Outsourcing set to reach half of total spend

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The rate of logistics outsourcing across EU continues to increase and, according to Datamonitor, total spend on outsourced logistics will reach euro175.5Bn by 2008 to account for 45% share of total logistics spend. Cost reduction, high-speed delivery and tightening budgets are all playing a role in enterprises gradually moving away from in-house logistics models.

Also, incoming EU legislation, such as the Waste Electrical and Electronic directive (WEEE), is putting further pressure upon the reverse logistics capabilities of white and brown goods manufacturers. Likewise, the EU Food Safety Authority’s new emphasis on product traceability ‘from the farm to the fork’ will place demands on food suppliers and encourage more to outsource some logistics functions helping to sustain the outsourcing trend.

All this spells good business for outsourced logistics service providers (LSPs) as manufacturers and retailers increasingly look to outsource some logistics functions in their quest to gain competitive advantage.

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, forcing rival fashion retailers to reassess their own logistics capabilities. Datamonitor expects the European grocery retail sector outsourced logistics to account for 42% (euro15Bn) of the total 2008 logistics spend, up from 39% in 2003.

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