On-going Consolidation Shapes E-commerce Logistics Landscape

ecommerce logistics

The rapid rise of e-commerce has undeniably transformed the logistics industry in profound ways. With consumers increasingly turning to online shopping for convenience and variety, logistics companies have had to adapt to meet the demands of this digital era.

Cutting-edge technology, such as AI-powered routing and tracking systems, has become indispensable for optimizing delivery routes and minimizing delays. Furthermore, the logistics sector has witnessed a surge in demand for last-mile delivery services, driven by the “Amazon effect” that has raised expectations for speedy, hassle-free deliveries. As e-commerce continues to expand, the logistics industry’s ability to innovate and efficiently handle the growing volume of packages will be pivotal in sustaining this dynamic shift in consumer behaviour.

In the realm of e-commerce logistics, acquisitions have become a quick route to establishing market presence. It’s a trend where innovative start-ups and seasoned specialists are frequently acquired by much larger global logistics players. Hardly a month goes by without the announcement of a major deal.

This month, GXO Logistics made significant strides in expanding its e-commerce operations with the acquisition of PFSweb for US$181m. PFSweb is a global commerce services company that specializes in providing e-commerce fulfillment services for consumer brands and internet retailers. In 2022, the company reported revenues of $295.1m. PFSweb operates distribution centres in key locations, including Memphis, Tennessee, Dallas, Texas, Las Vegas, Nevada, Toronto, Canada, United Kingdom and Belgium. Notably, its client roster includes renowned names like L’Oréal USA, ON, Kendra Scott, PANDORA, Moleskine, Proctor & Gamble, Shiseido Americas, and The United States Mint, among many others.

Other major players in the e-commerce logistics arena have also expanded through acquisition: DHL (recent acquisition of Monta), CEVA Logistics (Ingram Micro’s Commerce & Lifecycle Services), bpost (Active Ants), Maersk (Visible, B2C Europe, LF Logistics, HUUB), Ryder (Dotcom Distribution, Whiplash), Geodis (Need It Now Delivers, Keppel Logistics) and Wincanton (Cygnia Logistics). 

Belgium’s bpost not only owns the major e-commerce provider Radial but also made a significant move in August 2023 by acquiring the remaining shares of Active Ants, a leading European e-commerce fulfillment provider. Meanwhile, Scandinavian logistics firm Logent extended its footprint into the Netherlands with the acquisition of Misi in July, underlining the international nature of these logistics transactions. In the Benelux region, Paragon’s acquisition of MINC illustrates the trend of consolidation and expansion within Europe’s e-commerce logistics industry.

Furthermore, in the United States, Staci made waves in early 2023 by acquiring Amware Fulfilment. Amware Fulfillment LLC, a direct-to-consumer order fulfillment services provider in the US with a $200 million turnover, now combines forces with Staci, boasting a total of 81 fulfillment centres spanning North America and Europe.

As e-commerce continues to surge, these acquisitions are indicative of the intense competition and the industry’s quest for enhanced capabilities in the e-commerce fulfillment sector. They are all aimed at meeting the ever-growing demands of online shoppers worldwide.

The latest figures reveal that the total e-commerce logistics market experienced a surprising 5% contraction in 2022 (a rebalancing after a significant pandemic surge). However we are now predicting a robust recovery and growth of 7.9% in 2023, projecting a market value of €451,239.3 million. One notable shift in the industry landscape is the emergence of North America as the largest regional e-commerce logistics market. This development highlights the region’s resilience and adaptability in the face of market fluctuations.

A substantial 84% of the e-commerce logistics market is dominated by domestic operations, making it the largest market segment across all three major regions. This domestic focus underscores the importance of efficient local logistics networks in serving the ever-expanding e-commerce customer base. Cross-border shopping, on the other hand, seems to thrive in regions characterized as developing. This trend could be attributed to the increased access to international products and the convenience of online shopping for consumers in these regions.

TI tracks market developments and acquisitions within the E-commerce logistics industry as part of its continuous research platform GSCI.

Author: Paul Chapman

Source: Ti Insights

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