LONDON, U.K.–According to the latest report published by Ti, Global Contract Logistics 2015, the global contract logistics market grew by 5.4% in 2014, to reach €177.6billion. (CAD $242 billion) If prices and exchange rates were held constant at 2013 levels (real growth), then the market would have expanded by 4.4%.
Overall contract logistics growth of 5.4% compares favourably to growth of 2.8% in 2013, said the report.
The increase was largely driven by the performance of the largest markets (Western Europe, the US and China) which was markedly better than in 2013. Together, these markets accounted for about 65% of the global contract logistics market.
The real turnaround was the strengthening of the European economy, which was a critical factor in the growth of the overall contract logistics market. EU real GDP growth improved from just 0.2% in 2013 to 1.4% in 2014, resulting in an increase in volumes. More specifically retail sales (excluding the automotive sector) and vehicle production growth displayed positive trends.
The US contract logistics market also enjoyed a strong year where market dynamics in the US contract logistics sector boosted growth. For instance, the fear of a capacity crunch caused by truck driver shortages has increasingly led shippers to shift to dedicated contract carriage solutions.
Chinese growth was also a key driver of the global contract logistics market. China’s market size is thought to have grown by 17.7% year-on-year (real growth of 16.6%), to reach €18.9bn. Concerns over China’s economic performance in the year were generally overblown. Industry reports show that measures of capacity utilisation, inventory turnover, average inventory, new orders and logistics service charges were all higher on average in 2014.
The most disappointing region in terms of market growth was South America and its performance was described by the report’s authors as ‘terrible’. Its contract logistics market is estimated to have grown by just 2.4% in the year largely down to Brazil’s economic performance in 2014 significantly undershooting expectations.
‘The contract logistics market has really benefited from stronger economic fundamentals in most key markets. We have also seen the positive influence of trends such as e-retail which has increased the role and importance of logistics. We believe that global contract logistics growth will steadily accelerate in the coming years, although this relies heavily on European and US economic performance improving and merely a gradual slowdown of the Chinese economy,” said Ti analyst, David Buckby.
Julia Kuzeljevich is Editor of Canadian Shipper. She has been writing about transportation and logistics issues since 1999. All posts by Julia Kuzeljevich