Logistics Spending in North and South America to Swell by $106 Billion Through 2012

Following a decrease in market size of some $20.0 billion from 2007 2009, researchers from Analytiqa now predict that spending on logistics across North and South America could increase by approximately $106 billion through 2012, including an impressive 32 percent increase in logistics outsourcing expenditures.

Even so, the North and South American Logistics 2010 study, which sized logistics markets and evaluated outsourcing rates across Argentina, Brazil, Canada, Mexico and the United States, found that 3PLs looking to capitalize on this enormous growth will have to overcome a few significant challenges, related mostly to flexibility and speed.

As you might expect, now that supply chains have become leaner and inventories have declined, businesses are viewing outsourcing as an increasingly attractive proposition. But, quite literally, the pressure on 3PLs "to deliver," has increased.

According to the report, 3PLs now must improve the way they respond to changes in volumes, locations and deadlines. These days, flexibility and greater speed of response are "must-haves," and that means 3PLs will have to not only invest in technology, but they'll also work to develop strategies for more robust collaboration with their customers.

"As the economies of Latin America shift from producer-led economies to consumer-led economies, supply chains will react, change shape and develop in line with the end-markets they ultimately serve. Driven by economic growth and greater awareness of the benefits of outsourcing, the contract logistics market will undoubtedly grow, but there is clear evidence that 3PLs are not maximizing their opportunities," says Mark O'Bornick, Research Director, Analytiqa. "3PLs cannot take growth for granted, especially where they are perceived to add little value. In fragmented service provider markets, the increasing consolidation of 3PLs, through M&A activity, will enhance scale and provide opportunities for advancement, but the downturn has sharpened the price sensitivity of customer negotiations. This will remain for some time and the chance that sophisticated customers will in-source away from commodity service-based' 3PLs remains a real threat."

More details from the Analytiqa report are available here.

TAGS: Finance
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