Ti: Contract logistics companies on upswing

Ti: Contract logistics companies on upswing    The global contract logistics market is experiencing rising revenue and profit margins, and can expect mergers and acquisitions in the coming months, according to a new report from Transport Intelligence.
   The report, Global Contract Logistics 2011, chronicles a strong recovery by contract logistics companies in 2010 but notes the industry still lags in size from what it was prior to the economic recession.
   'The sector bounced back as most economies experienced positive GDP growth and a rebound in world trade,' the report said. 'However, the growth rate in 2010, at 8.4 percent, was not quite back to the levels seen before the economic downturn, and the overall size of the market is still below that of 2008. The beginning of the upturn was seen towards the end of 2009 as logistics companies started to benefit from a pickup in volumes and confidence in the industry returned.'
   Ti said China was largely responsible for the turnaround, helping the industry to double-digit growth rates as domestic investment continued and the demand for exports in Europe and North America soared.
   'The global contract logistics market was more resilient during the economic downturn than other logistics sectors due to the defensive nature of the industry, and thus placed the market in a good position for growth as the economy, and in particular trade, recovered,' the report said. 'The upturn in the market was mirrored by an increase in profitability. A survey of operating margins of some of the industry's largest contract logistics players showed that in 2010 margins rose to an average of 3 percent.'
   The report said that on a global basis, the market leader, DHL Supply Chain, was more than three times the size of its nearest rival, CEVA. The biggest mover in the global top 10 was European operator Norbert Dentressangle, propelled by its acquisition of TDG.
   “There are a number of well-backed and aggressive companies who want to develop their contract logistics business strongly over the coming years,' said Ti Chief Executive John Manners-Bell. 'I would be very surprised it this didn't result in further mergers and acquisition activity. On top of this, we expect the market to continue growing in the high single-digit range, as manufacturers and retailers look to outsource more value added services.”
   The report is available for purchase here.