Boom Time Seen for Outsourced Logistics Business

Enterprise expenditure on 3PLs set to increase significantly, but service providers must understand factors driving outsourcing trend - Datamonitor

Rising Spend in European Retail Market

Consumer Companies Moving Eastwards

Sector Breakdown

  • Hi-tech - outsourced logistics will account for two-thirds of overall logistics spend in 2010
    The supply chain in the hi-tech sector has come under pressure due to the success of the "just-in-time" business model and the continuing globalization of both the production and consumer bases. As a result, logistics operations are becomingly increasingly complex. Consequently, Datamonitor expects logistics spend in this sector to increase by EUR600 million ($735.8 million) through to 2010, two-thirds of which will be given to 3PLs.

  • Pharmaceutical industry - 3PLs have the potential to capture market share
    Outsourcing of logistics in the European pharmaceutical industry is not as mature as in the U.S. market. Although traditionally a difficult sector to break into due to strict compliance codes, 3PLs have the potential to capture market share due to their expertise. This will be especially true for those that can offer global networks, as companies are relocating their manufacturing bases to low-cost countries due to the deregulation of the pharmaceutical market and the strengthening of intellectual property agreements.

  • Automotive - higher wages and legislation playing in favor of outsourced logistics
    The problem of higher wages in the EU15 countries — Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom — has continued to force automotive manufacturers to shift some production to the emerging markets, including the recently ascended E.U. states. Moreover, in 2007 the introduction of the End of Life Directive, which necessitates that manufacturers set up systems for dealing with old automotive parts, will also present considerable opportunities to logistics players.

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