Contract Logistics market in good health

The contract logistics market saw a strong recovery in 2010. The sector bounced back as most economies experienced positive GDP growth and a rebound in world trade.


CEVA DHL Supply Chain


Contract Logistics market in good health

The contract logistics market saw a strong recovery in 2010. The sector bounced back as most economies experienced positive GDP growth and a rebound in world trade. However the growth rate in 2010, at 8.4 per cent, was not quite back to the levels seen before the economic downturn and the overall size of the market is still below that of 2008. The beginning of the upturn was seen towards the end of 2009 as logistics companies started to benefit from a pickup in volumes and confidence in the industry returned. The report from Ti, Global Contract Logistics 2011, shows an industry in good health, with revenues and margins rising. With a number of ambitious companies in the market, more mergers and acquisitions can be expected. China was largely responsible for the turnaround, leading the industry forward with double digit growth rates as domestic investment continued and the demand for exports in Europe and North America soared. Growth in the developed world was more muted although the German market stood out, benefiting from the robust manufacturing-led recovery in its economy. The global contract logistics market was more resilient during the economic downturn than other logistics sectors due to the defensive nature of the industry, and thus placed the market in a good position for growth as the economy, and in particular trade, recovered. The upturn in the market was mirrored by an increase in profitability. A survey of operating margins of some of the industry’s largest contract logistics players showed that in 2010 margins rose to an average of three per cent. The report also identified the world’s leading players. On a global basis, the market leader, DHL Supply Chain was over three times the size of its nearest rival Ceva. The biggest mover in the global top ten was European operator Norbert Dentressangle propelled by its acquisition of TDG. According to John Manners-Bell, Ti’s chief executive, the industry is in good health. “There are a number of wellbacked and aggressive companies who want to develop their contract logistics business strongly over the coming years. I would be very surprised it this didn’t result in further mergers and acquisition activity. On top of this, we expect the market to continue growing in the high single digit range, as manufacturers and retailers look to out-source more value added services.”