Retail consumer dynamics study
Retail consumer dynamics study
Read MoreTag: Worldwide
Third-Party Logistics Providers Play Key Role in Integration, Sustainability and Security of the Supply Chain
Capgemini, Georgia Institute of Technology, Oracle and DHL release the thirteenth annual Third Party Logistics Study
The survey shows that the ‘greening’ of the supply chain will have an increasing impact on the companies.
The study is based on a survey of 1,644 logistics executives from North America, Europe, Asia Pacific and Latin America and identifies a number of key findings:
• Green supply chain initiatives are essential for future business success according to 98 pct of logistics executives, yet the majority are unwilling to invest any additional funds in the greening of the supply chain.
• The theft of material goods continues to be the top security concern. But the changing business environment means that companies must focus more attention on other causes of supply chain disruption from the theft of intellectual capital and natural disasters, to the closure of ports and product tampering.
• Underpinning sustainability and security are strong relationships across the different parties in the supply chain achieved through integrated systems and services. Through deliberate efforts to form solid relationships with logistics providers using detailed contracts and metrics, companies can achieve significant cost savings, shorter order cycles, better customer service and improved business efficiency.
FedEx CEO: Economy will come back
FedEx CEO Fred Smith says the economy is stronger than most people realize, and that mountains of cash is “on the sidelines” in emerging markets, waiting to be invested.
Asked in an interview what it would take to turn around the U.S. economy as the credit crisis unfolds, Smith, who founded the global freight carrier, said things in the real economy are not that bad.
“The industrial economy is a lot stronger and more resilient than I think people give it credit for,” Smith told Fortune.
“And there’s an enormous amount of money in China, in the Middle East, and elsewhere that has to be invested. It can’t just be placid on the sidelines. So after a period of trauma and readjustment, my guess is that the economy will come around.”
“They’re showing pretty clearly that the economies of the industrialized world are slow, and that the emerging economies, like China and India and the intra-Asia trade, all continue to grow at pretty good levels but at substantially lower growth rates than was the case a few months or years ago.”
Read MoreEuropean parcel volumes resilient against economic adversity
Although the recent credit crunch and resulting economic uncertainty are affecting the growth potential of the European express industry, the main effects will be on the use of different modes of transport and profitability rather than on overall levels of parcel volumes.
Indeed, supply chain rationalization, internationalization and business-to-consumer (B2C) e-commerce are continuing to drive industry growth.
The US sub-prime mortgage fiasco’s impact on the financial sector and wider global economy, combined with a sharply increasing oil price, is having a direct impact on the express industry, with several express companies announcing lower profits and issuing cost cutting measures. However, the credit crunch has hit individual markets and companies differently, leaving those relying on the US and intercontinental routes the most exposed, says Datamonitor logistics & express senior analyst Erik Van Baaren. “In general, its effects are felt to widely varying degrees depending on companies’ exposure to the most affected verticals, country markets and trade lanes.”
However, although the value of the European express and parcels market is forecast to grow at a lower rate than in previous years, it is still expected to record an average annual growth rate of 3.5 pct in the next five years, above GDP growth. The strong demand for international and home delivery services is still contributing to the European express industry’s development, despite rising fuel costs and the global economic slowdown dampening its potential.
A trend that set in before the credit crunch, and was caused by rising fuel surcharges, has been that of a modal shift from air to road express services, as well as, to some extent, a shift to non-express freight such as rail or sea freight. The result of this shift has manifested itself mainly in decreased profitability, as increased transportation costs have not been offset by price increases. In Europe, volumes remained strong in the first half of this year and although a decline was observed in June, operators are still expecting only marginally lower volume growth in the coming years, Mr. Van Baaren says. “The next quarter will be critical and will reveal whether the lower growth in recent months was incidental or more structural.”
Retailers’ e-commerce investments, the rising use of broadband, favorable demographics and faster websites are extending the scope of products that are available online, which in turn is stimulating demand for home deliveries even as consumers’ disposable income comes under pressure. The rationalization of supply chains and the relocation of manufacturing and distribution activities are the other main growth drivers still fueling the express and parcels market, with Eastern Europe and the Far East acting as the catalysts for this development.
The outlook for the next five years remains uncertain as the full impact of the financial crisis has not yet become entirely visible. The outlook for the European parcels and express market remains cautiously optimistic, while emerging markets (Brazil, Russia, India and China (BRIC), Middle East and Eastern Europe) are still recording strong growth levels. The significance of the financial services vertical to the express industry has already been diluted in recent years by lower document volumes as a result of electronic substitution, Mr. Van Baaren says. “The economic crisis is likely to further restrict the importance of financial services for the express industry, negatively impacting those countries and companies which rely on it.
Read MoreCPL – B2C will drive European express growth
B2C deliveries will be the major growth market for the European express and parcels industry in the next few years along with international deferred shipments as customers downtrade from premium express to slower but cheaper products, the Courier and Parcel Logistics conference in London was told.
Home deliveries will grow strongly as consumers increasingly shop on the internet instead of in the high street, but issues surrounding “final mile“ deliveries will continue to pose operational challenges, senior industry managers said on the event’s opening day.
Speakers agreed that the B2C market would move towards segmentation between premium deliveries of higher-value goods and standard delivery of lower-value items. However, there was little customer take-up of parcel collection and drop-off points so far, they commented.
Addressing market trends, speakers said that the world economic slowdown and recent financial markets turbulence would impact on business. The express industry would see fewer shipments and more bundling of volumes from financial customers, while customer relationships were being shaken up by the rapid changes in the financial sector. More generally, operators needed to right-size their networks, remove excess capacity but not endanger their customer service levels.
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