sourcing’ continued. Growth rates in Germany and France were ‘solid’ as the manufacturing and retailing sectors in both countries held up well.

So far, the slowdown seems only to have affected the US market to any degree, said Transport Intelligence. That country’s contract logistics market grew by just under 7% in 2007 which represents a significant drop from its 10% plus growth in 2006. A slump in the construction industry, the ‘credit crunch’ and lower retail sales all contributed to that slower growth, with the sector related to the distribution of import volumes from Asia Pacific particularly affected.

Asia Pacific, however, was the real growth driver in the global contract logistics market. Overall, that regional sector grew by in excess of 11%, although that figure hid a high level of variance. China’s contract logistics sector continued its extraordinary growth, no doubt aided by the run-up to the Olympic Games. Japan, however, has fallen back into its long-running economic malaise and its contract logistics market returned one of the smallest growth rates from across the region. It was outshone by a range of up-and-coming markets such as Vietnam, Malaysia and Indonesia.

According to John Manners-Bell, CEO of Transport Intelligence, although 2007 was another good one for the contract logistics market, the next few years will be challenging. “So far, the contract logistics industry has shrugged off talk of the economic downturn and even in the US, where the transport industry is struggling, growth rates are remarkably good. However, we believe that markets around the world will inevitably be affected by the ‘credit crunch’ and a loss of consumer confidence. Consequently, we are downgrading our forecasts for the industry accordingly.”

Global Contract Logistics 2008 contains market sizing and forecasts for 70 countries in the European, Asia Pacific, North and South American, Middle East and African regions. It also contains market shares, rankings, company profiles and analysis of the latest trends and development in the sector. For more information follow the link to www.transportintelligence.com.

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