The year of the horse, which was full of surprises, changes and instability, is now galloping to an end. While logistics companies are counting the profits and losses of 2014, 2015 is also going to be uncertain. Market changes. Geopolitical misunderstandings. Technological modernization. Longer distances. Postmodern environmental and service culture requirements. The goat of 2015 will show its horns. What we can do is anticipate the main tendencies for which logistics companies and clients should prepare.
The Future Belongs to LTL
Clients enjoy the opportunity to transport small quantities of products, when these are mixed with other clients’ products in the same vehicle. The popularity of such a method skyrocketed during the global crisis of 2008-2010, when importers sought to reduce product quantities in their warehouses and accelerate capital turnover. To them transportation of goods in small quantities was the smart solution. Is this scenario repeating itself?
The trend is alive and kicking. Logistics sector grew faster than the Lithuanian economy, and revenues have doubled in 2013. However, the upheaval of 2014 – Russia's self-imposed isolation, embargo and sanctions - has forced the clients to re-think their options. This has meant a new growth in demand for LTL.
The annual growth of 7-8 percent of the LTL sector in the European Union allows us to to predict a golden age for part loads. Therefore, one thing is clear – compared with full loads, the demand for part loads transportation will increase in 2015. It is a global tendency which also affects Lithuania. In order to survive, our companies must show promptness in adapting to this trend.
Russian Games and New Challenges
Russia is playing a game of protectionist and isolationist policies, which have compromised the natural growth of European logistics sector. A causal chain is triggered leading to increased competition between carriers which will further intensify in 2015. It is no secret that the Top 100 best global logistics companies are annually growing by 3.7% and occupy a major part of the market. There won’t be many changes at the top of the hierarchy next year. The real competition game is played between small and medium logistics market players.
To compete in price was a modern challenge. Today's postmodern challenges force us to think about what's behind the price. In other words, investments in service quality standards in all business areas is the new kew to success. Logistics is no longer limited to freight transportation from point A to point B. The client cares about things which were considered unimportant by many just several years ago: the opportunity to monitor the condition of freight during every transportation stage with the help of modern technologies; the service culture; the environment. The fundamental challenge for a logistics company is to eliminate these concerns and provide well-executed solutions to ensure the client‘s peace of mind. Without as little ‘logistics stress’ as possible.
Top-of-the-line equipment. Clearly expressed specialization. Increase of the number of routes and clients in the West. And most importantly – investments in personnel, its qualifications, as well as team-building. This is a fresh postmodern approach to logistics which is a proper approach for 2015. Because the Lithuanian logistics market is not indifferent. We must reject short-sighted mentality: instead of trying to maximize earnings here and now, we should make long-term investments in team development and equipment upgrades, for this will always be required by important international clients. In the course of 2015, this will also likely be required bright clients in our own country. And they will be absolutely right to demand all this.