Increased freight volumes and a rebound in international trade will stabilize revenue.
New York, NY (PRWEB) January 16, 2014
Following a decline in revenue during the recession, the Freight Packing and Logistics Services industry has grown slowly since 2010, boosted by increases in trade and freight volumes, or goods transported in bulk. Industry revenue dropped in 2009, as the global economic downturn reduced consumer demand for manufactured goods. During this period, demand for freight packing and logistics services decreased because fewer products needed to be shipped, causing greater price competition among industry operators. In 2010, downstream demand began to improve in line with rising industrial production and international trade. However, in an effort to cut transportation costs to stay afloat during the recession, many businesses reduced the outsourcing of packing and logistics services and brought these activities in house. As a result, demand for industry services remained subdued, keeping revenue below prerecession levels. Despite a rise in 2013, industry revenue has declined at an annualized rate over the past five years.
The Freight Packing and Logistics Services industry has a low level of concentration. The industry mostly includes small players that service specific regions or market sectors. Additionally, the low market share concentration is due to the relative ease of entry and exit, enabling a large number of companies to operate in the industry. Only a moderate amount of capital is required to start a new business and the top companies in the industry (including CHEP and United Parcel Service Inc.) account for less than 15.0% of total revenue (see IBISWorld report 48899 for industry player market share). Due to the highly fragmented nature of the industry, the industry's concentration has not changed much in the past five years. Much like during the past five years, concentration is not expected to change significantly during the five years to 2018. Many companies also struggled with subdued demand and charged lower prices to attract customers, further limiting growth in revenue. Slight consolidation and increased external competition forced many operators out of the industry altogether.
According to IBISWorld Industry Analyst Leah Goddard, “in the five years to 2018, revenue is expected to return to steady growth, underpinned by increased freight volumes, a rebound in international trade and greater trucking activity.” IBISWorld expects total US trade to grow at an annualized rate in the next five years. Rising along with this trend, revenue is projected to grow over the period at an average annual rate in 2018. “Profit margins are also expected to increase,” says Goddard, as the industry gains ground and operators improve efficiency. However, industry growth will be limited as integrated logistic networks expand, major transportation operators bring packing and other activities in house and the use of digital technology reduces demand for some services.
For more information, visit IBISWorld’s Freight Packing & Logistics Services in the US industry report page.
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IBISWorld industry Report Key Topics
The Freight Packing & Logistics Services industry's main activity is providing packing and crating services for the transportation sector. The industry is comprised of companies that provide consolidation of freight consignments, trade document preparation, packing, crating and otherwise preparing goods for transportation and logistics consulting services. The industry does not include actual transportation of goods.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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