Free Essay

Global Trend in Logistic Sector

In: Business and Management

Submitted By jesseharley
Words 586
Pages 3
We will be using PEST analysis & Porter’s Five Forces framework to further illustrate the identified trend in the chosen sector, Logistics.
PEST
Political factors are the level of government intervention in the economy that include such as Antitrust regulations, tax policy, special incentives, foreign trade regulations, environmental and labor law, trade embargo, tariffs, political stability, industrial relations and others. In the context of logistics M&A, these will be important especially for firms that are operating in China, India, Vietnam. Using India as example, apart from the non-uniform tax structure, logistic companies in India have to pay numerous other taxes, octrois, and face multiple check posts and police harassment. High costs of operation and delays involving compliance with varying documentation requirements of different states make the business unattractive. On an average, a vehicle on Indian roads loses 1-2 days in complying with paperwork and formalities at different check posts en route to a destination. Fuel worth up to estimated USD 2.5 billion is spent on waiting at check posts annually.

Economical factors include economic growth, interest rates, exchange rates, increasing globalization, creation of WTO, trade agreements among regions such as ASEAN, NAFTA, EU), emergence of the Indian & Chinese economies and others. These factors have major impacts on how businesses operate and make decisions.

In the context of M&A for logistics sector, economic deregulation plays an important part. Economic deregulation has led to carriers such as airlines (Air France with KLM to in 2004) shipping lines (P&O Nedlloyd and Maersk in 2005) and network restructuring, mergers and consolidations (DHL and Exel in 2005, Schenker and Bax Global in 2006, EGL & TNT Logistics to form CEVA in 2007) in, greater efficiencies in the form of labor and equipment, and price reductions for shippers. Deregulation has also facilitated the growth of multimodal solutions (Sea-Air, Rail-Air etc) to improve freight mobility, options and cost to customers and provide product differentiation and innovation for players in the market. Deregulation in the air transportation industry has lowered prices for shippers, stimulated growth in air freight, and virtually doubled labor productivity. It also has spurred dedicated air-freight carriers, like passenger airlines, to develop hub and spoke operations.

Globalization trend means that Shippers are increasingly likely to source and sell goods outside their own home countries and exporting them across international across continents which are more complex compared domestically. They are likely to turn to international or global logistics companies to solve their challenges that could extend beyond the conventional warehousing and transportation in their newly identified markets. With M&A in Logistics sector, they are able to focus and develop a niche to compete, providing shipper with a much better pricing, solutionings, technological advancements and services. Big companies, big providers are the belief that they can serve their customers base much better as what economies of scale usually does.
Sociocultural (Demographic) factors include the cultural aspects, population growth rate, age distribution, career attitudes, consumer activism and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates.
Technological factors include aspects such as R&D activity, automation, technology incentive, new products innovation, application of knowledge and the rate of technological change. They can determine barriers to entry, optimum efficient production level and influence potential outsourcing decisions which in return can affect costs and quality. For Logistics, the degree of system and products innovation will be critical aspects whereby firms evaluate an M&A option.

Similar Documents

Premium Essay

Challenges

...THE RESILIENCY CHALLENGE: CONSTRUCTING THE AGILE SUPPLY CHAIN FOR HEAVY INDUSTRY June 2014 By Lisa Harrington, President, lharrington group LLC and Associate Director, Supply Chain Management Center, Robert H. Smith School of Business, University of Maryland 2 The resiliency challenge The engineering and manufacturing sector (E&M) is the definition of diversity. The companies that make up the sector manufacture everything from jet engines and drilling rigs to simple fasteners and filters. Broadly speaking, though, E&M firms fall into a number of sub-sectors including Aerospace and Aviation and Industrial and Construction Equipment. The overall sector, like all industries, faces a myriad of issues around volatility, including dealing with natural disasters and supplier disruptions. But these issues aren’t the only ones that keep sector executives up at night. E&M CEOs also worry about how to transform their frequently large and conservative companies into agile enterprises capable of meeting new competition and opportunity head on with faster, leaner and more resilient operations. Global market dynamics are driving the need for transformation. As emerging markets grow and new markets emerge, demand is dispersing geographically. Demand is also fragmenting as a result of increasingly complex requirements from customers both for new product customization and post-sale support and service. Customers want – and expect – more choice......

