Healthy demand for contract logistics despite industry slump

The global market for contract logistics has managed to avoid the economic downturn that has affected other supply chain and transportation sectors, according to a report by Transport Intelligence (Ti).
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The global market for contract logistics has managed to avoid the economic downturn that has affected other supply chain and transportation sectors, according to a report by Transport Intelligence (Ti).

The publication, Global Contract Logistics 2008, reports an increase of 9% in the international contract logistics industry last year, reaching an estimated US$222 billion.

In particular, the sector was helped by strong performances in European countries such as the Germany, United Kingdom, Finland and France, together with impressive Asia Pacific results from China and the emerging markets in Vietnam, Malaysia and Indonesia.

“We are fully integrating a well established and proven partner into the European region,” said Chris Price, managing director of Agility in North Europe. “This is perfectly in line with Agility Europe’s dedicated growth strategy and further solidifies our presence in this important market, which links the North of Europe to the rest of the world.”

So far, the slowdown only seems to have affected the US market to any degree. The country’s contract logistics market grew by just under 7% in 2007, which represents a significant drop from its 10% plus growth in 2006. A slump in the construction industry, the ‘credit crunch’ and lower retail sales all contributed to the slowdown, with the distribution of import volumes from Asia Pacific particularly affected.

“So far, the contract logistics industry has shrugged off talk of the economic downturn and even in the US, where the transport industry is struggling, the effects are still limited,” said John Manners-Bell, CEO of Transport Intelligence. “However, although the contract logistics market was strong in 2007, the next few years will be challenging.

We believe that markets around the world will inevitably be affected by the ‘credit crunch’ and a loss of consumer confidence. Consequently, we are downgrading our forecasts for the industry accordingly,” he added.

Global Contract Logistics 2008 contains market sizing and forecasts for 70 countries in the European, Asia Pacific, North and South American, Middle East and African regions. For more information, visit www.transportintelligence.com

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