2003 was a difficult year for many of the world’s leading logistics players, particularly those with high exposure to the struggling mainland European economies. Most logistics companies focused on improving internal efficiencies in order to maintain profit margins, or in some of the worst cases, to cut losses.
France was the most challenging of the markets. ABX Logistics received permission from the European Commission (EC) to bail out its French subsidiary, Dubois. Grimaud was not so lucky and its owner Ziegler shut it down amidst controversy.
Conditions in the UK were also difficult, although strong retail sales buoyed the consumer goods market. Many logistics companies, especially commoditized motor carriers, found it difficult to pass on rising costs, including fuel, insurance and employee overheads.
Germany, the largest market in Europe, experienced many of the same problems. Thiel Logistik was one of the worst affected by the downturn and scaled back on its expansion plans. D. Logistics, recovering from a disastrous acquisition program, managed to stem losses and hopes to return to profitability in 2004.
Alliances replaced mergers and acquisitions as a popular means to expand. Mainly due to the harsh economic climate, the number of companies ambitious enough to grow through acquisition fell considerably.
European Union expansion will not be good news for everyone in the industry. Some estimates suggest that up to 20,000 in the eastern European forwarding community will lose their jobs, and 2,000 within the EU as the need for forwarding agents is removed.
There’s light at the end of the tunnel. Improving results and positive indicators suggest that 2004 could see a strong recovery in the market. Stock prices have risen strongly, and even the high-tech sector — one of the worst hit — seems to have bounced back. The latest wave of financial results from the logistics industry seem to bear this out, although growth in revenues and profitability is by no means ubiquitous. LT
John Manners-Bell is lead analyst with Transport Intelligence (www.transportintelligence.com), based in Cambridge, UK.