GENERAL TRENDS
Logistics Industry Outlook and Observations
Growth in the global logistics market was strong in 2021 as it reached a value of $9,525.1 billion and is projected to further grow at a CAGR of 5.7% between 2022 and 2027 to reach a value of approx. $13,326.3 billion by 2027, according to Research and Markets.
Many of the challenges that have been caused or exacerbated by COVID-19 are expected to persist in the short-term
Labor shortages, supply chain disruptions, and tightening cargo capacities are all factors that continue to exert pressure on logistics providers
Rising inflation and evolving consumer demands are also increasing supply chain burdens across all industries
For the first time in decades, consumers are spending more on goods instead of services with a heavy reliance on imported products
Despite these challenges, new opportunities for technology-driven growth have emerged as the pandemic transitions to an endemic stage
Ever-increasing fuel costs and advancements in development are driving significant interest towards electric vehicles in all transportation related industries, as companies and consumers alike look towards more sustainable solutions
Autonomous vehicles are also poised to transform road and rail freight transport, with companies like DHL, UPS, and others investing heavily in research
With the proliferation of digitalization and cloud-based computing augmented by AI and data analytics, new software solutions present opportunities for logistics providers to increase reliability, reduce costs, and improve overall efficiency
Overall, transport rates and expenses are expected to steadily escalate in response to global logistics cost pressures and high product demand, but freight carriers are well positioned to capitalize on this perfect storm by expanding capabilities and adding tech-integrations to transport infrastructure
Industry Insight: Shifting Workforce Dynamics
The foundations of work are evolving, as COVID-19 initiated a revolution towards remote work, balanced lifestyles, and workforce prioritization. With labor shortages impacting suppliers, carriers, and receivers across the logistics landscape, leaders in the industry are being challenged to incentivize and retain talent.
The logistics industry is experiencing an unprecedented labor shortage due to a number of factors, such as an aging workforce leading to high retirement numbers, overwhelming gender imbalance, lifestyle challenges, and barriers to entry such as low truck driver training school output and stringent hiring standards
The American Trucking Association estimates that the industry will have to recruit 1 million new truck drivers over the next decade to replace drivers and hire additional ones to sustain current growth trajectories
While job openings are plentiful, the workforce needed to fill them has contracted despite wage increases, suggesting that employees are placing greater value on relational elements such as having positive and inclusive workplace environments and incentives beyond pay
The labor mismatch in supply chains is a complex issue that is unlikely to be remedied quickly, but companies that implement meaningful changes and address fundamental shifts in the labor supply can reduce attrition and retain quality workers.
M&A ACTIVITY
Logistics Deal Activity Heating Up
DEAL SPOTLIGHT
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The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.
