In the world of e-commerce and online business, logistics literally does the heavy lifting, distribution and connecting companies in the last mile with their consumers. It’s also a critical cost of doing business and a constant search for efficiencies, savings and faster ways to deliver to the customer. Today, we look at logistics trends and new developments around the globe.
Transparency Market Research estimates the value of global logistics will reach $781 billion by 2024 with 20% annual growth from $122 billion in 2014. Fickle consumers create big challenges for supply chain logistics according to a Wall Street Journal report. An AT Kearney report estimates e-commerce grew 14% in 2015, fueling an 8% increase in parcel and express shipments. VCs, led by Warburg Pincus, invested $12 billion in China’s warehouse and logistics market since 2013 says real estate consultancy Jones Lang LaSalle.
Walmart’s new on-time delivery changes may create hardships for suppliers as the company seeks to deliver goods faster to consumers. A shortage of land in London, UK will impact e-commerce growth and the supply chain resulting in tests like Amazon drone deliveries. In India, despite poor infrastructure, low technology penetration and an overall unorganized and fragmented nature of the sector, the logistics sector will grow by 12.17% annually to 2020.
The bankruptcy of global shipping company Hanjin will have far-reaching impact on logistics managers and retailers whose products in containers in ports around the world are now tied up in legal actions. Singapore-based Global Logistic Properties Ltd. is buying US distribution centers from Hillwood Development for $1.1 billion. Delivery time influences 87% of consumer online buying decisions according to a study by Dotcom Distribution.
Global E-commerce Logistics Market to Pass $781 Billion by 2024
The global e-commerce logistics market is expected to surpass $781 billion in 2024, up from its valuation of $122.2 billion in 2014, according to a new report from Transparency Market Research. The estimated CAGR of the market between 2016 and 2024 is 20.6%.
The imminent explosion of cross-border e-commerce websites will cause a stir in the global e-commerce logistics market, predicts TMR in the study. The market will also receive a boost from the availability of low-cost cargo. Already, the spread of B2C and C2C e-commerce websites has resulted in an increase in the demand for both domestic and international e-commerce logistics.
Sellers are now expecting a greater degree of transparency and efficiency in their chosen e-commerce logistics providers. This will also pave the way for higher customization in e-commerce logistics services. At the same time, companies providing these services are trying for look for practical ways to reduce costs – especially those associated with reverse logistics. Among the key services that e-commerce logistics companies provide are warehousing and transportation along with some other types of niche services. Via multichannelmerchant.com
Ripple Effects: 1-Click To Catastrophe – Increasing eCommerce Is Changing Supply Chain Logistics
1-click ordering from Amazon is an example of how retailers are answering consumers’ demand for instant gratification, and 1-click will soon feature same-day drone delivery. But there are ripple effects associated with 1-click ordering that have consequences more dire than an investment in penny stocks or firing off an angry email to your boss.
These technologies and services rely on forecasted sales and a new type of supply chain model that runs like clockwork. And if the delay in the iPhone 7 “Jet Black” has taught us anything, it is that consumer demand is fickle, not always that predictable and supply chains are fallible. While U.S consumers are merrily 1-clicking their way through their holiday shopping, the ripple effects of those 1-clicks emanate far beyond a customer and retailer’s immediate ecosystem.
Inconceivably, as global eCommerce speeds up, U.S. port activity and trade volume is slowing down. Typically, the summer is when ports see increased activity, as the huge retail market gears up and stocks up for the upcoming holiday season. But this past July, according to The Wall Street Journal, imports were down at the two busiest port complexes in Southern California and New York. The National Retail Federation predicts that this trend of low imports will have persisted in August and September, and import volumes will be down for both months compared to 2015. Via PYMNTS.com
State of Logistics Report Suggests Major Shift Due to E-commerce and Consumer Trends
Here are some quick numbers from the report, as summarized by the council and A.T. Kearney. U.S. business logistics costs were $1.4 trillion in 2015, an increase of 2.6% from the prior year. However, the rate of growth slowed in 2015; between 2010 and 2014, business logistics costs grew by an average of 4.6% annually. U.S. business logistics costs accounted for 7.85% of GDP in 2015, a slight dip.
Lower transportation costs in particular moderated the growth in logistics spending. The drop in energy prices triggered a reduction in fuel surcharges, which affected nearly all modes of freight. (Diesel prices fell nearly 30% in 2015.) Also, overcapacity in the full truckload sector helped drive down rates in that submarket.
The study suggested 2015 may have been a turning point in U.S. transportation costs. Transportation modes that rely heavily on energy customers for revenue, like rail and pipeline, experienced declines in shipments and revenue. On the other hand, consumer-driven modes, such as parcel and express and less-than-truckload, experienced accelerated growth. Via palletenterprise.com
As e-commerce booms, PEs eye China’s logistics space
When U.S. private equity heavyweight Warburg Pincus started looking at China‘s logistics sector in late 2009, there were more modern warehouses in Boston than in the whole of the world’s most populous country. But as Chinese consumers embarked on an online shopping spree, demand has soared from appliance makers, express delivery firms and e-commerce companies such as Alibaba Group Holding Ltd and JD.com Inc, far outpacing supply and prompting a parallel binge in investment in warehouses and logistics businesses.
Deep-pocket investors including Carlyle Group LP, Canada Pension Plan Investment Board (CPPIB) and Warburg Pincus have splashed $12 billion on the sector in China since 2013, says real estate consultancy Jones Lang LaSalle….
Although China‘s economy expanded in the second quarter at the slowest pace since the global financial crisis of 2008-09, online shopping revenues have soared and are expected to double to 7.5 trillion yuan ($1.13 trillion) in 2018 from last year, consumer and internet consultancy iResearch estimates. Via dealstreetasia.com
Walmart’s new on-time delivery standards may create supply chain challenges for its suppliers
Earlier this year, retail behemoth Walmart announced multiple changes to its on-time delivery standards for its suppliers that have the potential to significantly impact how these thousands of suppliers approach its supply chain and logistics processes with the retailer.
