Tag: logistics

Logistics Industry Down But Not Out

Considering the state of the economy, it’s not unexpected that the logistics industry is suffering along with everyone else. According to the recently released Global Contract Logistics 2009 report published by Transport Intelligence, the global contract logistics market grew at a rate of 5% in 2008, half the 10% growth experienced in each of the past few years. Of greatest concern was the noticeable drop in volume during the fourth quarter, generally considered the industry’s peak season.

“This downturn has been felt well into 2009, although there are signs that the fall in volumes may well have bottomed out by the end of the first quarter, the report suggests,” logistics industry analyst Ken Hurst noted in today’s posting on Works Management online.

Increasing, global reach provides the greatest opportunity for future success in the logistics industry, particularly when U.S. markets go stale. Developing markets in Latin America, Central and Eastern Europe and the Asian Pacific region offer the most opportunity for future growth, according to the Ti report. While the China market has cooled recently, Hurst expects it to rebound, saying, “… with GDP growth still in the high single digits, and a $585 billion stimulus package taking effect, underlying economic activity will continue to drive its [China’s] logistics sector.”

The report predicts five more years of volatile swings in the logistics industry worldwide with significant recovery not predicted until 2011. Rebuilding is expected to be agonizingly slow. According to Hurst’s post, “Ti believes that the market will grow at a compound annual rate of 2.4% between 2009 and 2012.” Stabilization of the industry will depend on the speed with which global sales increase. Until consumer confidence returns and drives up demand for goods, manufacturers and retailers will continue to keep supply costs lean. Because of its position at the tail end of the supply chain, the logistics industry may be one of the final economic sectors to achieve recovery. While contractual relationships will protect some logistics companies from the worst market volatility, “logistics providers will have to work hard at increasing their value proposition to clients if they are to avoid the worst excesses of the recession,” John Manners-Bell, Ti CEO told Hurst.

Part II: Trends Challenge the Material Handling Industry

Today we continue our post on future trends that will challenge the material handling industry. Please see our June 6 post for Part I.

  1. Workplace. The workplace is already changing with a growing number of workers telecommuting and working from home. The traditional brick and mortar office is giving way to mobile and virtual offices. Computers, cell phones, teleconferencing and video conferencing allow people to do business with clients, colleagues and suppliers around the world from any location, including their kitchen table. Nearly 750,000 people already live and work out of their RVs. The blurring of home and work boundaries is already starting to impact how we work and our expectations about work.
  2. Biotechnology. Genetics, biotechnology and nanotechnology are the world’s new industrial frontier. Scientists are creating undreamed of organisms and compounds that are revolutionizing our world, and all in ever more minute packages. Every year brings profound discoveries that will force us to redefine the role of industry, how we produce and use materials, and the role of workers.
  3. Globalization. A global economy is a growing reality. World markets are becoming increasingly interconnected. To be successful, businesses will have to look beyond local and regional resources to take advantage of market opportunities around the globe. As this occurs will the pressure of business and industrial inter-reliance have an affect on political, economic and social issues around the world. It seems certain that opportunities for global influence and change will be created. The challenge will be to see that they are positive ones.

Material Handling Industry Must Seek Growth in World Markets

Navigating the U.S. economy has been a bumpy ride of late for industry and consumers alike. There is hope for a smoother future, particularly in material handling, but the road to success may lead outside America’s borders.

World market demand for material handling equipment and systems is expected to increase 5% per year through 2012, according to a new study, World Material Handling Products, by The Freedonia Group, Inc. The Cleveland-based industry research firm expects major market gains to come from growth in fast-developing countries in the Asia/Pacific region, Eastern Europe, Africa/Mideast region and Latin America. Growth in these markets is expected to eventually outstrip sales in the U.S., Western Europe and Japan. However, in the near term, the study predicts “renewed strength” in the Japanese material handling market and “acceleration” in the U.S. market driven primarily by automated products such as robots and automatic guided vehicle systems (AGV). 

The Fredonia Group report analyzed the $93.8 billion world material handling industry in 37 major national markets worldwide, predicting global industry growth to $133.5 billion, including price increases, by 2015. Rapid economic growth, increased manufacturing output, greater fixed investment activity and rising motor vehicle production in China, India, Turkey, Mexico and Russia, particularly, will lead demand and sales gains. China, a major producer and exporter to Asian markets, is predicted to account for 30% of total material handling sales growth.

The material handling products demanded by these developing markets will come primarily from U.S., Europe and Japan which are home to the largest and most advanced material handling equipment and systems producers. High-value products, technical expertise, advanced production systems, capital availability and trained labor will give western material handling firms a pronounced sales edge in developing markets. However, that edge may be short-lived. China, with its vast low-cost labor pool, has become a major producer and supplier to Asian markets. While quality and safety issues haunt Chinese-produced products, the country has shown amazing adaptability in other product markets and could become a major world material handling competitor within the next decade.

Next time: Which material handling products will see the greatest growth?