Eurostat data suggests that consumer-focused industries are most likely to demand more logistics services in early 2024. The latest Eurostat volume indices show that retail volumes remain down year-on-year (Y-o-Y) but stable at levels 4% above those of 2019. In 2023, month-on-month (m-o-m) growth of EU retail volumes averaged 0%. On the other hand, production sits just 0.8 percentage points above 2019 levels, and m-o-m growth in 2023 averaged -0.3%. This suggests that consumption may have hit its lowest point and is unlikely to decrease further, while production continues to decline.
Will consumer products provide more logistics service opportunities in 2024? Wage growth is the key factor that will likely drive an increase in demand for logistics services in the consumer products sector in 2024. S&P Global expects wage growth to slow to 4% in 2024 from 5% in 2023. This, combined with an expected European inflation rate of 2.9%, would result in just a 1% growth in the demand for consumer goods. Consequently, it will be crucial for logistics providers to focus on high-growth segments.
E-commerce stands out as an example of a segment showing signs of robust structural growth, thanks to ongoing innovation and a growing consumer base. The demand for large appliances may struggle to rebound quickly in 2024 due to diminished consumer savings, which will likely hinder substantial purchases. Conversely, cheaper, smaller non-essential products bought online could experience a quicker rebound.
Will manufacturing offer growth opportunities in 2024? Eurostat data indicates that manufacturing lags behind consumption, and we might witness further declines at the start of 2024 before it stabilizes. European producer prices need to undergo further reductions before experiencing a robust growth phase. While prices have been declining since May 2023, they still remain higher year-on-year. Additionally, high interest rates will limit the availability of capital and discourage investment in expanding production. Consequently, growth prospects will be restricted in manufacturing, prompting logistics providers to seek out the few high-growth sectors.
Green supply chains are likely to remain a high growth area in industry. Financing for green solutions remains high and growing and, similar to e-commerce, shows strong structural growth unaffected by the continent’s general economic health.
In conclusion, a more relaxed labor market might result in only slight consumption growth in 2024. Meanwhile, high interest rates could deter production expansion. However, there are key industries poised to drive robust growth in the demand for logistics services in 2024. Logistics providers must focus on tapping into these high-growth sectors.
Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.
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