The logistics business sector is one of the biggest industries in Europe. It generates revenue of more than US$ 1 trillion annually, represents just 15% of total GDP and employs more than 7 million people.

• Definition / Scope
• Market Overview
• Market Risks
• Top Market Opportunities
• Market Trends
• Industry Challenges
• Technology Trends
• Pricing Trends
• Regulatory Trends
• Other Key Market  Trends
• Market Size and Forecast
• Market Outlook
• Technology Roadmap
• Distribution Chain Analysis
• Competitive Landscape
• Competitive Factors
• Key Market Players
• Strategic Conclusion
• References
• Appendix

Definition / Scope

The term Logistics is generally the detailed organization and implementation of a complex operation. Logistics is the planning, execution, and control of the procurement, movement, and stationing of materials, personnel, and other resources.

The resources managed in logistics can include physical items such as food, materials, animals, equipment, and liquids; as well as abstract items, such as time and information.

Logistics consists of the management of several activities along the supply chain that may be roughly classified into two categories:

• Basic Activities
• Advanced Activities

Innovation can be associated with changes in the offering of logistics service. The focus is on the company rather than the system. Incremental innovation concerns the stepwise improvement of an existing service offering and operations using the existing technology.

This leads to expand or make an existing service provision more efficient and competitive. Disruptive innovation happen when the companies provides solutions to customer based on deep process improvements by using new services to obtain greater value from innovations in logistics beyond the provision of traditional services.

This report identifies the potentially disruptive impact of the technologies on logistics segments such as:

• Transportation logistics
• Manufacturing,
• Supply chain
• Last-mile delivery solutions in the European region

Specific digital technologies covered include:

• Augmented reality,
• Autonomous transportation,
• Cloud digital platform,
• Internet of things (IoT) robotic systems, and
• 3D printing.

Market Overview

As Europe’s population will increase from 811.7 million from 2018 to 830 million by 2025 the volume of goods shipped will be driven by urbanization, an increase of disposable income, internet penetration and ease of access to new technologies. The current document/paper-based shipments are expected to reduce significantly as digital document management evolves .

The European logistics industry is considered to be an early adopter of technologies and innovations. Europe contributed about 15% of global GDP and 20% of world trade in 2018. With key trade partners being located in North America, East, and Southeast Asia and Africa, sea-borne trade is a major transportation mode in the region.

With the emergence of the digital environment, traditional service offerings are increasingly being replaced with innovative logistics solutions driven by digital technologies. Digitalization of core business operations with technologies is expected to facilitate the logistics service providers to transform their business by adopting innovative business models.

Europe’s logistics market was valued to be a $1.34 Trillion market in 2018 and is estimated to grow with a CAGR of 6.81% during the forecast period of 2019-2025.

The economic environment remains strong due to increasing domestic demand, favorable employment conditions, and high consumer confidence levels. Growth momentum is expected to be sustained in 2019, with the regional economic growth of 2.1% in 2018. Strong cross-border links mean Europe’s international express forecast is not far off domestic express.

However, trade tensions, increase in energy prices, and uncertain policy environment is expected to have a negative impact on business confidence. Increased supply chain networking, transshipment, expedited trade negotiations, and improving connectivity with Asia as part of ‘One Belt, One Road program’ with regional transportation infrastructure initiatives are expected to enhance the efficiency of transportation in the region.

Market Risks

Currently, the logistics industry is vulnerable to the disruptive impact of digitalization. Likewise, trade tensions, increase in energy prices, and uncertain policy environment is expected to have a negative impact on business confidence. They do not have structured innovation processes in place.

Environmental Risks:

• These include a wide range of events including extreme weather, earthquakes, tsunamis, floods and even volcanic eruptions.
• The economic cost of natural disasters was estimated by insurance company Swiss Re at US$ 194 billion in 2010.
• The supply chain consequences are derived from not only the disruption of production but also the impact on transportation services and infrastructure

Geopolitical Risks:

• Tensions in the Middle East are a considerable source of risk for supply chains, especially affecting transit routes such as the Straits of Hormuz and the SuAnz Canal.
• An example relates to bombs placed in packages originating from Yemen.

Economic Risks:

• One of the most pressing supply chain risks from an economic perspective is what can be termed ‘demand shocks’. They find it difficult to manage uncertainties and economic risks.
• An example of this is the disruption caused by the company failure of suppliers following the 2008 recession.
• ‘Supply shocks’ are less obvious, but a material threat all the same. The volatile nature of shipping rates could fall into this category.

