Outsourcing set to boom

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Spending on logistics services across the automotive, consumer, pharmaceutical, retail and technology industries is set to increase by 30 billion euros over the next five years as the size of outsourced logistics market grows by 33 per cent, according to research from Analytiqa.

However, Analytiqa’s report, Western European Logistics 2007, warns third party logistics providers that opportunities must be earned as they will no longer be able to simply rely on greater outsourcing penetration and sustained margins to recognise growth.

In Western European retail markets, logistics spend is set to grow by 15.7 billion euros over the next five years. Not all of this will go to 3PLs, however, as a number of retailers are bringing logistics services back in-house.

For 3PLs, growth in retail markets will be driven by both consumer demand and supply chain trends. While outsourcing rates in southern European markets will continue to flourish, across the more mature northern European markets growth will come from booming online shopping trends and environmental legislation requiring the recycling of electrical products.

Within the automotive sector, logistics outsourcing rates will continue to climb as manufacturers seek to reduce costs and increase efficiency in supply chains that extend further across Europe.

By 2011, Analytiqa forecasts that logistics providers will command more than 57 per cent of the sector’s supply chain requirements. These trends, together with tighter environmental legislation, will provide opportunities for 3PLs to win business and add value to their customers. The End-of-Life Vehicles Directive sets rising targets for re-use, recycling and recovery across the industry.

In consumer markets, 3PLs will look to capitalise on lengthening supply chains in Europe, as the centre of gravity for both manufacturing and European Distribution Centres moves Eastwards. Environmental legislation, and in particular the Waste Electrical and Electronic Equipment directive (WEEE) will provide innovative 3PLs, that develop (or have already developed) recycling and / or reverse logistics capabilities, an opportunity to win business and become further integrated into the operations of their customers.

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