The global contract logistics market will not escape the deep impact of Covid-19 and is set to contract 4.5% in 2020. The fall comes after a year of significant disruption which has seen manufacturing capacity taken offline and retail sectors across the world effectively shut down. The story is not only one of doom and gloom, however, with certain sectors experiencing something of a boom during the Covid-dominated year.
As restrictions on movement and social and economic activity took hold, core contract logistics sectors bore the brunt of lockdowns. Automotive manufacturing in the UK, for example, fell dramatically. In April 2020, the first full month of the UK’s lockdown saw just 197 cars manufactured compared to UK output figures of 70,971 in April 2019. The picture has been similar globally. Over the first eight months of 2020, passenger vehicle sales in the US are down 23% year-on-year. over the same period, in China sales are down 10%, while in Europe the decline is 16%. Globally, analysts expect a 20% decline in the automotive market over the course of 2020.
High-street retail has also been hit by pandemic-related shutdowns. In Germany, footfall on the country’s main shopping high streets in Hamburg, Cologne and Berlin were 50% lower in June 2020 than a year earlier, while in London’s West End the declines topped 75%. High street retailers have battled against lost sales to online channels for more than a decade and the key contract logistics sector is suffering. A second wave of Covid-19 infections and shutdowns may prove terminal for some segments of high street retail. Research from the Altus Group shows the severity of the situation – in the UK, some 95% of retail property developers either have or plan to repurpose retail space, with as much as 12.5m sq m set to be put to other uses, roughly equal to 10% of the UK total retail footprint.
There have been positive developments for the contract logistics market so far in 2020, however. While the impacts of Covid-19 have been negative in aggregate, certain sectors have seen sales grow significantly. This is certainly true of grocery retail which saw demand spike across many consumer markets in Europe and North America in Q2 as social lockdowns were imposed. This led to many stockouts on consumer staples. Demand spikes have also been seen in certain categories of consumer electronics as significant proportions of the workforce globally has reoriented to working from home. Laptop and PC sales, for example, have seen a marked rise year-on-year during 2020.
Ti’s latest Global Contract Logistics market size data provides H1 2020 and Full Year 2020 forecasts globally, for seven regions and for 23 individual countries. The 5.5% global fall in H1 is led by Europe, the second-largest region by value, where declines were 7.4%. Like Asia Pacific and North America, which sit either side of Europe as the largest regions, H1 appears to have seen the sharpest contraction with the full-year figures for all three showing signs of early recovery.
Ti’s new market projections break down growth in the contract logistics market by region and country with growth rates provided for H1 and the full year 2020.
If you would like to access Ti’s full dataset on the contract Logistics market then you can take a look at Ti’s Global Supply Chain intelligence (GSCi): https://www.ti-insight.com/product/gsci/
Source: Transport Intelligence, October 8, 2020
Author: Transport Intelligence