Effective February 2017, Walmart will require its suppliers (shippers) to meet a two-day shipping window instead of its previous four-day window, as well as up its required compliance rate from 90 percent to 95 percent.
In a corporate blog posting, Walmart said that for non-compliant deliveries, its suppliers pay a fee of 3 percent of the cost of goods of all non-compliant deliveries, which has been in effect since 2010. The 3 percent “tax” also applies to suppliers when less than 95 percent of merchandise cases are received within the must arrive by date (MABD) delivery window. But suppliers are not charged it they cancel purchase orders prior to the MABD. Via logisticsmgmt.com
London housing crisis: A shortage of land could kill off the capital’s e-commerce revolution
Recent reports that Amazon is set to test drone deliveries in partnership with the UK government is just the latest salvo in the fiercely contested battle between the e-commerce giants that are transforming the way we shop. The move also demonstrates the challenges of a constantly evolving logistics sector.
City A.M. readers are at the heart of this revolution, of course, with deliveries being made to your offices, homes and now even commuting points to fit around increasingly busy working lives.
And according to the latest figures from eMarketer, the rapid growth of online retail sales in the UK is set to continue, rising from £60bn in 2016 to £90bn-plus in 2020, accounting for almost 25 per cent of sales.
So what can possibly go wrong? The answer is plenty, and to understand why you need to know how the e-commerce supply chain works. Via cityam.com
Necessity of Deploying Automation Technology in Logistics Management
The logistics industry can primarily be divided into two types, where one type is the in-house logistics operations of enterprises and the other provides support services to companies for example, third-party logistics, fourth party logistics, etc. While both of these have its own pros and cons, what becomes necessarily important here is that, these two together account for approximately 14% of GDP expenditure (as per research firm Novonous).
In comparison to other developing and developed countries, Indian logistics competitiveness has been significantly low (ranked 35 by World Bank) due to poor infrastructure, low technology penetration and an overall unorganized and fragmented nature of the sector. However, the logistics sector in India is estimated to grow at CAGR of 12.17% by 2020 and the technology market is steadily growing, with the rise in demand from the thriving logistics of eCommerce, food tech, pharma and manufacturing sectors.
Food tech companies, for example are adopting tech-based delivery algorithm so that they can track orders and their delivery boys live. This enables them to grow faster with smoother operations as against their competitors. Also, E-commerce companies have decided to invest in tech companies, which shows that online retailers are experimenting with different avenues to find suitable technology to cut delivery costs. Via iamwire.com
Hanjin’s woes likely to complicate lives of global logistics managers
For many maritime and trade analysts, Hanjin Shipping’s receivership and bankruptcy filing suddenly exposed how fragile the world of shipping alliances and just-in-time supply chain management these days.
According to Prof Andrew Lubin, who currently teaches a variety of International Business Courses at Rosemont College, Rosemont, PA, the global implications should be a major concern for logistics managers.
He notes that after five business days since Hanjin’s filing, this is what we know:
– Three Hanjin ships are reported arrested (in Long Beach, Shanghai and Singapore)
– 61 of their 98 vessels were refused entry at ports worldwide, and are either returning to Busan, or allegedly “safe” (meaning arrest-free) ports of Hamburg and Singapore.
– 540,000-567,000 twenty-foot equivalent units (TEU’s), containing U.S. $ 13 billion worth of cargo due to 8,300 shippers, are stuck at ports worldwide, are on arrested vessels, or returning to a safe port in hopes of unloading, reloading, and re-shipment.
– Container rates, as reported by Xeneta.com and Shanghai Container Exchange, have soared 36-51% from Busan / China ports to USWC, USEC, and N. Europe. Via logisticsmgmt.com
Global Logistic Properties to Buy U.S. Warehouse Portfolio for $1.1 Billion
Global Logistic Properties Ltd. said it has agreed to buy distribution centers from Hillwood Development Co. for $1.1 billion.
GLP, a large industrial property company part-owned by Singapore’s sovereign-wealth fund, has been aggressively expanding in the U.S. over the last two years, as the rise of online shopping drives up the values of distribution centers.
The Hillwood portfolio, with 15 million square feet, solidifies GLP’s position as the second-largest owner of warehouses in the U.S., after San Francisco-based real-estate investment trust Prologis Inc. Upon completion of the deal, GLP will own nearly 200 million square feet of warehouse property in the U.S., compared with about 325 million for Prologis. Via wsj.com
Delivery Time Influences 87% of Online Shoppers’ Purchase Decisions
Fast delivery and premium packaging has a high impact on customer loyalty, according to recent data from logistics and fulfillment firm Dotcom Distribution.
Delivery time is a key factor in the decision to shop with an ecommerce brand again, according to 87% of the 558 online shoppers Dotcom Distribution polled in May for its new study, How Fast Delivery and Quality Packaging Drives Customer Loyalty, and highlight the importance of shipping speed and package aesthetics in the customer experience.
The study found that 67% of online shoppers would pay more money to get same-day delivery if they needed the package by a deadline, such as an anniversary. Comparatively, 47% would pay more for same-day delivery simply because they wanted their package more quickly, demonstrating that consumers distinguish between a need and a want, yet desire fast shipping when available. Via multichannelmerchant.com
Logistics is the lever for e-commerce
With today’s report, you can see the critical role logistics plays in e-commerce from Amazon and Walmart to smaller makers and manufacturers ttoday and in the future. Watch for new innovations that support and sometimes also disrupt e-commerce and we’ll continue to keep you current for solutions and opportunities.