Technological Risks:

• Technological failure/outage is a major concern to shippers, although as yet there have been few significant incidents. They struggle to combine new technologies with their own, out-dated system/process frameworks.
• The development of information technologies will play an important role in the mitigation of supply chain threats. The adoption of more technology will also play a role in increasing risks by leaving supply chains open to ‘cyber attacks’ or even accidental outages. Handling the introduction of these innovations successfully raises new questions around areas such as employment, control and liability.

Top Market Opportunities

Irrespective of the challenges, rise in adoption of logistics solutions is creating an opportunity for the market growth. The economic environment remains strong due to increasing domestic demand, favorable employment conditions, and high consumer confidence levels. Growth momentum is expected to be sustained in 2018, with the regional economy expected to grow by 2.1% in 2019.

Some of the key growth opportunities include:

• Logistics Marketplaces: In the context of globalization and increasingly digital lifestyles, logistics marketplaces create opportunities for new services that can overcome geographical and functional segmentation. Sample use cases: Logistics Mall, Click2Transport.com.
• Next-generation M2C: Manufacturer-to-customer (M2C) reflects the reality of a digital lifestyle; customers can order direct from manufacturers, thus setting new requirements for the design and management of global logistics networks. Sample use cases: M2C Marketplaces (Alibaba.com, globalmarket.com)
• Urban Logistics: Key issues in urban areas are environmental impact and traffic density. Combined with the growing relevance of e-commerce and home delivery, this makes urban logistics solutions essential. Sample use cases: urban Consolidation Centers (uCC), e.g., Bristol; binnenstadservice.nl
• Real-time Services: Real-time services enable flexible and efficient adaption to change conditions and ad-hoc optimization of supply chains by integrating real-time events into intelligent, interactive analytics frameworks. Sample use cases: agheera.pulse, Real Time Tracking.
• Crowd Logistics: This includes crowdsourcing first-and-last-mile activities, using employee tweets for flexible re-routing, and using social network mining as a trigger for new products, significantly impacting costs, flexibility, and CO2 efficiency. Sample use cases: MyWays, polyport.ch

Market Trends

Logistics companies are facing a period of record change as digitization takes hold and customer expectations to evolve. New entrants, whether they are start-ups or the industry’s own customers and suppliers, are also emerging in the sector. And with an estimated US$1.18 trillion of revenues at stake, companies need to adapt to changing markets proactively.

• The push for globalization: Manufacturers and retailers have increased both the level of global sourcing and the scope of the markets that they supply. Many logistics companies have chosen to globalize their operations in line with the changing requirements of their clients. This, in turn, is expected to drive demand for outsourced logistics services with a CAGR of 7.5% over the forecast period .
• Liberalization of markets: The liberalization of the European postal markets has been one of the driving forces behind the high level of M&A activity in the late 1990s and early 2000s.There has also been deregulation in Europe’s rail industry, which prompted some state-owned railways to prepare for a more competitive environment.
• Cross-border shopping: About 38 percent of all online shoppers in Europe ordered abroad in 2017, with half of them ordering goods or services over the internet from sellers from other EU countries. When it comes to their website ranking, Amazon and eBay are very dominant in Europe. However, Alibaba Group is slowly moving in from the Eastern countries, to take over the dominance of US marketplace giants Amazon and eBay .
• Multiple-user Networks: Innovative methods of transportation, smart packaging solutions, and real-time supply-chain monitoring enable the use of standard, existing networks to transport and store special and dangerous goods. The largest freight forwarders, distribution companies, express operators, shipping lines, in-house operators and post offices have engaged in ‘one-stop shop’ providers of multiple functions. DHL, TNT and Wincanton, have retreated towards the core competency/home market quadrant.
• Digitization: Increasing volumes of data and sophistication of connectivity across the value chain are impacting the entire industry ecosystem. From exploring monetization opportunities at the consumer end of the value chain to transforming the workplace by applying robotics, the potential for harnessing the power of digitalization across the logistics industry is substantial. Unmanaged, this data threatens to overwhelm the industry’s systems and processes. Managed, it can be a major source of competitive edge. It is estimated that US$1.5t worth of logistics opportunity will be created as a result of digital transformation by 2025 .
• The TEN-T Programme: To improve the speed, cost and ease of logistics across the EU, the EC has identified about US$ 800 billion of infrastructure improvements to be carried out by 2030 across 2,500 projects, as part of the TEN-T programme. These corridors will more effectively link 94 ports, 38 airports and tackle 35 major cross-border projects, thereby contributing to European cohesion and a more competitive economy. With the cost of logistics in the EU currently representing around 15% of the end product’s value, this legislation aims to half these costs by better facilitating cross-border trade .