Words: 5054 - Pages: 21

Premium Essay

Indian Logistic Industry

...INDIAN LOGISTICS INDUSTRY 2009 PROJECT REPORT ON INDIAN LOGISTICS INDUSTRY FOR PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT SUBMITTED TO: Ms. Gunjeet Kaur Lect. of SVSM SUBMITTED BY: Rajnish Kumar Roll No. SVPG/07/05 PGDM – 6th Trimester SWAMI VIVEKANAND SCHOOL OF MANAGEMENT Ramnagar (near Banur), Patiala 1 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING INDIAN LOGISTICS INDUSTRY 2009 Punjab LOGISTICS MANAGEMENT - INTRODUCTION Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers' requirements rather to the customers’ delight. A professional working in the field of logistics management is called a logistician. Logistics, as a business concept, evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials, and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage...

Words: 20387 - Pages: 82

Free Essay

Llkal

...Effective Logistics Is an Essential Factor Affecting the Finnish Economy One of the general trends of the transport and logistics sector is the growing demand for mobility. In the EU area transport has a total expenditure of around 1000 billion euros, generating over 10 % of the Union’s GDP. It is also a very vital issue for Finland’s economy. The following brief article illustrates logistics questions from the Finnish point of view and gives some examples of the current logistics R&D activities of VTT, the Technical Research Centre of Finland. Photo: VTT Remote position cReates challenges foR the value chain in finland Because of Finland’s geographical location, maritime transport is vital to the Finnish economy. Maritime transport is by far the most important form of transport in the Finnish export trade. The Baltic Sea provides a transportation route that connects Finland with other parts of Europe, our most important market. About 70 % of Finnish imports and about 90 % of Finnish exports use seaborne transport. Thus it is vital for the Finnish economy to find sound and reliable solutions for yearround service. Here the winter provides challenges for Finnish society due to the fact that our coast-line is ice covered for several months every year. Competitiveness in logistics is an important factor for us, and all means to improve our effectiveness are vital. The high price of oil is also significantly affecting the profit margins of the transport sector. geneRal......

Words: 1240 - Pages: 5

Free Essay

Management

...responsible; they have more than 300 branches situated in major towns and cities nationwide to serve you. They want to be the leading courier company meeting the daily needs of the mailing public and build sustainable competitive strengths and gain leading position in the industry. 5. What trend suggesting future change in economics and technical characteristics are apparent? Megatrends. This includes major high-level, non- sector specific, global trends affecting the evolution of manufacturing around the world. These “megatrends” are recognized as critical drivers in many countries, shaping future manufacturing challenges and opportunities. They include phenomena affecting industrial activity at the global and national levels: the increasingly complex and globalized nature of manufacturing; the drastic reduction in manufacturing timescales and associated acceleration of technological innovation; and the growing need for sustainable, resource efficient production. Enablers of future manufacturing competitiveness. Describes qualities and characteristics that, according to many of the exercises analysed, will trigger industrial development in the face of the above- described global trends and drivers. These are attributes that will need to develop and sustain in order to remain competitive in the future. Some of the most evident qualities and characteristics that will be increasingly necessary in the future include resource efficiency and the...

Words: 1098 - Pages: 5

Premium Essay

Fedex

...Logistics and Supply Chain Management Practices in India Samir K. Srivastava, Management Development Institute, Gurgaon, India ABSTRACT India is the fourth largest country in terms of Purchasing Power Parity (PPP) and constitutes one of the fastest growing markets in the world. Globalization of businesses, infrastructural bottlenecks, increasing uncertainty of supply chain networks, shortening of product life cycles and proliferation of product variety have forced Indian firms to look beyond their four walls. They face issues related to choosing and working with the right supply chain partners (suppliers, customers and logistics service providers), fostering trust between them and designing the right system of gauging performance. In this paper, we present a snapshot picture of logistics and Supply Chain Management (SCM) practices in India. It is borne out of the felt need by managers, expert professionals and academicians to address logistics and supply chain practices at the national level. Our exploratory study is based on both field visits and secondary data. We capture facts, figures as well as qualitative responses about the logistics infrastructure and supply chain practices. We focus on supply chain collaboration and partnerships, supply chain structure, facilities network design, transportation and logistics and the role of Information and Communications Technologies (ICT). Field visits to at least one major facility of 25 firms were carried out......

Words: 6875 - Pages: 28

Premium Essay

Transportation & Logistics 2030 Volume 1: How Will Supply Chains Evolve in an Energy-Constrained, Low-Carbon World?

