longer-term plans, it isn’t close enough for most of us to envisage precisely what we’ll be doing,
or translating strategic aims and high-level objectives into tactical activities.
It is now over fiveyears from the start of the global economic downturn, a period in which the world has experienced a series of interdependent regional economic crises. Following a long period of debt-powered
prosperity and growth in the 1990s and 2000s, established western economies have endured an extended ‘hangover’ after the affluent early years of the new millennium.
Diminishing household incomes and consumer spending power are reflected in the cuts
businesses have been forced to make in order to reduce costs and remain profitable (or in some
cases minimize losses). Some companies have chosen to take their logistics in-house, particularly
in the hi-tech/electronics sectors, whilst others have moved to outsourcing logistics for greater
flexibility and cost control.
And due to globalization the effects of the downturn have been felt almost everywhere. Whilst
many regions have now exited recession, others (in particular in the Eurozone) continue to feel its
direct effects whilst even those that are well on the way to recovery still continue to feel the pinch
through reduced demand from Europe and North America. Even many of the high growth emerging
markets have tended to see growth level off closer to single digit figures.
The worldwide impact of the prolonged downturn means that the global logistics industry has
been particularly hard hit. Subdued consumer demand and retail sales have translated to lower
production levels and consequently lower shipping volumes, driving permanent changes to the
landscape and dynamics of the logistics industry.
Looking ahead to 2020
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 welldocumented 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
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.
In this whitepaper we take a look into the future, at the key issues affecting road, air, sea and rail freight and warehousing by 2020, and importantly, how the technology that underpins the logistics industry is likely to have changed.