Industry Challenges

The logistics industry is facing a fundamental transformation. Given the accelerating pace of change, the companies need to transform themselves for a world where they are no longer protected by entry barriers, competition comes from all directions, and digitalization will become the major agent of change.

• Global uncertainty: Disruption in the global supply chain cost US$56 billion in 2015 in Europe alone. The industry also faces geopolitical instability in both developed and developing markets, including the uncertainty of Brexit, potential trade protections in the US, fluctuating fuel prices and exchange rates, and economic downturns in Russia, Ukraine, and the Middle East. Economic turbulence, protectionism, and geopolitical instability are forcing transportation and logistics providers to adopt new business models and new alliances .
• Urbanization: People are already expecting just-in-time and often near-immediate delivery. This has led to increased parcel volume, exerting pressure on city infrastructure and sustainability. It is estimated about 15% of the traffic in urban regions will be constituted by freight in the EU by 2050. With the rise of megacities, providers need to cope with the challenges of urban logistics, including congestion, difficulties in loading and unloading, and last-mile delivery .
• Environmental issues: For many years, modern supply chain management concepts have been criticised owing to their supposed detrimental impact on the environment. However, there is also evidence that modern supply chains are more efficient, not least due to the lower levels of embodied carbon due to lower levels of inventory.
• Technology innovation: Business model disruption is coming from established companies and a host of new entrants who are harnessing the latest technology innovations. Also, logistics companies will need to develop deeper industry expertise beyond traditional transportation and logistics solutions. They will need to customize services and closely align themselves with their customers, operations, processes and technologies. About 50% of the transportation companies aim to focus on digital, technology and analytics in the near term. Also, it is anticipated that 50 billion plus objects will be connected to the internet by 2020. .Thus, service agility, responsiveness, customization, greater transparency and innovation will become key differentiators for a high-performing logistics company.
• Need for new talent: New technologies require new skill sets, including design thinking, data sciences and robotics. Hiring costs will rise, and innovation will be a key competitive factor. Employees are challenging the current workplace and employment practices using digitalization and are demanding greater connectivity and mobility to fulfil their roles more efficiently, irrespective of their functions. By current estimates, more than 70 million adults in the EU are affected by gaps in basic skills . Businesses are increasingly reporting difficulties in finding employees with adequate skills. Over the next 10 years, digital technology in the logistics market will lead to the creation of 2 million jobs and reduce carbon emissions by 10 million tons .
• Sustainability and transparency: The companies are driven by the need to comply with the increasing regulatory requirements, including product stewardship, forced labour, human trafficking and data privacy. However, the often subtle variations in regulations pose a challenge and add significant cost to multinational companies, which struggle to comply with the inconsistent laws across countries and regions. It is anticipated that usage of energy in transportation will increase globally from 106 exajoules (EJ) in 2013 to 128 EJ by 2030 .

Technology Trends

• Big Data / Data-as-a-Service: Big data analytics represents the “industrial revolution of data”; it allows the processing of previously untapped data sources and enables real-time analytics on a broader scale. Sample use cases: nugg.ad (DP Mail), NavAir Deckplate (Navy .
• Cloud Computing: Beyond the hype, the paradigm of cloud-based services is increasingly tangible for logistics; new process cloud-based concepts (S-BPM) support management of globally distributed, federated logistics networks and enterprises. Sample use cases: Red Prairies (DHL Pilot), Logistics Mall, LOGICAL, Metasonic S-BPM Suite
• Autonomous Logistics: There can be no more disruptive technology to the global road freight industry than ‘autonomous driving’ or to give it its more usual term ‘driverless vehicles’. Autonomous logistics enables innovations such as cellular transport systems, self-steering vehicles, and unmanned aerial vehicles, offering new and efficient transport solutions for existing infrastructures and in remote areas. Sample use cases: Self Driving Car (Google), unmanned Aerial Vehicles (Matternet)
• 3D Printing: 3D printing is a disruptive production technology that will change tomorrow’s logistics by necessitating specific networks for materials delivery, but it will also offer new business opportunities for logistics providers such as digital warehousing and 3D-model hosting. Sample use cases: DHL CSI research project “3D Printing”, DirectSpare research project (eu)
• Robotics & Automation: Robotics and automation technologies support zero-defect logistics processes and enable new levels of productivity. Due to the growing popularity of e-commerce, an increasing number of small individual orders have to be handled in warehouses, and fulfillment and distribution centers. Constant improvement in robot performance, speed, and repetition accuracy, and rapid progress in grip and sensor technology, the cost-effective use of 3D object recognition, and an improved price/performance ratio will lead to more intensive adoption of these technologies in different operational areas. Sample use cases: Parcel Robot, Robot Cell Light (DHL).