...Transportation & Logistics Transportation & Logistics 2030 Volume 1: How will supply chains evolve in an energy-constrained, low-carbon world? PricewaterhouseCoopers 1 Acknowledgements The editorial board of this issue of our Transportation & Logistics 2030 series consisted of the following individuals: PricewaterhouseCoopers European Business School Supply Chain Management Institute Dr. Heiko von der Gracht +49 611 3601 8800 vdgracht@supplyinstitute.org Tobias Gnatzy +49 611 3601 8800 gnatzy@supplyinstitute.org Prof. Dr. Inga-Lena Darkow +49 611 3601 8800 darkow@supplyinstitute.org Klaus-Dieter Ruske +49 211 981 2877 klaus-dieter.ruske@de.pwc.com Dr. Peter Kauschke +49 211 981 2167 peter.kauschke@de.pwc.com Julia Reuter +49 211 981 2095 julia.reuter@de.pwc.com Dr. Elizabeth Montgomery +49 89 5790 5159 elizabeth.montgomery@de.pwc.com We would like to thank the panellists who took part in the Delphi survey that underpins this report. For confidentiality reasons their names will not be mentioned. Special thanks go to Tom Gorman, CEO of CHEP EMEA and Harry Hohmeister, CEO of Swiss International Air Lines, who took the time to share their thoughts and insights with us. Finally, we would like to express our appreciation for the expertise provided by the below listed individuals: Jenny Bailey, Andreas Baur, Nicholas Bell, Thomas Brüderlin, Giorgio Elefante, Richard Gane, Martha Elena Gonzalez, Susanne Klages, Christian Knechtel, Socrates LeptosBourgi,......

Words: 28154 - Pages: 113

Premium Essay

Logistics Industry

...INDIAN LOGISTICS INDUSTRY May 2012 Index I. II. Executive Summary Market Overview – – – – – – – – Industry Overview Structure of the Industry Five Forces Model Growth Drivers Trends in the Industry Government Initiative Opportunities in the sector Challenges in the sector III. Industry Analysis III. Major Players – Major Companies – Common Stock Comparables IV. Organized Players in Logistics Segment – – – – – Container Rail Business Multimodal Transport Operation Container Freight Station Third Party Logistics Express Logistics 1 Index V. Investment in the Sector – Private Equity Deals – Recent Joint Venture – Recent Private Equity Funding VI. Profile of Listed Companies – – – – – – – – – – Container Corporation of India Limited Allcargo Logistics Limited Gateway Distriparks Limited Aegis Logistics Limited Transport Corporation of India Limited Arshiya International Limited GATI Limited Blue Dart Express Limited Shreyas Shipping and Logistics Limited Sical Logistics Limited VII. Corporate Profile (Dinodia Capital Advisors) 2 Executive Summary The logistics sector in India is evolving rapidly and its growth is dominated by the interplay of infrastructure, technology and new types of service providers that will determine whether the industry is able to help its customers to reduce logistics costs and provide effective services or not Changing government policies on taxation and regulation of service providers is going to play an......

Words: 6615 - Pages: 27

Premium Essay

Analysis of India's Logistics Industry

...ANALYSIS OF LOGISTICS INDUSTRY : ANALYSIS OF LOGISTICS INDUSTRY By:- Group No. 7 Prijo Mathew Sivaramakrishnan Suvrata Nandy Gaurav Verma Dhinesh Kumar Objectives: Objectives To study in detail about the Global Logistics Industry To study in detail about the Indian Logistics Industry To find out the areas where Logistics Industry in India is lacking To compare the Global Companies (UPS, FedEx and DHL) with the Indian Logistics Companies ( Gati , DTDC and First Flight) INTRODUCTION: INTRODUCTION What is Logistics? Management of flow of goods and services Integration of information, transportation, inventory etc Reduces operational cost, improve delivery performance and enhance customer satisfaction The importance of logistics is growing and now the logistics industry has become highly recognized in the global scenario Evolution of Logistics Industry: Evolution of Logistics Industry Global Scenario of Logistics Industry: Global Scenario of Logistics Industry Size of the Global Logistics Industry Annual logistics cost of the world is USD 3.5 trillion The annual logistics cost in any country varies in between 9% to 20% of their GDP Logistics market in US is 10% of its annual logistics cost Global Logistics industry is estimated to be worth USD 300 billion Largest service providers are located in Europe Biggest market - US Current Status and Dynamics of the Industry: Current Status and Dynamics of the Industry Issues – Pricing pressures, high cost of operations, low...

