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Outsource magazine: thought-leadership and outsourcing strategy | April 25, 2015

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Logistics set for global boom

Outsource Magazine

The global outsourced logistics industry is poised for strong expansion due to a growing trend towards outsourcing by manufacturers in order to focus on their core competency.

According to Frost & Sullivan’s report “360 Degree CEO Perspective of the Global Logistics Industry”, the global outsourced logistics industry is estimated to reach $648.57 billion in 2014. Increased outsourcing of manufacturing activity, multiple sourcing locations and a widespread consumer base have resulted in the supply chain also becoming longer and more extensive. As supply chains get more complex, they are increasingly being outsourced to logistics service providers, who handle transport, storage, distribution and the risks associated with it.

“The global logistics market is at a prolific phase of its development,” said Frost & Sullivan Research Associate Archana Rajagopalan. “Although the transportation segment was hit by rising fuel prices, the industry has maintained a steady profit of ten to 15%.”

With fuel prices eating away profit margins, service providers are looking at alternative, more fuel-efficient modes of transport. “On the other hand, manufacturers are beginning to change their preferences from cheaper emerging economies to closer, more transport-friendly locations,” explained Archana.

“Third Party Logistics (3PLs) have to keep an eye on changing sourcing locations, and the preference for rail and marine modes of transport over road and air alternatives.Along with an emphasis on investigating new methods, 3PLs should also focus on improving their current assets. They need to improve the efficiency of their assets using technologies like Fleet and Warehouse Management Solutions to avoid the brunt of fuel pressure.”

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