Pricing Trends

The following indicators represent the development of different cost factors in the logistics sector:

• Fuel prices: The consumer prices of petroleum products net / inclusive of duties and taxes was US$ 2.25 per 1,000 liters. The prices communicated by the Member States are the prices most frequently charged, based on a weighted average. Comparisons between prices and price trends in different countries are of limited validity because of differences in product quality, in marketing practices, in market structures, and to the extent that standard categories are representative of the total sales of a given product .
• Warehouse rents: The average yearly rent for modern warehouse space is US$ 70 per m². The figures have been calculated by the average of all available values from one country’s most representative regions in the different reports. While comparisons between the different countries are feasible, the timelines of the countries should be considered with caution .

Regulatory Trends

• Rise in Trade Related Agreements: Another important factor which has influenced the logistics sector is the rise in the trade-related related agreements between countries. Free trade agreement has enabled the reduction in duties and taxes. Further, there has been an increase in the trade activities as exporter and importer need not pay taxes to the government. Countries in trade blocs are lifting bans and making trade more flexible. In 1994, the European Parliament and the Council of the European Union issued an important directive for the internal market. This Directive introduced a common labelling system for the main components of products sold in the EU. It harmonised the diverse laws and regulations that had previously existed in EU countries relating to the labelling of materials. These diverse laws and regulations were creating barriers to trade. All Member States adopt common external trade policy and measures .
• Brexit Challenges: Regulation is also a challenge, particularly with uncertainty over Brexit and the changes being introduced to the way customer data is handled by the GDPR. Brexit is expected to have far-reaching consequences for the road haulage industry. Manufacturers and retailers have started to stockpile products to ensure continued supply if there is disruption. Once the UK has exited the EU (March 2019), relevant transport legislation will still stand unless the UK Government repeals this or takes steps to amend the various statutes .

Other Key Market Trends

Convenience logistics is in response to the specific requirements of next-generation e-commerce; it covers the entire spectrum of commodity goods including sensitive and cold-chain products. Demand is constantly growing, especially for home delivery of fresh and frozen food through standard networks. This requires the development and implementation of special processes and packaging (from -18°C to room temperature).

Food ordering via the internet is not yet a big market (GER food online <1%, DVD/BlueRay 35%), but is primarily limited by insufficient logistics infrastructure supporting this business segment . A whole new generation of logistics consumers, the “logsumer”, can now take an active part in decision-making on the time, price, quality, and “green” or “fair” aspects of logistics services; this affects the entire supply chain.Sample use cases: MyArrival, Shu .

Market Size and Forecast

The European logistics market size was valued at US$ 1.34 trillion in 2018. It is anticipated to register a CAGR of 6.81% over the forecast period to reach above US$ 2 trillion by 2025.

The European logistics industry is considered to be an early adopter of technologies and innovations. With regard to the logistics industry, productivity, process efficiency, and speed of delivery, and last-mile delivery costs have been the crucial factors that influenced the growth and profit margins. Moreover, this trend is expected to hold for the years 2019 to 2025.

This report identifies the potentially disruptive impact of the innovations on logistics segments such as

• Transportation
• Manufacturing
• Consumer goods
• Other industries

Transportation:

• The transportation category commanded the largest share of 45.44 % share of the total logistics market in the region in 2018.
• The market accounted for US$ 609 billion in 2018 and is expected to reach above US$ 1 trillion by 2025, growing at a CAGR of 7.4% over the forecast period of 2019-2025.
• This segment is largely fragmented, with the regional service providers holding 15% of the market while the remaining 85% of this segment is controlled by medium- and small-sized service providers .

