EU15 embraces logistics outsourcing
the EU15's enterprises will continue to increase.
Market analyst Datamonitor's European Logistics Market Maps 2004 predicts that total spend on outsourced logistics in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom will reach €175.5 billion by 2008 to account for 45 per cent share of total logistics spend.
This suggests that cost reduction, high-speed delivery and tightening budgets are all playing a role in enterprises gradually moving away from in-house logistics models.
"There will be continued growth in the outsourcing of more complex logistics tasks such as order handling, logistics management, and the provision of value-added services," said Tom Mills, Datamonitor logistics analyst.
"Escalating costs of research and development have contributed to the search for cost savings."
In addition, incoming EU legislation, such as the Waste Electrical and Electronic directive (WEEE), is putting further pressure upon the reverse logistics capabilities of manufacturers of white and brown goods.
Likewise, the EU Food Safety Authority's new emphasis on product traceability 'from the farm to the fork' will place demands on food suppliers and encourage more to outsource some logistics functions helping to sustain the outsourcing trend.
Implementation of traceability systems will become obligatory for all operators in the food chain in the EU from 1 January 2005. This means a business must be able to identify all of its food, food products and feed suppliers and all the businesses to which they have supplied food or feed to.
In addition, the information needs to be systematically stored, to be made available to inspection authorities, upon request. A proposal to introduce a similar system, the Public Health Security and Bioterrorism Act of 2002, has been adopted in the USA.
All this spells good business for outsourced logistics service providers (LSPs) as manufacturers and retailers increasingly look to outsource some logistics functions in their quest to gain competitive advantage.
In the European grocery retail sector, Datamonitor expects outsourced logistics to account for 42 per cent (€15bn) of total 2008 logistics spend, up from 39 per cent in 2003.
This year will be critical in defining traceability as the European Union completes work on its legislation and the various Codex Committees and Task Forces determine how the concept of traceability will be used in international trade (Codex standards and guidelines are referenced by the World Trade Organisation in trade disputes).
In addition, the International Organisation for Standardisation is now developing the general principles for design and development of traceability systems in the agriculture & food chain.
