Whilst Amazon is attempting to dominate the e-retail market by creating a vast integrated logistics capability, it is important to remember that there are a small army of third party logistics service providers who are adapting to the opportunities that e-commerce offers.
One example is Clipper Logistics. A medium sized contract logistics provider in the UK, that has re-oriented itself to exploit the move into internet shopping by conventional retailers.
The most recent numbers illustrate this. For the past six months, Clipper saw revenue climb by 16.5% to £164.9m and profit in terms of EBIT up 23.2% at £7.6m. Although not all of the company’s revenue is e-commerce related, around half is and this segment grew solidly.
The driver was, according to Clipper’s management, organic growth from its existing retail clients. These include the clothing retailer ASOS and the furniture and homeware store John Lewis. The operations for these two large clients are focussed on fulfilment centre operations. The John Lewis relationship is particularly dynamic. The ‘click and collect’ contract agreed last year has been expanded to cover the whole of the UK and as a result has been moved into a joint venture. This has demanded the opening of a new fulfilment facility in Northampton. In addition, Clipper has grown its returns management operation for clothing retailer Marks & Spencer.
Clipper is a small contract logistics provider in a very large pond. Sustaining such double digit growth rates in the future will not be easy, not least as the company will have to face major changes in warehousing technology which may well force changes in its corporate finance profile. Yet what Clipper does demonstrate is that in a world where world trade is assumed to be becalmed and the growth rates for forwarders and contract logistics businesses are miserable, there are major opportunities to be had in new types of logistics services. The potential is vast, the market is fast growing and the margins are potentially higher than those traditionally expected in logistics.
If this brief has been of interest you might also like to download Ti’s Global e-commerce 2016 report. The report contains Ti’s bespoke market size and forecasting data, as well as overviews of some of the world’s leading e-commerce businesses. In addition, the report includes company profiles of both post offices, LSPs and dedicated e-commerce solution providers to showcase the different strategies shaping the market we know today. Ti will be publishing it’s 2017 version of the report early next year, for more information, contact Michael Clover, [email protected].
Source: Transport Intelligence, December 7th, 2016
Author: Thomas Cullen