Global transportation and logistics industry

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Global transportation and logistics industry

The Transportation & Logistics sector spans a wide range of service offerings such as by air, road, rail, sea – as well as related services such as warehousing, handling, and stevedoring. The extent of coverage includes value added services such as packaging, assembling, labelling etc. In addition to these, Transport & Logistic providers undertake the management role of planning, administering and coordinating. Over the years, the sector has reshaped in manner where most players have a tendency to consolidate; resulting in larger, integrated groups operating in more than one of the Transport & Logistics sub-services/sectors. As a result, the limits between the sub-services/sectors become more and more indistinct. The benefits of globalisation and business process outsourcing of logistics services generated double digit revenue growth in the industry in the early part of the 21st century. However the co-existence of other pressures, threats and limitations such as the economic downturn, and fuel price hike contribute to the dramatic changes faced by contenders in the sector. With privatisation and liberalisation, more complexities were introduced to the sector. In addition, trade routes are changing and networks have become increasingly complex – as have the agreements between companies sharing resources. There have been several regulatory requirements which have changed substantially in the recent years. Due to more IT enabled interconnectivity in companies, it operates across national. Hence, issues pertaining to customs, tax compliance, accounting and governance have increased. Companies looking to build a sustainable business need to continuously offer value additions to its stakeholders. Therefore with the changing business models in the industry, many companies are evolving from forwarding and warehouse managing businesses to highly industrialised, IT driven supply chain providers; adopting a holistic approach in their service.

Impact of the economic downturn

Over the past years, the Transport & Logistics industry has been profiting considerably from positive economic conditions and the demand for raw materials, capital and consumer products. Since 2008 though, the trade was suddenly faced with some of the most complex market conditions in history. A tightening global credit crisis and economic downturn that began in the U.S. quickly spread throughout the globe, impacting many organizations in nearly every aspect of the business. Changes in consumer buying patterns have led to less significant transport volumes, and shifts to less expensive delivery modes, with a sizeable impact on the express business. The volatile oil price coupled with a stronger focus on emission reduction has increased pressure on transportation companies, especially airlines, leading to a record in airline insolvencies. In addition, the economic recession places more fundamental challenges on the Transportation & Logistics industry: consumer patterns and a general curb of demand thereby causing a lower level of the flow of goods.

Opportunities in the emerging markets

For a country’s economy, in addition to the tourism sector, even the transportation sector is often viewed as an important indicator of growth. With the rise in commercial trade activities,

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