Contract logistics growth weakens but margins increase in 2011

Ti’s latest report – Global Contract Logistics 2012 – shows that the global contract logistics market grew by 4.5% in 2011 to reach €153bn.
 
The market was characterised by a strong start to the year, followed by a slowdown in the second half as weakened consumer confidence driven by uncertain economic prospects led to declining volumes, particularly in Europe and the US.
 
In addition to the slowing global economy; increasing fuel prices, the earthquake and tsunami in Japan, floods in Thailand and political turmoil in the Middle East and North Africa all took their toll. However the contract logistics industry in emerging markets continued to outperform those in the developed world, although these countries were not completely immune from global events.
 
There was considerable variation in regional growth rates. The development of the European contract logistics industry was largely dependent on the level of exposure to the ‚distressed‘ southern European economies. Germany and northern European markets on the whole performed well, whilst logistics service providers found the environment in Spain, Italy and France challenging. Overall the region’s contract logistics market grew by 3.1%.
 
In Asia, contract logistics growth moderated in 2011 to 7.4%, due to weaker demand in Western markets and especially the impact of the Eurozone crisis. However investment overall increased and consumption remained buoyant. Of course the whole region was affected by the Japanese earthquake and Thai floods, and supply chains were still affected in the first quarter of 2012.
 
Growth in the North American contract logistics market slowed considerably in 2011 to 2.8%, with the amount spent in the sector remaining just below the peak of 2008. The US economy struggled throughout most of the year and it was not until the end of 2011 that the country started to see some positive signs.
 
There was, however, good news in terms of the sector’s profitability. Weighted average operating margin, tracked by Ti for six years, rose slightly from 3.2% in 2010 to 3.4% in 2011. It is now at its highest level since 2007. Cost control, higher volumes and the ability of many companies to pass on fuel costs to clients contributed to the rise.
 
According to John Manner-Bell, CEO of Transport Intelligence, the market is delicately poised. "The Contract Logistics sector is very robust in the face of economic challenges," he said. "However the growth and profitability of the market will rely heavily on whether Europe can sort out its financial mess."

Quelle: eyefortransport

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