Manufacturing:

• The manufacturing category is a rapidly growing category. The market accounted for US$ 395.5 billion in 2018 and is expected to reach value at US$ 621.4 billion by 2025, growing at a CAGR of 6.5% over the forecast period of 2019-2025.
• Europe contributed about 15% of global GDP and 20% of world trade in 2018. In Europe, the Single European Market allowed vehicle manufacturers (VMs) previously rooted in high labor cost markets, such as Germany, to exploit lower-cost production in Southern and Eastern Europe.
• The recession of 2008-9 prompted VMs to re-focus towards developing markets. Since then, German VMs have continued to do well, exporting to Europe and the developing world. However, other mid-market brands have suffered, as the EU continues its economic weakness.

Consumer goods:

• The consumer goods segment is the smallest category which is expected to grow from US$ 177.9 billion in 2018 to US$ 250.8 billion in 2025 at a CAGR of 5.9%.
• Consumer and retail industries are hugely important for the logistics industry. In the contract logistics industry, they account for more than half of all revenues.
• In Europe, the consumer goods industry was transformed by the advent of the Single European Market. This allowed manufacturers to exploit the lower labor costs of the peripheral members of the EU (such as Spain and Portugal), whilst being able to export to the rest of the region.

Other Industries:

• The other industries segment is the smallest category which is expected to grow from US$ 87 billion in 2018 to US$ 125 billion in 2025.
• Brexit’s uncertain impact on UK and Europe-wide supply chains makes the short-to-medium term forecast for Europe’s logistics market more difficult to predict.

By Geography

While the majority of interest is still focused on the UK (US$ 170.6 billion), Germany (US$ 325.7 billion) and France (US$ 162.8 billion), there continues to be a spread of capital beyond the core markets. That said, Germany, UK, and France all witnessed high levels for revenue in 2018 .

Germany:

• Germany is home to a number of the world’s largest logistics companies, including DHL and DB Schenker. However, many large corporates like to do business with specialist mid-sized companies.
• The logistics market in Germany achieved a record level in 2018, with a total of US$ 325.7 billion in revenue, with a CAGR of 5.5%. The market is expected to reach US$ 473.8 billion by 2025.
• With strong economic fundamentals, attractive financial terms, robust occupier demand, and potential rental growth due to low vacancy levels, the German market will remain very attractive to most investors over the forecast period of 2019-2025.

United Kingdom:

• The UK logistics market continues to be robust. The market accounted for US$ 170.63 billion in 2018 and is expected to reach value at US$ 228.3 billion by 2025, growing at a CAGR of 4.25% over the forecast period of 2019-2023.
• The growth of online retail will continue to be a key driver of demand across a range of facilities, sizes, and locations. A large proportion of the market is dedicated to the distribution of imports through ports and the retail sector.
• However, uncertainty due to Brexit is hanging over the industry as operators wait to see the impact on supply chains.

France:

• The French market is characterized by the number of strong regional players which are in existence. This was symptomatic of France’s large geography which forced alliances between medium-sized companies to provide national distribution.
• The French logistics market experienced a dynamic 2018, achieving US$ 162.8 billion in transaction volumes. The market is expected to hike to the second position in Europe displacing UK to reach US$ 244.7 billion by 2025, growing at a CAGR of 6% over the forecast period of 2019-2025.
• The main logistics hubs in the Corridor will suffer from the lack of supply (especially in Lyon and Marseille), and the shortage of quality supply.

Italy:

• The Italian logistics investment market remains lively thanks to strong interest from international investors. The market accounted for US$ 117.5 billion in 2018 and is expected to be the largest segment in terms of value at US$ 182.5 billion by 2025, growing at a CAGR of 6.5% over the forecast period of 2019-2023.
• The Italian logistics market is highly fragmented with a large proportion of owner-drivers. The lack of large Italian logistics players has made it difficult for other foreign-owned companies to develop scale in this sector through acquisition.
• Low levels of regulation, as well as ease of entry and exit from the market, have made it more difficult for larger transport concerns to build scale and profitability.

Spain:

• Spain’s logistics market continues to attract international capital with new funds arriving every quarter. The market accounted for US$ 91.5 billion in 2018 and is expected to reach value at US$ 132.9 billion by 2025, growing at a CAGR of 5.5% over the forecast period of 2019-2023.
• The logistics market is highly competitive and centered around Madrid and Barcelona which are also the focus for transport infrastructure.
• Once again, e-commerce and retailers will be the principal drivers and, overall, Spain is likely to be considered a good market with excellent opportunities.

