New York, NY (PRWEB) May 22, 2014 -- Following a decline in revenue during the recession, the Freight Packing and Logistics Services industry has grown slowly over the past five years, boosted by increases in trade and freight volumes, or goods transported in bulk. According to IBISWorld Industy Analyst Leah Goddard, “Industry revenue dropped 13.5% 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 remains subdued, keeping revenue below prerecessionary levels. As a result, industry revenue is anticipated to marginally rise 0.5% in 2014. Over the past five years, industry revenue is forecast to increase at an annualized rate of 1.3% to $2.1 billion.
Many companies 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. The industry typically employs a flexible labor force; employers hire staff to meet increased demand during busy seasons and reduce the number of workers in difficult years. During the recession, deteriorating demand for industry services caused a steep drop in employment, and many of the workers that remained were forced to take pay cuts. Companies have not significantly expanded the size of their staff since, and employment and wages have stagnated as a result.
The industry is expected to return to more robust growth, underpinned by increased freight volumes resulting from higher consumer spending and international trade. “Over the five years to 2019, the total value of US trade is forecast to rise,” says Goddard. Revenue is projected to rise along with this trend. Profit margins are also expected to increase as the industry gains ground and operators improve efficiency. However, industry growth will be limited as integrated logistic networks expand and major transportation operators bring packing and other activities in-house.
The Freight Packing and Logistics Services industry has a high level of concentration, with major players Brambles accounting for a high percentage of industry revenue. Despite the dominance of one corporation, the industry mostly includes small players that service specific regions or market sectors. Additionally, the relative ease of entry and exit enables a large number of companies and nonemploying entities to operate in the industry, primarily through services such as carpool arrangement. Only a moderate amount of capital is required to start a new business within the industry. For these reasons, aside from Brambles, the industry is highly fragmented. As Brambles continues to acquire smaller companies and expand its market share, the industry's concentration will increase.
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IBISWorld industry Report Key Topics
The Freight Packing and 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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Gavin Smith, IBISWorld, +1 (310) 866-5042, [email protected]