The Covid-19 pandemic has had a major impact on our consumption habits leading to the eCommerce boom and the definition of new types of online and offline consumers. But that’s not all: the health emergency has shone a spotlight on the Logistics sector, underscoring its strategic importance to the entire economy and putting it permanently at the center of business strategies.
According to the latest data from the Milan Polytechnic’s Contract Logistics Observatory’s Research on the Evolution of Third Party Logistics, in 2020 the latter has established itself once and for all and is now growing steadily. While during the first lockdown (March-April 2020) the turnover of logistics companies had collapsed for most sectors excluding eCommerce, Food and Healthcare, already as of June 2020 the sector has reacted positively by marking a robust recovery. To date, Third Party Logistics is worth 49.3 billion euros and accounts for more than 40 percent of logistics activities in Italy.
What do we refer to when we talk about Third Party Logistics?
According to the definition of the Politecnico di Milano’s “Gino Marchet” Observatory, “Contract Logistics should be read in the context of logistics outsourcing and therefore includes all the declinations of outsourcing of logistics activities and processes, from Strategic Outsourcing decisions (the set of strategic decisions of outsourcing a logistics process and including at least transport and storage activities), to Commodity Outsourcing decisions (the set of tactical decisions of outsouring more basic logistics activities).”
Contract Logistics development trends
1. Customer Service: more and more logistics operators are paying special attention to overhauling the entire customer service process, which can offer various opportunities and benefits on both the client and supplier sides.
2. Green Logistics: attention to the issue of sustainability is increasingly preponderant in the logistics and transportation sector. The goal is to minimize the environmental impact of logistics operations by acting on the entire Supply Chain, from transportation to procurement to storage, inventory management and order fulfillment.
3. Logistics 4.0: The technological and digital evolution of the industry is key to ensuring new storage, handling and transportation systems.
4. Omnichannel Logistics: omnichannel, which we have also discussed here, is one of the trends of greatest interest and concerns the integration of different sales channels.
The impact of Covid-19 on Third Party Logistics
The value of turnover of “Italian” contract logistics companies in 2019 was nearly 87 billion euros with a positive change compared to previous years (+2.1 percent in real terms in 2019 compared to 2018). There were just over 86,000 companies operating in Contract Logistics, the majority of which belonged to the world of trucking (with nearly 66,600 “owner-operators”), followed in terms of numbers by the class of warehouse managers (3,400 companies) and that relating to freight forwarders (over 2,000 companies).
For 2020, on the other hand, the estimated reduction in turnover is 9.3 percent, which in absolute terms translates into a total value of 77.8 billion euros, due to the decline in exports and domestic freight traffic.
However, the pandemic has accelerated a process of change already underway in the logistics sector, which has been able to respond effectively to the health emergency thanks to the ability to make quick decisions, the outsourcing of logistics, the flexibility of suppliers and, finally, the constant dialogue and collaboration with workers in the sector.
In the following insights we will look in more detail at the potential for Contract Logistics development and the solutions to support omnichannel logistics.