Rest of Europe:

• The improving economy and strong market confidence were reflected in the performance of Europe’s real estate market in 2018, with the industrial/logistics sector the most active.
• Much of the region’s logistics activity focuses around the major ports and airports situated in Germany, France, Belgium, Netherlands, and France.
• Overall market sentiment is very positive across all logistics sectors. The market accounted for US$ 471.8 billion in 2018 and is expected to reach value at US$ 817.8 billion by 2025, growing at a CAGR of 6.8% over the forecast period of 2019-2025.

Market Outlook

Europe’s logistics market is forecast to register the growth of CAGR 6.81% reaching over US$ 2 trillion in value terms by 2025. The internet of things technology is increasingly becoming central to business processes across industry verticals.

With the rising prominence of the internet of things in the logistics industry and the multiple applications of connected logistics in e-commerce, the logistics market is receiving a fillip. By 2020 Gartner, the technology consultancy believes that there will be 20 billion objects or ‘things’ with some form of an embedded computing device connected to the internet or ‘Cloud’ .

According to the study by verdict among all the channels in the market, the online channel is expected to continue to take share from conventional channels and is forecast to account for more than 30% of the market by 2025 which has historically been dominated by the specialists, with limited change in channel mix expected.

According to Prologis, each US$ 1.13 billion of additional online sales generates around 77,000 sqm of new logistics demand. This translates to potential demand growth amounting to 15 million sqm in Europe over the next five years.

Furthermore, e-commerce growth could mean more than 200,000 new logistics sector jobs across Europe. The Centre for Retail Research reports that the average share of Internet retail in Europe stood around just 8% in 2016.

However, Produce Business UK expects the online share to grow to 15-25% by 2030. Major players in the industry determine this shift at the moment and much changes are not expected, however as new entrants and smaller once verge for a competitive edge, it is expected that the online store will witness a higher boom over the forecasted period of 2019-2025 .

The logistics industry is at a crucial point in its development. Not only is there a host of economic, security, legal, political and societal pressures, but also an excess of disruptive forces, many of which are as a result of the development of new technologies.

The development of e-commerce will be a major disruptive force. Logistics companies will need to add niche services, both in fulfillment and last-mile delivery. Online sales will continue to grow by 12 to 14% per year .

Technology Roadmap

• Next-generation Telematics: The next generation of telematics will be based on real-time shipment and traffic data, enabling new solutions for dynamic routing and value-added services such as flexible delivery offerings. Sample use cases: Smart Truck (DHL), Connected Drive, TeleMatics (BMW, MAN, T-Systems) .
• Quantum Computing Low: Quantum computing will cause a paradigm shift, offering operational speeds far exceeding those in conventional computing; in addition, quantum cryptography will make information transmission completely secure. Sample use cases: IBM Quantum Computing, D-Wave One (D-Wave Systems)
• Augmented-reality Logistics: Augmented reality (AR) has become widely adopted in a range of different environments since the application was first launched. By adding virtual layers of context-specific information at the right time and in the right place, augmented reality will provide new perspectives in logistics planning, process execution, and visual analytics. According to the companies involved in a test of the technology, efficiency savings of 25% were achieved, including zero errors.
• Low-cost Sensor Technology: With the cost of initial investment dropping, the next few years are likely to see new creative uses of established consumer sensor technologies (e.g., Kinect, 3-D-Scanning) for logistics purposes. Sample use cases: DHL Solutions and Innovation: Research project Trans4Goods

Distribution Chain Analysis

Currently, the logistics landscape is defined by antiquated customer interfaces, a lack of pricing transparency, and asset utilization inefficiencies. This means the industry is vulnerable to the disruptive impact of digitalization.

The processes at each supply-chain milestone will be impacted by it. For instance, logistics processes will see a significant efficiency increase through automated, connected operations with real-time control, while the standardization of data formats will disrupt forwarding logistics.

The supply-chain architecture will be transformed by digitalization. For instance, Tier 1 automotive players such as Faurecia are looking at creating self-adaptive supply chains by integrating an end-to-end logistics view. LLPs need to ensure they are not missing the move to digitalization, they need to understand when it is likely to occur and evaluate whether they should drive early change by proactively partnering with different players within the logistics supply chain.