Words: 1252 - Pages: 6

Premium Essay

Econimic

...national to an international network is still going on. The structural transformation in logistics once started with the creation of the Single European Market. Logistics providers began to create pan-European networks in line with the expansion of the European Union. The current adjustments reflect both eastern parts of Europe and the evolvement of a global distribution structure and the accession of the peripheral economies in the central. In addition to these geographic aspects, the logistics markets in European have been influenced by numerous factors dramatically in the technological, financial, and political environment (Europe Real Estate, 2012). Logistics property is targeted by international investors. The volume of total investment currently exceeds €10 billion. Logistics property helps to compensate the poor performance and diversify portfolios of other sectors. Networks of European distribution are still relying on large distribution warehouses, and growth is most likely in the further. ‘Although prime yields up to 13% for opportunistic investments in emerging clusters are rather attractive, yield compression is foreseeable in the near future’ (Europe Real Estate, 2012). In this paper, there is a case, which is talking about a central European decides to operate a privately importing and exporting logistics business in Hungary, will be analysis. The conditions which can turn logistics system in the central Europe will be shown; Warehouse recommend deapend on the......

Words: 3161 - Pages: 13

Premium Essay

Business Management

...above-mentioned period; whereas total sales of passenger cars in domestic market have increased at CAGR of 14.02%. In terms of production, commercial vehicles have registered a CAGR of 24.55% from 2001-02 to 2005-06; while passenger vehicles have registered a CAGR of 18.24%. There is a declining trend in mopeds production as well as in sales in the domestic market. During 2001-02, mopeds production and sales have declined at CAGR 2.93% and 5% respectively. Exports on a roll The significant development in Indian automobile sector is the outstanding growth of its exports. From 2001-02 to 2005-06, total exports of automobile sector has gone up at CAGR of 44.56%. Exports of motorcycle segment have registered highest annual growth rate of 61.42% during this period. This has clearly indicated that Indian automobile sector is going global. Chart- 2: Export Trend in Indian Automobiles (‘000 units) 900 800 700 806.49 600 Overview of Indian automobile and auto components industry Indian automobile industry is riding high with overwhelming economic growth rate of 8.4% in 2005-06. The industry has been growing at CAGR of 16.33% from 2001-02 to 2005-06 in terms of production. Booming IT/ITES sector, manufacturing industry (namely textile, pharmaceutical and engineering) and real estate have contributed to this high growth in automobile industry in the country. This is easy to understand because the per capita disposable income of the people has gone up remarkably. Over the last five......

Words: 4070 - Pages: 17

Premium Essay

Corporate Strategy Fedex

...Executive Summary This report endeavors to look at FedEx from the strategic initiative point of view and how it was able to adapt to changing business environment to improve itself.  While organisations the world over have come and gone a few leave a lasting footprint on the way they have moved in the particular sector.  FedEx with its various innovative ideas has left lasting footprint that has forever altered the scope of service within the logistics industry. From its humble beginnings as a delivery company, it has set itself up a global logistics and business services organisation that has shaken the belief held by behemoths regarding the level of innovation and service that they can offer to the customer base.  With its out-of-box approach it has made industrial leaders like UPS, DHL etc, and look like new kids in the block.  The strategic initiatives that the organisation has taken during various time a frame has exemplified the leadership ability of Mr. Smith to work toward uncertainly and how to respond to them. Introduction A general assumption regarding strategy is that executives by applying a set of tools will be able to predict a future of any business clearly enough to choose a clear strategy or direction to adopt. This overall scenarios and assumptions made usually led to a layout of vision for the future with assumed precision. However, one needs to remember that when the time ahead looks uncertain this approach is at best only helpful marginally and...

