Global freight packing and logistics services industry demand expected to grow 2.1% over 2012, yet limited growth keeps revenue below pre-recession levels with average annual decline of 2.2% to US$1.7B over five years to 2012: IBISWorld
April 4, 2012
– While revenue dropped during the Great Recession, the Freight Packing and Logistics Services industry's performance has started to improve, as freight transportation activity and demand from trade have returned to growth. The industry performed particularly poorly in 2009, when revenue fell 14.5% due to sharp declines in freight volumes and trade. According to IBISWorld industry analyst Lauren Setar, "The global economic downturn depressed trade, reducing the number of products that needed to be shipped." Declining demand caused greater price competition among operators. Demand improved in late 2010 and is expected to continue rising through 2012, causing revenue to grow 2.1% over 2012. However, this limited growth has kept industry revenue below pre-recession levels, with an average annual decline of 2.2% to $1.7 billion over the five years to 2012.
Despite stronger growth in demand, the number of establishments is expected to decline at an average annual rate of 0.7% in the five years to 2012, as many firms continue to recover from the recession's negative effects. Consolidation and increased external competition have forced many operators out of the industry. The industry employs a flexible labor force; employers hire new staff to meet increased demand and then shed workers in difficult years. Setar says, "In 2009, falling demand caused a particularly significant decrease in employment and wages." Over the five years to 2012, industry employment and wages are estimated to fall at average annual rates of 1.0% and 2.6%, respectively. The industry has a low level of concentration, mostly including small players that service specific regions or market sectors. However, one major player, Brambles, operates in the industry through its US freight packing and logistics services segment, CHEP.
Over the five years to 2017, revenue is expected to return to steady growth. Increased freight volumes, a rebound in international trade and higher trucking and rail activity will support this growth. However, the industry will likely face increasing pressure over the next five years as integrated logistic networks continue to grow, major transport operators bring more auxiliary transport activities in-house and greater use of digital technology reduces demand for some services.
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