Internet retailing has the greatest promise for 2014

The world’s economy appears to be more stable at the beginning of 2014 than at the same time last year but the logistics sector faces continuing change of a magnitude not seen for more than a decade. There are three particularly prominent drivers of change.  

The most salient of these is the continued evolution of internet shopping. Whilst hardly new, this has now reached such a scale that it is starting to dominate certain sections of the logistics market. Existing solutions are often inadequate to cope and new systems are emerging which will transform much of retail logistics. This trend has gained such momentum that its influence on the structure of the logistics sector and the nature of supply chains is now comparable to last decade’s wave of outsourcing to China.

The issue of the oil price cannot be ignored. Oddly over the past couple of years this has proved to be less important than might be expected as transport providers utilise more efficient vehicles. However the possibility of gradually falling prices ought to be a favourable trend both for the cost base of transport providers and the growth of underlying demand. It may also be the trigger for higher levels of growth in the medium term.

In turn the price of oil will be driven by the speed and nature of growth in global GDP. Whilst growth in emerging markets is often still reasonable the trend seems to be pointing downwards. The economies of the UK and the US are recovering at a modest pace but the Euro Zone is severely depressed. Consequently the prospects for international trade look mediocre. Yet this low growth environment may be an important driver of change in itself as both customers and logistics service providers look to improve returns and cut costs.

Put together, these three trends suggest that whilst the prospects for the logistics sector are promising this is due in greater part to structural change, rather than any cyclical return to the sort of growth seen before the financial crash of 2008.