Words: 3569 - Pages: 15

Premium Essay

Global Logistic Management

...Company Name: 1.0 Introduction The Council of Supply Chain Management Professionals (CSCMP) defines logistics as the process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound, outbound, internal, and external movements. Inbound Logistics It is important for companies to have total visibility of their inbound logistics function. If the logistics management can see which inbound deliveries are arriving they can schedule the correct resources to be available at the correct times so that materials are unloaded in a timely fashion without causing a bottleneck at the receiving dock. The inbound logistics process in SAP starts when purchase orders are processed at the vendor and an advanced shipping notification (ASN) is sent back. When an ASN is received this can trigger an inbound delivery to be created in SAP. The delivery will contain information on the vendor, the items, quantities to be expected and the delivery details. The delivery monitor is used to display and process open and completed deliveries. It is a single list that is easily reviewed. It shows deliveries that are due for picking or putaway and creation of transfer orders, deliveries for which picked quantities or putaway stocks need to be confirmed...

Words: 3099 - Pages: 13

Premium Essay

Reduce Lead Time

...Equipment market. The Global Crane market is undergoing a radical change due to growth of the emerging economies, infrastructure industry and drive towards greater energy efficiency. According to TechNavio’s analysts forecast the Global Crane market is expected to grow at a CAGR of 7.29 % over the period 2013-2018[7]. Fig1- Regional differences, Source - http://www.khl.com/servlet/file/CHRIS%20SLEIGHT.pdf?ITEM_ENT_ID=81256 The Indian industrial crane market amounts to approx. Rs2000 to 2200 crore per annum. Majorly 70% demand comes from the private sector and 30% from the government owned companies (Saibal ray, Yigal Gerchak & Elizabeth M. Jewkes, 2002) India has few factors which would ensure the steady growth of this segment in the next few years. The increase in domestic spending on infrastructure as stated in the Budget 2014-15, increased investment from foreign multinationals would prove to be a key factor in the growth of the construction industry as a whole. ElectroMech is the largest EOT cranes manufacturer in India with Pune being the base. It commands the highest market share and is recording 50% average annual growth. ElectroMech offer precise solutions for wide-ranging applications in manufacturing plants and infrastructure projects through a complete range of Hoists and Cranes. Apart from the standard and semi standard product delivery, Electromech also offers the customized solutions to its clients. ElectroMech has collaborated with global brands......

Words: 2402 - Pages: 10

Premium Essay

Indian Bpo’s – Walking Up to the Philippines Opportunity

...Q 1 How has the global economic down turn, Discussing in opening profile and throughout this chapter, impacted jobs outsourcing in the BPO industry? Ans: The global economic downturn has impacted jobs outsourcing in the BPO industry as it has helped to be one of the largest job creators in India. Due to this, many companies had to increase their operations output and therefore employ more and more people to keep up with the expanding trend. Job outsourcing seemed to be the only viable option as global economic downturn had created many problems when it came to funding and financial institutions. There needed to be cut backs in order to keep things afloat and most companies would see that job outsourcing would solve at least one of the many problems involved in the economic downturn. The global economic downturn provided merges and many acquisitions for the BPO industry and helped to create certain flexibilities for some companies which helped with resource management. The main reason why the economic downturn has impacted on job outsourcing in a major way is because it is cost effective and helps companies concentrate on core areas. It also contributes to improvement in productivity. Referringto chapter, The International Institute for labor has discussed in the opening profile “The reason behind the global economic downturn is the financial crisis which is hitting the world of work”. The credit crunch and collapse of stock markets are starting to effect......

Words: 1545 - Pages: 7

Premium Essay

Reverse Logistics in Indian Automobile Industry

...Reverse Logistics in Indian Automobile Industry Reverse Logistics is a process in which a product moves in reverse through the supply chain network. It may be used for the purpose of recapturing value of a final product or for even proper disposal. It may also be termed – service, as the process of planning, implementing and controlling the efficient and cost effective transfer of raw materials, in-process inventory, finished products and related information, from consumption to the point of origin, for the purpose of recapturing value of proper disposal. While the primary sectors involved in making use of this process may be classified as the Pharmaceutical Sector, Retail sector, Automobile sector and the Electronics sector, we are mainly about to focus all our attention to the practices of ‘Reverse Logistics’ in the Indian Automobile Industry. To truly know why the whole idea of ‘Reverse Logistics’ assumes significance when considered in terms of the Automobile Industry, first we need to think of the nature of the final product i.e. Automobiles or Vehicles as we call them. The parameter one needs to look at is the life cycle of the product and what happens to the final product once it reaches the end of its useful life. By its very nature, it’s difficult to predict the life cycle of the final product. This is because; it is highly susceptible to the nuances of the human subjectivities. But even if we are unable to predict the duration of the life cycle, we have......

Words: 1394 - Pages: 6