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Barclays : Growth beckons for logistics firms that deliver the goods

10/22/2014 | 05:10pm US/Eastern

THE growth in e-commerce has brought big business to the logistics industry and will continue to do so between now and 2018, with 92 per cent of logistics companies seeing it as their biggest area for growth over the next four years, according to new independent research commissioned by Barclays' transport and logistics and retail banking sector teams. David Goodall, pictured, head of corporate banking for Barclays in Gloucestershire, said: "A competitive and growing delivery market is an exciting place to be at present. Where there is growth, there is opportunity and the real winners will be those who invest in technology and innovation." Delivering items to consumers can also pose a significant challenge, however, adds the report. Consumers not being at home to receive their delivery is the number one issue for logistics companies, listed by 63 per cent of firms as a cause for concern. The issue of absent consumers even tops that of managing costs (57 per cent) and managing peak times (55 per cent).

In the same survey, one in five (20 per cent) of consumers questioned stated that they needed to re-arrange delivery of a parcel in the past year.

To address those challenges, logistics companies are looking ahead to where they can improve and innovate to drive future growth. With 45 per cent of consumers stating they would order more products online if delivery services were improved, the opportunity for growth is clear, says Barclays. According to the report, 61 per cent of logistics firms say that improved tracking (61 per cent) along with improved notification alerts (44 per cent) will be their top areas for future development. For over a third (36 per cent) adding the option for Sunday delivery is of interest for future service improvement, a move which will "surely" be welcomed by consumers as just under 70 per cent of them canvassed in the same survey wanted deliveries on a Sunday. Less than 12 per cent of logistics companies, however, feel that service will specifically drive the growth of their business in terms of sales or profits.

With the number of deliveries set to increase by 40 per cent to 1.35 billion by 2018, logistics companies are looking to capitalise on the opportunities that presents.

Mr Goodall added: "The evolving dynamic between retailers offering a range of delivery options and consumers demanding more flexible delivery methods is an interesting one.

"However, the predicted growth over the next few years clearly highlights that the opportunities are there for those operators who carefully reassess their delivery strategy and continue to innovate and invest in fulfilling the all-important 'last mile'." One area that both logistics firms and retailers are working on, according to Barclays' report, is the size of packaging for deliveries. With letterbox-sized packages set to see the largest increase of deliveries by 2018, increasing by 45 per cent, being able to fulfill delivery in the first attempt will lead to a reduction in costs associated with repeat delivery services and so has "obvious benefits" for the both the retailer and the consumer. While the growth of online shopping will boost logistics companies' business, half (52 per cent) say that having to cope with this increased capacity could also pose a challenge.

An increasingly demanding consumer (35 per cent) and surge in the use of free delivery by retailers (32 per cent), along with the rise of click and collect schemes (31 per cent) are also deemed to be potential threats for logistics companies.

It has been noted that while click and collect offerings appear to be popular, consumers believe it is an imperfect solution, with 23 per cent of those surveyed deeming it "inconvenient" and 78 per cent would prefer goods to be delivered direct to their homes instead.

(c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

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