The evolving e-commerce has put pressures on sales channels for faster delivery and optimum supply chain. This scenario brings opportunities for third-party logistics and warehousing services. In the past, real estate and production were the factors driving CEE. Currently, e-commerce is in the same position, both in domestic, as well as foreign markets.

Competitive Landscape

The European logistics market is highly competitive. The industry has seen many mergers and acquisitions over recent years. The presence of online players operating across the globe makes this market appears highly competitive. In the past, legacy logistics players (LLPs) such as DHL, Kuehne + Nagel, DB Schenker, UPS, and Nippon Express operated in a stable world, where efficiency, standardization and low cost were the keys to success. However, digitalization has changed this focus, transforming the market.

The logistics market landscape of Europe is fragmented in nature, with a mix of global and regional players. Many major Western European companies have factories in CEE because the cost of labor is low. It is known that Western Europe is home to some of the global logistics giants. The aforementioned scenario has brought many western logistics players into the current market.

Additionally, regional and global developers are adding new warehouses and distribution facilities at a record pace. The facilities and infrastructure can be built and operated at less cost in countries, like Poland or the Czech Republic, and still serve markets of high-cost countries, such as Germany, Switzerland, and France.

Furthermore, some of the logistics players are establishing logistics hubs in Central Europe and serve Eastern European countries. For instance, DHL purchased 60,000 square meters of land at the Vienna Airport to act as a freighter hub for Eastern Europe and opened up the region to all modes of transport.

Due to factors such as price wars the level of competition among the companies in this market space will further intensify during the forecast period of 2019-2025.

Competitive Factors

The companies are increasingly following strategically alliances such as acquisitions and product expansions in new locations to improve their market positions. Additionally, the major players are also focusing on strengthening their product portfolio by acquiring small and local brands. Key players in the market for logistics are adopting numerous strategies to stay competitive.

Product development and mergers and acquisitions are some of the key growth strategies adopted by key players to steal a march over their competitors .

There have been significant merger and acquisition activities by the global logistics players to gain the advantage of the Eastern European growing logistics market. For instance, by the end of 2017, Yusen Logistics acquired Tibbett Logistics, a wholly-owned subsidiary of UK-based Keswick Enterprises Group.

With the ever-increasing cross-border trade, the country is also looking into the modernization of border infrastructure with the cooperation of the neighboring countries, as this is vital and supplements the growth of cross-border trade. Located at a strategic geographical location connecting Western Europe with Russia and China, the cross trade (international road transport between two different countries performed by a road motor vehicle registered in a third country) through the country is also very high.

Existing online retailers are likely to continually expand their warehouse space in the coming years, while new market players may search for suitable facilities and supply chain operators. Increasing demand for appropriate distribution space, as well as tailored logistics services, puts pressure on developers and 3PLs to adjust their offer to meet these new requirements.

Moreover, companies focus on introducing new technologies in order to improve in-store retail experience whilst offering a seamless shopping experience over multiple channels.

There have been constant innovations and technological advancements in the market in order to provide the customers’ performance-driven, comfortable and advanced products.

These players undertake various initiatives and adopt different strategies, such as partnerships, and launching new products and services to sustain in the competition. For example, Rihanna designed two collections inspired by her personal style for River Island 

Key Market Players

European logistics market was dominated by the top 10 logistics companies (including Deutsche Post, Maersk, and UPS), which had a combined revenue worth US$ 130 billion .

Company Profiles

Maersk:

• Maersk Inc. provides transportation and logistics services. The Company offers services such as freight consolidation and logistics, domestic transportation, trucking, terminal and warehousing operations, data services, and port and inland terminal management.
• Maersk Line UK Ltd. provides shipping services. The Company offers intermodal cargo transport, refrigerated services, dry bulk transport, heavy machinery transport, and hazardous material services. Maersk serves customers worldwide .

Deutsche Post:

• Deutsche Post AG provides mail delivery and other services to the public and businesses. The Company offers domestic mail delivery, international parcel and mail delivery services, and freight delivery and logistics services.
• It provides integrated services for managing and transporting letters, goods, and information. The Company offers air and ocean freight, road and rail transportation, contract logistics, and international mail services. DHL Express Germany operates worldwide .

UPS:

• UPS Supply Chain Solutions, Inc. provides supply chain services. The Company offers transportation, freight, logistics, distribution, consulting, and customs brokerage services.
• UPS Supply Chain Solutions also offers consulting services for the automotive, industrial manufacturing, and healthcare industries worldwide .

