Barcelona, February 24, 2024.- The Logistics Management magazine has published a great analysis on the challenges that logistics professionals face in the coming months. Here is a summary:
According to the most recent Transport Intelligence (Ti) market survey, the global express and parcel market will be one of the big winners. In its forecast for 2020, Ti predicted a total value of €375.5 billion (+9.6% year-over-year). In the period 2020-2024, they expect that the market will grow at a CAGR of 7.5% and achieve a total value of €501.2 billion by 2024.
Regarding key regions and their domestic express markets, Ti forecasts that Asia Pacific will see an 11.1% CAGR between 2020-2014. With the booming express sector in China and other Asian key markets such as Korea and Japan, which came relatively well through the pandemic due to stringent lockdowns from the very start of 2020, the Asia Pacific region is expected to sustain a relatively more stable economic growth than other regions and to keep express growth moving at pace over the forecast period.
Europe’s Express market is set to grow faster than pre-pandemic expectations, with a predicted 2020-2024 CAGR of 5.4%. One reason is that Europe, and especially Germany, have undergone a significant push in terms of digitization through the crisis and are expected to maintain this pace.
The North American domestic express market is set for a post-COVID 2020-2024 CAGR of 5.4%, slightly down from pre-COVID estimates. The region’s biggest market, the United States, has implemented uneven stay-at-home measures across the country at state level, creating different shopping needs.
Indeed, the pandemic has accelerated e-commerce growth worldwide and caused a shift in the retail business. While local retailers suffered hard under the crisis, leading online marketplaces like Amazon and Alibaba were able to expand their market shares during the lockdown and increase online sales during Black Friday, Cyber Monday, and other e-commerce peak seasons around the globe.
China’s online giant, the Alibaba Group, generated a growth merchandise volume (GMV) of $74.1 billion during the 11-day “Global Shopping Festival” campaign in November, an increase of 26% compared to the same timeframe in 2019. In the meantime, Cainiao Network, the logistics arm of Alibaba Group, processed more than 2.32 billion delivery orders during the same period. Alibaba’s revenue for the third quarter was $22.8 billion, an increase of 30% year-over-year.
Amazon reported $96.1 billion in revenue during the third quarter of 2020, an increase of 37% compared to the same quarter in 2019. In order to cope with the growth, the company is continuing to expand its logistics network in Asia. Amazon announced plans to add 10 new fulfillment centers and expand seven existing sites in India as part of its global e-commerce strategy.
The e-commerce boom also offers opportunities for brands. According to a survey conducted by the logistics provider GEODIS and the consulting company Accenture Interactive, among 200 European and American companies in 2020, around 59% of the European and 46% of the American companies relied on marketplaces for their online sales. These marketplaces held a 28% market share in the pre-pandemic period—a number that has risen to 38% during the pandemic.
However, most of the brands surveyed believe that over-reliance on marketplaces is not sustainable and want to shift more toward owned e-commerce channels. Nearly two-thirds (64%) state that reducing their dependence on marketplaces is their first or second priority for the next six months.
“Direct sales from brands’ retail websites currently represent 5% to 8% of online sales. Brands would like to increase that to 20% or 30% in the next three to five years,” says Sohel Aziz, managing director of Accenture Interactive. “The survey shows that brands are aware of the fact that improving their omni-channel logistics capabilities is essential and urgent,” said Sohel Aziz, managing director, Accenture Interactive.
Among the big challenges is the lack of real-time visibility. According to the survey, only 16% of companies were able to get real-time key performance indicators for their supply chain, with 25% of American brands and 10% of European brands saying they had such visibility.
“Only a minority have real-time supply chain inventory visibility,” says, Ashwani Nath, global head of e-channel solutions at GEODIS. “However, this visibility is essential to ensuring product availability, offering a variety of shipping choices, and informing the customer of the product’s shipping status. Behind the scenes, this means optimizing the logistics cost for each order and overcoming many logistical challenges, such as reconciling the physical with the digital, maintaining a real-time inventory and managing transportation.”
Between pandemic worries and the e-commerce boom, another topic was in focus at the end of the year: the Brexit deal. After all the years, it was finally done and announced on December 24, 2020, with great relief from the British and European sides.
A hard break between Great Britain and the European Union as well as a chaotic no-deal Brexit situation was averted at the very last minute. The new free trade agreement (FTA) is now regulating trade relations between the UK and the EU as of January 1, 2021. The most important point is to avoid tariffs and to ensure smooth trading.
The business group Logistics UK and UK Warehousing Association (UKWA) welcomed the new FTA. “A deal is great news for the UK economy, since it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth,” says Elizabeth de Jong, the group’s policy director of Logistics UK. However, she also urges traders to continue to get ready for the new trading conditions and to be well prepared for the introduction of customs declarations and additional checks on food and livestock.
“The conclusion of a FTA is good news indeed and a better outcome than we might have expected given the impasse of recent days,” says Peter Ward, CEO of UKWA. “However, as usual, the devil is in the detail and, most importantly, the agreement doesn’t alter the fact that the UK is no longer in the Customs Union. So, export/import businesses will still need to prepare for the momentous changes ahead.”
The EU is the UK’s largest trading partner. In 2019, UK exports to the EU were £294 billion (43% of all UK exports). UK imports from the EU were £374 billion (52% of all UK imports).
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