Transport and logistics industry: 2011 in review

Full recovery from the recession did not occur as many had hoped, resulting in an unsettling effect on the industry – declining demand and thus declining cargo.

Still, many transport and logistics providers were able to record profitable revenue thanks mainly to higher fuel surcharges and increased rates. The high oil prices during the first half of 2011, resulting in part from the Arab Spring, caused many shippers to shift from airfreight to "less expensive" modes of transport such as ocean freight. Sadly, the ocean freight industry was not able to capitalise on this shift as rates simply collapsed for many carriers during the second half of the year on the back of over-capacity.

By the second half of the year, pessimism set in as manufacturing slowed throughout the world; including China. Increasing fears of a double-dip recession were much discussed as two of the largest economic regions, the US and Europe, faced troubling political and economic issues – the US witnessing its first downgrade in its credit rating and the increasing global concerns of Europe’s debt problems.

Freight out of the traditionally strong Asia-Pacific region steadily declined during the second half of the year; however, US ports reported increased exports. For example, the port of Los Angeles recorded record monthly increases in exports for October and November.

As the US and Europe struggled with economic issues, they appeared to no longer be able to contribute to the world economy as the primary customers of imported goods. Because of this, we witnessed perhaps an important shift in trade patterns as emerging markets such as Russia, South America and the Middle East began to exercise their growing economic strength. Demand from these regions has increased, resulting in China, the US and Europe targeting their export trade to these markets.

Despite global economic concerns, mergers and acquisitions within the transport and logistics industry remained strong as the number of deals increased almost 5% through the third quarter compared to same period in 2010. However, according to PriceWaterhouseCooper’s figures, the global total deal value compared to 2010 is down by almost 40%. This suggests that smaller, more specialised providers appear to have been targets of acquisitions throughout 2011. The majority of the acquisitions made were in Asia and other emerging markets, however, the European and the US merger and acquisition market remained fairly strong as well.

Not only was the economy a major concern, but natural disasters played havoc to global supply chains. The Japanese earthquake and tsunami caused disruptions in the automotive industry, impacting manufacturing facilities throughout the world. The Thai floods‘ effect on the high tech industry resulted in leading IT manufacturers, Intel, Dell and Texas Instrument, to report lower quarterly earnings. Both of these disasters raised questions concerning the effectiveness of just-in-time manufacturing and delivery as well as the need for improved supply chain planning for unforeseen events.

The topic of near-sourcing popped up yet again as not only a potential solution to supply chain disruptions brought on by the natural disasters, but also as a solution to increasing labour and manufacturing costs in China. Mexico, long discussed as a possible recipient of near-sourcing opportunities, did see some Asia production relocate to the country throughout the year, but due to concerns of violence in the country, there still remains a sense of hesitancy from many manufacturers.

Finally, as 2011 draws to a close, it will be remembered as a year of great change – politically and economically. The changes that 2011 brought forth will create opportunities in the coming years for those financially stable transport and logistics providers that are willing to capitalise on these changes in this evolving global economy.

Quelle: eyefortransport
Portal: www.logistik-express.com