Global Logistics & Freight Industry
The world logistics and freight sector continues to grow thanks to its role in the global economy. Freight is moved using various modes, be it rail, road, sea or air. Logistics ensures proper supply chain management, getting goods and services to their destination without pushing transportation prices too high. Effective management of the supply chain is also necessary to ensure goods arrive in top condition.
Market Segments
- The global airfreight industry is worth more than $70 billion and is comprised of almost 12,000 companies worldwide, reports IBISWorld. The airfreight logistics sector involves mostly the transport of commercial cargo. Growth in the industry is dictated by international trade and transport demand concerning time-sensitive freight and mail. Airfreight has witnessed a decline since 2008 due to the global economic downturn. The sector entered into a recovery phase in 2010, and has climbed to almost 3% growth in 2012. The sector’s current phase of decline is mainly due to insufficient technology advancement, volatile profitability and falling industry participation. Airfreight sector performance is expected to remain under a yearly rate of 1% through 2017.
- The world maritime freight industry was worth more than $54 billion in 2011, having recorded close to 5% yearly growth for the four preceding years, reports MarketLine. Market consumption volume fell at a yearly rate of around -2% over the same four-year period, reaching less than 7 billion tons in 2011. Industry growth is expected to accelerate to a yearly rate of more than 7% between 2011 and 2016, driving the market to almost $77 billion. The global marine ports and services industry encompasses all revenue collected by owners and operators of both public and private marine ports as well as providers of related services.
- The railway freight industry involves the transport of goods by railroads and the operation of rail infrastructure necessary in transporting goods. Around half of all EU rail freight is international, a percentage set to increase in the coming years. Rail freight industry growth will also be fuelled by environmental awareness and the need to secure sustainable mobility.
- The world road freight transportation services sector recorded strong growth over the past five-year period, reports Lucintel. Industry performance is expected to maintain a yearly rate in excess of 2% between 2012 and 2017 to reach more than $2 trillion at the end of the five-year period. Factors fuelling growth in this sector since the 2009 dip include road freight demand, economic growth, the increasing attractiveness of hybrid power train systems, and pressure and encouragement from governments to adopt green technologies.
Regional Market Share
- China’s external logistics costs reached almost $1.5 trillion in 2011, equivalent to 18% of gross domestic product, reports Research in China. Transportation logistics makes up around 55%, with warehousing charges at less than 35% and logistics management fees slightly more than 10%. Close to 45% of the country’s 50-leading logistics outfits are transportation-oriented, and just more than 50% are integrated businesses. The two remaining logistic enterprises are warehousing logistic outfits, accounting for under 5% of China’s logistics enterprises.
- The UK logistics sector is worth more than $115 billion. There are close to 200,000 companies in operation in the UK logistics industry, employing almost 2.5 million people. UK freight logistics outfits can manage a distribution system they own or manage one on behalf of another company. More than 60% of UK freight is carried as third-party logistics.
Market Outlook
Companies operating in the global logistics and freight industry face several obstacles to growth,including infrastructure issues, rising fuel costs, legislation, environmental concerns, funding, and changing sourcing of overseas goods. In developed countries, governments continue to invest in transport infrastructure to boost competitiveness.
Since today’s markets involve an increasingly complex system of international relations, freight operators have to fine-tune their communications infrastructure to facilitate the smooth transfer of information.
Successful asset management will also continue to play a key role in the profitability of specific freight handling outfits. Companies must also have a good degree of foresight, aided by an effective alerts system, to deal with any problems as they arise to prevent disruptions to smooth transportation.
Leading Industry Associations
- International Freight Association www.ifa-online.com
- British International Freight Association www.bifa.org
- Global Logistics Association www.globallogisticsassociates.com
- National Association of Freight and Logistics www.nafl.ae
