In fashion retail, the need for high-speed delivery models has resulted in Euro5.5bn spend on outsourced logistics
In the fashion sector, some supermarkets and vertical retailers are very successfully employing high-speed supply chains as a source of competitive advantage. This is forcing rival fashion retailers to reassess their own logistics capabilities.
Tom Mills, Datamonitor logistics analyst comments:
"Fashion supply chains are becoming increasingly geared towards a high-speed, frequent delivery model. Fashion retailers are being made aware of the potential of the supply chain as a source of competitive advantage. Logistics providers that can offer solutions to enhance fashion supply chain performance should target this business."
In the European grocery retail sector, Datamonitor expects outsourced logistics to account for 42% (Euro15bn) of total 2008 logistics spend, up from 39% in 2003.
Clinical trials, an area that pharmaceutical companies can reduce R&D costs by outsourcing to a logistics service provider
Datamonitor expects the European pharmaceutical logistics market to grow by a compound annual growth rate (CAGR) of 6% between 2003 and 2008. Over the same period, outsourced logistics spend will rise by 6.8% CAGR, when it will account for 24% of total logistics spend compared to 23% in 2003.
"There will be continued growth in the outsourcing of more complex logistics tasks such as order handling, logistics management, and the provision of value-added services," says Mr Mills. "Escalating costs of research and development have contributed to the search for cost savings. Clinical trials are one area in which pharmaceutical companies can reduce R&D costs by outsourcing to a logistics service provider."
Hi-Tech manufacturers are outsourcing different parts of their logistics operations
As they look for ways to reduce costs, hi-tech manufacturers are outsourcing different parts of their logistics operations. Many hi-tech manufacturers have now relocated manufacturing to more cost-effective locations, such as Eastern Europe or the far East. Technology companies sourcing from the SE Asia region are finding their supply chains stretched over long distances, with increased complexity in co-ordinating inbound flows. These issues represent an opportunity for LSPs to help these companies consolidate shipments at source, handle goods and data flows from various sources and shippers and provide global freight transportation capabilities.
Datamonitor expects the European hi-tech logistics market to grow by compound annual growth rate (CAGR) of 4.42% CAGR between 2003 and 2008. By comparison, outsourced logistics spend is forecast to increase at the higher rate of 5.7%, as the outsourcing trend continues in this sector.
Outsourced logistics will account for 55% of the total European automotive logistics market
According to Datamonitor, outsourced share of the total European automotive logistics market will increase from 52.2% in 2003 to 54.9% in 2008. Slow passenger car sales in Western Europe have made life difficult for Europe's carmakers, which face tough competition and limited growth prospects in a saturated market. As such, the growth in outsourcing logistics in the European automotive sector is partly attributable to the pressures faced by carmakers, which are obliged to reduce fixed costs as much as possible. The outsourcing of logistics functions enables them to focus on their core manufacturing functions.