Air Cargo Quarterly
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Report confirms DHL Supply Chain still number 1
Ti’s latest study on the contract logistics market, Global Contract Logistics 2013, indicates that once again DHL Supply Chain is the dominant market player, controlling 8% of the overall market with revenues of €13bn in 2012. It dwarfs the second placed CEVA which has revenues of €3.9bn.
However, the report also identifies that there is significant fragmentation in the sector with the top ten players only holding a combined market share of 22%. In a sector worth €159.35bn in 2012, the high level of market fragmentation is not only striking, but a clear indication of the scope for consolidation through mergers and acquisitions.
According to the report, although the global economic downturn has resulted in a decline in manufacturing, the instability has provided opportunities for acquisition activity. For example, Russian Railways’ €800m acquisition of GEFCO in 2012 exemplified that opportunities exist for companies looking to enter the market.
The report also found that, due to economic weakness in Western Europe, Asia Pacific will become the largest contract logistics market by 2016. While DHL Supply Chain is the third largest provider in the region, interestingly no other global players feature in the region’s top ten; with regional providers dominating.
Although DHL Supply Chain was able to force its way into the market through acquisition, global providers meet considerable entry barriers, in particular in China and Japan. Therefore, while these barriers remain, companies are looking to create national joint ventures and develop distribution centres as well as cross-border services in South East Asia from which they can service the larger markets and benefit from the growing intra-Asian trade.
Cathy Roberson, the report’s author, commented, “Despite a slowdown in market growth over the past two years, there are certainly opportunities for companies to develop market share, if they adopt the right strategy. For some providers, that will mean enhancing their service levels for certain vertical sectors and for others it will mean following a carefully crafted acquisition strategy in new geographies. However, with the global economy in the balance, it is now more important than ever to get the strategy right.”
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