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4 July 2013 | Andrew Allen
DHL Supply Chain remains the leading player in the contract logistics market with 8 per cent of the overall market with revenues of €13 billion (£11 billion) in 2012, according to Ti's latest study into the contract logistics market.
The second largest operator, CEVA, has revenues of €3.9 billion (£3.3 billion), according to Global Contract Logistics 2013, which identified significant fragmentation in a sector where the 10 largest companies held a combined market share of just 22 per cent. The report says while the global economic downturn has resulted in a decline in manufacturing, the instability has provided opportunities for acquisition activity.
The high level of market fragmentation in the sector, worth €159.35 billion (£135.74 billion) in 2012, presents an opportunity for consolidation through mergers and acquisitions, the report said. It cites Russian Railways' €800 million (£681 million) acquisition of GEFCO in 2012 as the kind of opportunity that exists for companies looking to enter the market.
The report also predicted that Asia Pacific would become the largest contract logistics market by 2016, due to the economic weakness of western Europe. Asia Pacific is largely dominated by local providers with DHL Supply Chain, the third largest provider in the region, the only global company to feature among the 10 biggest players.
But the report says while DHL Supply Chain was able to enter the market through acquisition, it is likely to be hard for other providers to follow suite, particularly in China and Japan. This is likely to lead to the creation of national joint ventures and distribution centres as well as cross-border services in South East Asia in order to service larger markets and benefit from the growing intra-Asian trade.
Report author Cathy Roberson said: “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.”