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May 1st 2015- Contract logistics market growth accelerated in 2015, claims new report

According to the latest report published by Ti, Global Contract Logistics 2015, the global contract logistics market grew by 5.4% in 2014, to reach €177.6bn. If prices and exchange rates were held constant at 2013 levels (real growth), then the market would have expanded by 4.4%.

Overall contract logistics growth of 5.4% compares favourably to growth of 2.8% in 2013.

The increase was largely driven by the performance of the largest markets (Western Europe, the US and China) which was markedly better than in 2013. Together, these markets accounted for about 65% of the global contract logistics market.

The real turnaround was the strengthening of the European economy, which was a critical factor in the growth of the overall contract logistics market. EU real GDP growth improved from just 0.2% in 2013 to 1.4% in 2014, resulting in an increase in volumes. More specifically retail sales (excluding the automotive sector) and vehicle production growth displayed positive trends.

The US contract logistics market also enjoyed a strong year where market dynamics in the US contract logistics sector boosted growth. For instance, the fear of a capacity crunch caused by truck driver shortages has increasingly led shippers to shift to dedicated contract carriage solutions.

Chinese growth was also a key driver of the global contract logistics market. China’s market size is thought to have grown by 17.7% year-on-year (real growth of 16.6%), to reach €18.9bn. Concerns over China’s economic performance in the year were generally overblown. Industry reports show that measures of capacity utilisation, inventory turnover, average inventory, new orders and logistics service charges were all higher on average in 2014.

The most disappointing region in terms of market growth was South America and its performance was described by the report’s authors as ‘terrible’. Its contract logistics market is estimated to have grown by just 2.4% in the year largely down to Brazil’s economic performance in 2014 significantly undershooting expectations.

Commenting on the report’s findings, Ti analyst, David Buckby, said: ‘The contract logistics market has really benefited from stronger economic fundamentals in most key markets. We have also seen the positive influence of trends such as e-retail which has increased the role and importance of logistics. We believe that global contract logistics growth will steadily accelerate in the coming years, although this relies heavily on European and US economic performance improving and merely a gradual slowdown of the Chinese economy.’

 

April 29th 2015- John Manners-Bell reflects on XPO Logistics' acquisition of Norbert Dentressangle

News broke overnight that XPO Logistics and Norbert Dentressangle have entered into an agreement for XPO Logistics to acquire a majority interest in Norbert Dentressangle and launch a tender offer for the remaining shares in a deal with a total value of €3.24bn.

Reflecting on the acquisition Professor John Manners-Bell, Transport Intelligence’s CEO, said: “Our prediction that there would be a number of transformational deals in 2015 has proved right. The acquisition of Norbert Dentressangle by smaller US company XPO catapults it into the ‘Big League’ of global logistics providers. In much the same way as the FedEx-TNT deal, it is a sign of confidence in the European economy, especially the UK where Norbert Dentressangle is so strong.”

“The strength of the dollar no doubt helped the deal, but we suspect that it would have happened anyway. XPO has been behind a wave of acquisition activity in the US and there were fears it was running out of steam. However it has clearly turned its attention internationally in order to meet its ambitious growth targets. However Norbert Dentressangle was not the finished article – it has been growing its freight forwarding business and is weak in Asia – so we can expect its new owners to continue with in-fill acquisitions to address these whitespots,” Manners-Bell concluded.

XPO’s acquisition of Norbert Dentressangle, one of the providers featured in Global Contract Logistics 2015, demonstrates the value such a company holds within the market. With its contract logistics business, strong European road network, established e-commerce solutions and growing freight forwarding operations across Asia Pacific and the Americas as well as in Europe, Norbert Dentressangle makes for an interesting acquisition target.

Global Contract Logistics 2015 contains industry-leading research into development and innovation within the global contract logistics market. The report includes detailed profiles of the leading contract logistics providers including Norbert Dentressangle and its direct competitors. 

 

March 20th 2015- Latin America: Region of Extremes, Region of Opportunities

  • Cold chain opportunities are increasing due to the importance of agricultural exports such as flowers and growth in pharmaceuticals handling and clinical trials.
  • Mexico surpassed Brazil as the region’s top producer of automobiles.
  • Brazil and Mexico are the largest countries in the region. Combined, these two countries comprise almost 60% of Latin America’s GDP.
  • The widening of the Panama Canal has brought opportunities and economic benefits, not only to Panama, but also to the countries surrounding it.

A region of extremes, Latin America is geographically and culturally diverse. However, Ti’s latest report, Latin America Transport and Logistics 2015 finds that a recurring theme throughout this vast region is the need for infrastructure improvements and loosening of regulatory requirements. Indeed, opportunities are great but will be missed if infrastructure and regulatory requirements are not addressed. For example, cold chain needs are growing thanks to the rise agricultural exports and in pharmacuetical handling and clinical trials expanding in the region. As a result, there is a need for temperature-controlled warehousing and transportation. In addition, the widening of the Panama Canal is bringing new opportunities into the surrounding area including expansion of ports and airports to meet the potential transshipment needs.

According to lead writer of the report, Ti senior analyst Cathy Roberson, “The region’s greatest enemy is itself. In order for Latin America to reach its true potential, it will have to overcome its infrastructure issues once and for all as well as its bureaucratic and corrupt practices.”

While the opportunities are great, supply chains are unique for this region as companies work around infrastructure and regulatory issues. Many of these supply chains encompass Brazil and Mexico which combined, comprise almost 60% of Latin America’s GDP. However, the disparity between these two large economies is widening as Mexico enjoys its close proximity to the US and Brazil becomes further mired in taxation, regulations and strikes. Once the region’s export leader in electronics and automobiles, Brazil has now taken a back seat to Mexico.

