As rumours circle regarding a potential £2bn sale of EvRi, only two years after their quiet but much needed rebrand, a rescue deal for rival brand Yodel has been agreed by Shift Group and Solano Partners, due to result in a new UK distribution powerhouse under the YDLGP Holdco.
Meanwhile French multinational CEVA Logistics acquired Wincanton in a £567m deal, taking the business back to private ownership in the process.
We’re merely weeks into the year and 2024 has already seen a huge amount of movement and change within the Logistics and Distribution landscape.
With so much recent upheaval and disruption in the sector, Will Bellinger highlights what some of the key factors of this change are and what can we expect to happen in future??
External factors affecting global shipping routes
Ongoing conflicts in the Middle East and Ukraine have affected global supply chains, impacting key shipping routes in the Suez Canal and Black Sea.
The blocking of the Suez Canal in particular, following repeated rebel activity from groups such as Houthis, has forced logistics leaders to look for alternative routes. It’s estimated that an additional 1 million USD will be spent on fuel for each shipment between Asia and Northern Europe, significantly affecting bottom lines.
With these problems showing no signs of dissipating any time soon, it’s likely that this additional strain will have to be borne by the industry for some time yet.
In times of crisis, it’s likely that the industry could adopt a viewpoint of “stronger together” which could lead to further consolidation and partnership within the space. Larger logistics firms are well positioned to swallow up smaller players at a bargain-price as smaller firms battle with the increased cost of doing business.
As with all clouds there remains a tangible silver lining that this disruption could speed up digital transformation. Many smaller firms are innovating with new, sophisticated AI driven technology which makes them more attractive still, to the major distribution giants.
challenges in the wake of Covid-19
After Covid-19’s impact on consumer behaviours showed an uplift in profits for organisations as customers switched to online delivery more than ever before, logistics businesses have now seen a decline in fortunes. Ongoing difficulties and retail trends showing consumers switching back to the high street have provided C-suite with food for thought, as many reconcile large overheads.
Many 3PL and 4PL businesses hired extra staff to cope with the increased early demand, and are now scaling back their teams as the market conditions return to normal trading.
In addition, logistics firms could now be seen to be dealing with the “Amazon effect”. Customers now expect a significantly increased level of service from delivery companies with speed and flexibility almost as important as the delivery cost – which consumers now expect to be low or if not zero.
One solution to this could be a heightened investment in marketing and PR. The perceived service that customers associate can often differ from actual results. EvRi was recently named the second-worst parcel firm in the UK despite an on-time delivery rate of over 99%.
It’s clear that logistics has a PR problem, and leaders need to heavily focus on changing this narrative through a prolonged charm offensive in 2024.
what can we expect throughout 2024?
2024 has already seen significant market consolidation and professional services firm, PwC, expects more of this throughout the year.
In their Shifting patterns report they share Will’s prediction that as market leaders compete for scale and reach, it’s likely that we will see more of the “smaller players” snapped up by larger logistics firms.
It’s certain that 2024 is going to be a year of change and not just in terms of acquisition, here are Will’s predictions for the year ahead:
- Predictive analytics. Logistics firms are likely to harness data to map challenges of the future by onboarding more expertise as well as interim support.
- Sustainability. The sector will boost efforts to lower carbon footprints by using alternative fuels such as hydrogen and electric powered vehicles. Eco-friendly packaging will remain paramount.
- Automation. This will be the fastest growing area of logistics as firms continue to eye efficiencies and invest in warehouse robotics and driverless vehicles. AI and machine learning will play a huge part in driving digital transformation within logistics.
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