Despite a handful of key economies continuing to falter, the signs of recovery are now evident within the
logistics industry and beyond. Transportation rates and margins may remain volatile, reflecting the on‐going
fluctuations in local retail performance, particularly for air freight, but volumes are stabilizing and road and rail
freight in particular are showing an increasing trend. Sea freight volumes overall continue to be affected by
over capacity, with slow steaming and fewer routes still common. Merger and acquisition activity levels are
buoyant and new partnerships between regional and international LSPs are regularly being announced.
Yet there are a number of challenges ahead. In particular, key operating costs are set to keep increasing.
Spiralling fuel costs are a well‐documented issue for the logistics industry, particularly for those operating in
the Eurozone where government taxes exacerbate the impact of the regular per‐barrel oil price increases. And
labor costs are increasing the world over; standards of living and average wages are rising significantly in
emerging markets whilst in more established western
economies, several years of lower birth rates are
beginning to create more competition to attract
employees. LSPs are therefore seeking out ways of
protecting their margins, by leveraging economies of scale
through partnerships and networks and taking a bigger
share of supply chain profits through expanding the reach
of their operations and offering value‐added services.
Time to market (speed) and agility to react to changing demand as well as customer service are key and
potential differentiators. The modes of transport and sourcing destinations are changing as the customer
criteria change, with more near shore and same shoring and more road and rail (versus long sea voyages or
high cost air freight) as some supply networks contract in terms of geographic distances.
In Western markets, consumer demand continues to be focused around high‐tech goods such as smart phones
and tablet computers, with their reach widening to ever younger consumers and further into the business
world. Multi‐channel retail has firmly taken hold with tech‐savvy consumers increasingly shopping around for
both variety and price, shopping online and via mobiles as well as continuing to visit physical stores. These
consumers expect fast, often free delivery, which puts increasing pressure on the supply chain logistics.
Developing countries, such as China and India, not only remain at the forefront of production for high‐tech
goods but are also experiencing a growing middle class domestic market for these and other products. There is
strong demand, particularly for branded goods that were previously out of the reach of the majority of
household budgets. Multi‐channel has expanded at a similar rapid rate as these economies, with social change
in buying patterns being driven by technology, fast changing fashion/new products, variety and availability,
working patterns, traffic congestion and the ability to compare price and convenience. Many consumers still
like to touch and feel the goods first, but then price search and buy online from a trusted brand or retailer.
Despite a handful of key economies continuing to falter, the signs of recovery are now evident within the
logistics industry and beyond. Transportation rates and margins may remain volatile, reflecting the on‐going
fluctuations in local retail performance, particularly for air freight, but volumes are stabilizing and road and rail
freight in particular are showing an increasing trend. Sea freight volumes overall continue to be affected by
over capacity, with slow steaming and fewer routes still common. Merger and acquisition activity levels are
buoyant and new partnerships between regional and international LSPs are regularly being announced.
Yet there are a number of challenges ahead. In particular, key operating costs are set to keep increasing.
Spiralling fuel costs are a well‐documented issue for the logistics industry, particularly for those operating in
the Eurozone where government taxes exacerbate the impact of the regular per‐barrel oil price increases. And
labor costs are increasing the world over; standards of living and average wages are rising significantly in
emerging markets whilst in more established western
economies, several years of lower birth rates are
beginning to create more competition to attract
employees. LSPs are therefore seeking out ways of
protecting their margins, by leveraging economies of scale
through partnerships and networks and taking a bigger
share of supply chain profits through expanding the reach
of their operations and offering value‐added services.
Time to market (speed) and agility to react to changing demand as well as customer service are key and
potential differentiators. The modes of transport and sourcing destinations are changing as the customer
criteria change, with more near shore and same shoring and more road and rail (versus long sea voyages or
high cost air freight) as some supply networks contract in terms of geographic distances.
In Western markets, consumer demand continues to be focused around high‐tech goods such as smart phones
and tablet computers, with their reach widening to ever younger consumers and further into the business
world. Multi‐channel retail has firmly taken hold with tech‐savvy consumers increasingly shopping around for
both variety and price, shopping online and via mobiles as well as continuing to visit physical stores. These
consumers expect fast, often free delivery, which puts increasing pressure on the supply chain logistics.
Developing countries, such as China and India, not only remain at the forefront of production for high‐tech
goods but are also experiencing a growing middle class domestic market for these and other products. There is
strong demand, particularly for branded goods that were previously out of the reach of the majority of
household budgets. Multi‐channel has expanded at a similar rapid rate as these economies, with social change
in buying patterns being driven by technology, fast changing fashion/new products, variety and availability,
working patterns, traffic congestion and the ability to compare price and convenience. Many consumers still
like to touch and feel the goods first, but then price search and buy online from a trusted brand or retailer.
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