Ti’s Trade Analyst, David Buckby notes that this disparity between the region’s largest economies will likely grow further as more companies move production to Mexico to take advantage of NAFTA credits as well as lower labor costs.

However, despite the heavy dependence on trade with North America, global trade is changing for this region. Trade with emerging markets in Asia, Africa and the Middle East is on the rise. Furthermore, intra-region trade is considered the fourth largest trade partner behind North America, Europe and Asia. But, as noted by a few supply chain practitioners, managing customs clearance between countries is difficult at best as much of it is still not automated.

Still, while there are challenges to operate in this region, its growing middle-class with its purchasing power combined with improving social and health programs are presenting new opportunities. How it will overcome itself as its major enemy will be played out in the years to come as Latin American countries look towards government reforms to stimulate a region rich in opportunities.

To coincide with the publication of ‘Latin America Transport and Logistics 2015’, Prof John Manners-Bell, Ti’s CEO, will be speaking at the forthcoming 2nd Brazilian Supply Chain and Logistics Summit in Sao Paulo on the limitations of Brazilian infrastructure.

About ‘Latin America Transport and Logistics 2015’

Ti’s latest report provides research and analysis into Latin America’s key industries along with country and top logistics profiles. New to this report is a comparative analysis of leading logistics providers. In addition, the report includes Ti’s market sizing of the region’s contract logistics, e-commerce, express/small parcel and freight forwarding sectors.

About Transport Intelligence

Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.

Key Contacts

Michael Clover, E: mclover@transportintelligence.com T: +44(0)1666 519900

 

 

 

March 7th 2015 - Investment in infrastructure could see the growth of Indonesia’s logistics and forwarding markets rapidly accelerate over the next five years, says new Ti report  

  • Indonesia’s contract logistics market could grow at a compound annual growth rate (CAGR) of up to 14.4% over 2013-19
  • Total forwarding market to expand by a CAGR of up to 14.7% over 2013-19
  • Ocean and air markets to see double digit growth
  • Express and contract logistics markets to potentially grow by CAGRs of more than 20% and 14%, respectively, over 2013-19

Indonesia’s new government needs to remove obstacles to investment in its transport and trading infrastructure to realise its enormous economic and logistics potential, according to a new report by Transport Intelligence.

By most rankings Indonesia lags behind its regional competitors in South East Asia terms of logistics performance. However, Ti’s latest report - Indonesia Transport & Logistics 2015 - A New Dawn? – argues this could soon change if the new government of President Joko ‘Jokowi’ Widodo follows through on its promises to fund new transport and infrastructure investments and attract private investors and operators.

“Ti believes that if the country’s logistics performance could be improved by boosting investment, Indonesia’s low land and labour costs, huge domestic market and easy access to neighbouring ASEAN markets could make it a highly attractive location for manufacturers seeking alternatives to China,” said Michael King, Ti’s Head of Operations in Asia. “This would have huge benefits for all sectors of the logistics and forwarding business.

“However, if the new government does not follow through on its pledges to push through business-friendly reforms, then Indonesia’s economic and trade growth is likely to underwhelm.”

Ti’s market sizing analysis looks at each key logistics sector using three growth scenarios over 2013-19. The realisation of a scenario (low, medium or high) is dependent on Indonesia’s Logistics Performance Indicator reaching a certain threshold. Vast differences in growth rates are predicted when LPI scores differ.

At the upper range of LPI improvement, TI’s analysis found that the total forwarding market in Indonesia could increase by a CAGR of 14.7% over 2013-19. Also under the ‘high’ scenario, the contract logistics market in South East Asia’s biggest economy could increase by 14.7% over the study period, while the combined domestic and international express market could be worth €9,236m by 2019, up from just €2,923m now.

Indonesia’s air and ocean forwarding markets in the report’s ‘moderate’ (expected) forecasts are expected to grow by CAGRs over 2013-19 of 9.2% and 13.5%, respectively. However, under Ti’s ‘high’ forecast, this could rise to 11.5% for air forwarding and 16.9% for ocean forwarding.

“Low hanging fruit for the new President in terms of trade facilitation and logistics performance includes customs reform, encouraging adoption of a national single window and easing the process of setting up a business in Indonesia,” said King. “Land acquisition also urgently needs examining.

“But the key differentiator between our ‘low’ and ‘high’ forecasts is infrastructure development. For much of the last decade Indonesia’s ports, railways, airports and roads have been neglected. The privatisation of transport has stalled, starving the sector of investment and leaving inefficient state-owned enterprises in monopolistic positions that further discourage private operators from entering the market.

“If ‘Jokowi’ can address these failings then domestic and international trade and logistics demand across all verticals will rapidly accelerate.”

 

Notes to Editors

About ‘Indonesia Transport & Logistics 2015 – A New Dawn?’

Ti’s latest report offers unprecedented insight into the competitive environment for forwarders and logistics service providers operating in South East Asia’s largest economy, including analysis of which companies are already major players and what barriers market entrants face. In addition, the report features in-depth analysis of the road, rail, sea and air sectors including Ti’s exclusive market sizing and demand forecasts.

About Transport Intelligence

Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.

Key Contacts

Sophie Brady, Head of Sales, Asia

+61 (0)2 8003 7208 or email: sbrady@transportintelligence.com.

 

Michael King: mking@transportintelligence.com

Head of Operations & Senior Analyst, Asia

 

 

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