Freight Shipping Logistics And Market Trends
The freight logistics industry is growing, changing and adapting at a fast and furious rate — because it has to. The first step in gaining freight logistics insight is to get a sense of the factors around freight shipping logistics that are having such an impact on the business.
The World Is Changing, and So Is Freight Logistics
Among the significant market trends affecting the logistics industry:
- Outsourcing. Manufacturers and e-commerce companies continue to outsource freight and logistics management to specialized firms. Outsourcing enables companies to concentrate on their core strengths and handle logistics more efficiently, improving both margins and customer satisfaction. The trend to outsourcing shows no signs of letting up.
- Globalized economy. The world is shrinking. Thanks to e-commerce, trade agreements and other factors, goods are being shipped all around the world. This has created great demand for intermodal shipping, with trucks, vans, airplanes and merchant ships working in concert to move materials.
- E-commerce. Retail in general may be sputtering, but e-commerce is roaring like Niagara Falls. Pure online companies such as Amazon continue to show impressive growth, and traditional brick-and-mortar retailers are realizing great success from their online operations. The result is a greater demand for integrated logistics and delivery services for items that were purchased only in stores in the past.
Freight Shipping and Logistics Statistics
Globally, the logistics industry is much larger than many people realize:
- Global logistics is a $4 trillion business.
- Emerging markets, India and China in particular, are expected to cause this business volume to rise to far greater heights.
- Global air freight business exceeds $70 billion.
- Air freight is growing at an almost 5 percent annual pace.
- Global sea freight is a $54 billion business.
- Global road freight constitutes a $2 trillion business.
Within the U.S., logistics plays an enormous role:
- The U.S. logistics business represents $1.45 trillion, more than 8 percent of gross domestic product.
- The logistics business is currently about two-thirds transportation and one-third warehousing.
- Intermodal freight is the most rapidly growing transportation segment.
The Future: Growth, Contraction or Stagnation?
Forecasting in the logistics industry is no less challenging than it is in any other business. Despite the very positive changes in the global economy mentioned at the top of this article, significant problems and unknowns are tempering growth and giving cause for concern for freight logistics companies. These challenges include:
- A chronic shortage of drivers in the U.S.
- Political and social turbulence in the U.S. and around the world
- An increasingly complex and burdensome regulatory environment
- Truck capacity issues
- A deteriorating transportation infrastructure
- Old equipment that cannot be replaced or properly repaired due to thin operating profits
Many people believe many of these issues will sort themselves out after the U.S. elections in November, as businesses get a clearer idea of the economic environment they will be operating in come 2017 and beyond. In the meantime, we can expect freight shipping logistics to show moderate growth — not a bad thing at all, considering the realistic alternatives.
Ship With Confidence
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