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LSP and freight forwarding market in recovery, survey says

Logistics service providers and freight forwarders are optimistic that the economy will continue to grow, and provide opportunities for expansion in 2013, according to a survey by Transport Intelligence (TI) and Kewill, a leading provider of innovative software for global trade and logistics.

80% of respondents reported slight business expansion over the past two years with over 75% expecting this growth to continue in 2013, according to the independent survey of 484 international businesses, developed to examine the lasting impact the global economic downturn has had on logistics service providers, and the role of IT in ensuring their survival.

Growth has been well spread geographically across firms of differing sizes, although logistics service providers in Europe demonstrated lower growth rates in comparison to their counterparts in North Africa, Middle East and Africa, with logistics companies in North America and Latin America, particularly freight forwarders and 4PL’s, experiencing the highest level of growth. This highlights the impact that the on-going Euro crisis has had on European logistics service providers.

Few respondents intend to pursue growth through acquisitions alone and most respondents intend to pursue growth organically, although there are still some organisations seeking expansion through a mix of organic and acquisition. The majority of logistics service providers will seek to generate their future expansion through organic growth, typically those with hefty loans and few tangible assets to invest in acquisitions. However over 30% of forwarders and 3PL’s envisage growth by merger or acquisition in 2013, reflecting their sector’s stronger cash positions.

Joel Ray, Head of Consultancy at Transport Intelligence, said, "With over two thirds of companies surveyed expecting growth in the next 12 months and the majority of smaller firms feeling more optimistic, including 90% of 4PL’s and over 80% of freight forwarders and 3PL’s, the outlook for the logistics and transport industry is looking up."

Gerry Daalhuisen, Solution Manager for Global Trade and Logistics at Kewill, cautioned "What the logistics industry must take into consideration, in particular the mid-sized organisations with 251 to 500 employees that are most likely to have grown in the past two years and are most likely to grow in the coming year, is that the companies who re-invested in their business and focused on expansion were the ones who reaped the rewards. Investing in technology is no longer an option, it is imperative in doing business efficiently and thriving in today’s tough market place."

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