GLOBAL LOGISTICS INDUSTRY

Overview: The global logistics industry is estimated to be over $1,000 billion. It has seen a growth of
28% in the past five years. The logistics industry was badly affected by the 2008 recession and is now
trying to pick up pace amid the global economic downturn. Marine freight is the biggest segment in
the global logistics industry. It is growing at a slower rate of 1.5% and has earned revenues over $350
billion in 2011 (estimated). Rail transport has been growing steadily at the compounded annual
growth rate of 3.7%. The most expensive transport mode - air freight - has also seen a slow growth at
1.9%. Marine freight also known as merchant shipping carries out 90% of the international trade with
over 1 lakh commercial ships including containerships sailing in international waters.
Statistics: According to the 2011 trade statistics by World Trade Organization, the European region
accounted for the highest cross border merchandise trade at over $13.4 trillion. The Asian region
ranked second with trade figures touching $11 trillion. The Americas region fell way behind the top
two with trade figures at $7 trillion due to the global economic slowdown and the predicted fiscal cliff
in the United States.
However in 2012, post the Eurozone crisis, the scenario changed completely. The 2013 Agility
Emerging Markets Logistics Index presented a different picture altogether of the international trade.
The index ranks world economies according to their attractiveness for investments by the logistics
companies. The 2012 data suggests that emerging markets in the Americas and Asia region grew at an
average of 4.4%. The growth in the US was dismal at 2.2% and the European region contracted by
0.2%. The air and ocean freight volumes dropped significantly. But the industry sentiment is positive
towards the developing nations which shall offer better opportunities to the logistics sector in both
short term and long term.
Chinese exports to the US surpassed the European ones, thus making US the biggest importer of
Chinese goods in 2012. The Eurozone crisis marked the downfall of trade activities. Ocean and air
freight revenues dropped by 10% and 12% respectively in 2012. Many industry experts and analysts
have said that, except a few countries in the European region, others shall experience a flat or
contracted growth in 2013.
In terms of BRIC economies, China is the most sought after destination for investment by logistic
companies followed by India and Brazil. Russias economic outlook is also positive. The country
should shift its dependency on energy and mining sector for sustainable growth in the future. Turkey
emerged as a high potential market with comparatively less barriers to entry. Mexico with its location
(proximity to the US and European markets) and low cost labor advantage is one of the most
attractive destination for sourcing merchandise.
Future Trends: In 2012, research agency Gartner published a report outlining the trends that will be
seen by 2016.
conscious and are in the
process of imposing carbon tax on emissions. Thus, over 50% of the global logistics companies will
have to report their verified environmental data. They will also have to shift their focus on
sustainable logistics.
y chain risk is growing, the logistics companies will have to appoint Chief
Compliance and Risk Management Officers.

about 20% of the supply chain companies are likely to adopt a supply chain executive convergence
strategy.
downward fall.
The logistics companies will have to adopt a strategy to optimize the international merchandise
flows. Companies would seek new sourcing hubs in order to attain economies of scale. Thus, logistic
companies will also have to chalk out strategies that would help merchandise companies achieve their
goals.