Stifel: E-commerce to swell transportation budgets

Higher e-commerce supply chain costs will induce companies to devote more money to overall freight movement, the investment bank’s transport and logistics group said in a note Tuesday.    Stifel’s transportation and logistics group this week predicted that freight transportation budgets will swell as e-commerce sales grow.
   The theory, based on discussions last week with a number of logistics companies and technology providers in Europe, is that the costs to fulfill e-commerce orders are higher than traditional sales and so will be reflected as companies grapple internally with those realities.
   “Our favorite quote was from our first meeting at (the 3PL) KION: ‘The supply chain is more important to e-commerce companies than it was to traditional retailers, so it takes greater priority within the organization and has a bigger budget,’” Stifel managing director of global transportation and logistics Dave Ross and research analyst Bruce Chan wrote in a note to investors Tuesday.
   “This is important, in our view, as it implies that 1) retailers shifting toward more omni-channel supply chains will likely rethink internal priorities to increase transportation spend, 2) airfreight should play a bigger role in supply chains, and 3) the carriers (or 3PLs) with the best service should be in higher demand.”