Kerry Logistics:

• Kerry Logistics (Central Europe) GmbH provides logistic services. The Company offers transportation, international freight forwarding, and express and supply chain solutions.
• The Company offers transportation of cargo by air, land, and sea. Kerry Logistics (Central Europe) serves customers worldwide .

XPO Logistics:

• XPO Logistics, LLC provides transportation and logistics solutions. The Company offers freight brokerage, global forwarding, supply chain, and transportation management.
• The Company also offers expedited air freight forwarding, warehousing management, drayage, intermodal, transportation, and reverse logistics .

Hellmann Worldwide Logistics:

• Hellmann Worldwide Logistics, Inc. provides logistics services. The Company offers transportation, warehousing, packaging, distribution, freight, customs clearance, storage, and e-commerce services.
• The Company also offers brokerage, cargo forwarding, quality management, warehousing, storage, customs clearance, packaging, waste management, and consulting services.
• Hellmann Worldwide Logistics delivers contracted logistics to clients in the United Kingdom .

FM Logistic:

• FM Logistic Corporate provides logistics services. The Company offers distribution, delivery, supply chain, cross-docking, packing, order management, and other related solutions.
• FM Logistic Corporate serves customers worldwide .

Strategic Conclusion

European logistics market is in its strongest positions for decades. Like most other industries, it is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models. There are many ways the sector could develop to meet these challenges.

Much of the region’s logistics activity focuses around the major ports and airports situated in Germany, France, Belgium, Netherlands, and France. Although highly integrated by strong transport infrastructure and a common Customs area, each country market retains its highly individual character, underpinned by local regulations. Germany confirmed its leading position in the logistics market in Europe.

Logistics companies will need to focus on ‘digital fitness’, cost efficiency, asset productivity, and innovation if they want to meet changing expectations. Building and refining these and other capabilities, and then bringing them to scale across the enterprise, will be key as they translate the strategic into the everyday.

The future of the logistics industry relies on the collaboration, co-creation, and coordination among companies to multiply their capacity to generate new products and services. That is co-innovation. Here is where true disruption takes place by reshaping value-systems and redefining eco-systems.

References

1.  https://www.plunkettresearch.com/industries/transportation-supply-chain-logistics-industry-market-research/
2.  https://www.statista.com/statistics/639948/logistics-market-volume-europe/
3.  https://www.pwc.com/us/en/faculty-resource/assets/symposium/2014-megatrends-overview.pdf
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13.  https://www.dhl.com/content/dam/Campaigns/InnovationDay_2013/90310673_HI-RES.PDF
14.  https://ec.europa.eu/transport/sites/transport/files/themes/strategies/studies/doc/2015-01-freight-logistics-lot1-logistics-sector.pdf
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18.  https://www.dhl.com/content/dam/Campaigns/InnovationDay_2013/90310673_HI-RES.PDF
19.  https://www.dhl.com/content/dam/Campaigns/InnovationDay_2013/90310673_HI-RES.PDF
20.  https://www.statista.com/statistics/639948/logistics-market-volume-europe/
21.  https://www.statista.com/statistics/639897/logistics-market-size-europe/
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23.  https://www.slideshare.net/PraneethPrabodhaDiss/impacts-of-disruptive-innovation-on-shipping-and-logistics-in-10-years-76435298
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25.  https://www.dhl.com/content/dam/Campaigns/InnovationDay_2013/90310673_HI-RES.PDF
26.  https://markets.businessinsider.com/news/stocks/worldwide-connected-logistics-market-key-players-focus-on-mergers-and-acquisitions-to-strengthen-position-says-tmr-1002222358
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28.  https://www.statista.com/statistics/640120/top-25-logistics-companies-europe/
29.  https://www.bloomberg.com/profile/company/0362730Z:US
30.  https://www.bloomberg.com/profile/company/DPWCHF:SW
31.  https://www.bloomberg.com/profile/company/0004046D:US
32.  https://www.bloomberg.com/profile/company/1102066Z:LN
33.  https://www.bloomberg.com/profile/company/7668211Z:CN
34.  https://www.bloomberg.com/profile/company/91428Z:FP

Appendix

List of abbreviations

• CAGR: Compound Annual Growth Rate
• EU: European Union
• LLPs: Legacy Logistics Players
• US$: United States Dollar