Whether the mouth of the Elbe on the German North Sea coast, the Pacific between Asia and America or the Chinese Sea, the world’s oceans are absolutely teeming. Tracking apps such as “MarineTraffic”, for example, vividly illustrate the global exchange of goods with symbols, including those for tankers and container ships. These applications also helped to visualise the most recent traffic jam at various nodal points of sea freight, when a long queue formed off Shanghai and Zhejiang in June. More than 4% of global freight capacity was stuck behind the “Kiel Trade Indicator” there. The situation has eased somewhat of late. “Following the end of the lockdown in Shanghai, ships have been docking there in the customary number again,” wrote the Kiel Institute for the World Economy (IfW) in an update on 20 July. Nevertheless, the German Bight is now proving to be something of a bottleneck for global trade. “There are now 24 container ships queuing to enter a German port, the first time this figure has exceeded 20 since we started our data series,” the IfW reported. The number of ships waiting has risen by 60% within the space of a month. Alongside strikes by dock workers, the coronavirus pandemic remains a major reason for the bottlenecks.
At any rate, the developments just outlined demonstrate just how important functioning supply chains are for modern life. Until the start of 2020, very few people would have taken any notice of them. For consumers, just as much as for the majority of businesses, it was a matter of course that end products and components were delivered quickly and punctually after being ordered. “The pandemic was something of a crash course in the finer points of supply chains,” the strategists at Swissquote conclude. Today, they add, the resilience of global commodity flows is almost a more frequent topic of conversation than the weather. At the same time, the Swissquote analysts are discovering heightened interest from investors in the logistics sector. “The transport companies are actually the winners of the pandemic,” they explain, with leading industry representatives, such as container giants Maersk and Evergreen from Denmark and Taiwan respectively, having posted record results.
It is not only the giants of the world’s oceans that are drawing covetous looks. “The funding for logistics start-ups has jumped markedly,” the strategists report. Current figures backing up this assertion come from McKinsey & Company. According to the calculations of the consultancy firm, the total capital invested in start-ups from the transport and logistics sector almost doubled in 2021. The young logistics companies collected a record USDbn 24.6 overall – 94% more than in the previous year – in more than 200 funding rounds (see graph 1). McKinsey & Company attribute the surge in growth to the greater awareness of many corporate managers of the risks associated with transport blockades, production shutdowns and a shortage of raw materials. A lot of money is flowing into companies in the supply chain visibility sector especially. This category includes Flexport, a US start-up which has developed a technology platform that connects all participants in a supply chain with each other. The company picked up USDmn 935 in a funding round at the start of February 2022.
This example also shows how broad the spectrum of the logistics industry now is, extending as it does far beyond classic transport by land, water or air. A key role is now played by automation, for instance, or the use of robotics. “Automated guided vehicles could increase the productivity of pickers & packers in warehouses three- or fourfold,” explains the Swissquote analysts. The prospects for the market as a whole are also positive. If Transport Intelligence (Ti) is anything to go by, the worldwide logistics industry had already recovered from the 2020 coronavirus slump last year. The market researchers anticipate an average annual growth rate of 4% for the period 2020 to 2024. That would make the sector worth around EURtn 6.9 by the end of the forecast period. The flourishing online trade remains a driver of growth, leading Ti to expect a disproportionate increase in turnover in international express logistics of 6.8% a year on average until 2024.
Source: McKinsey & Company; as at: 06.06.2022 Past performance is not a reliable indicator of future performance.
Source: Statista, Transport Intelligence (Ti); as at: 27.01.2021 Past performance is not a reliable indicator of future performance.
