Xchanging’s previous review of the supply chain and logistics sector depicted an industry reeling from the impact of the global economic crisis.
Then, in the period between December 2007 and December 2008, global international cargo traffic had plummeted by 22.6%. International passenger traffic had taken a 4.6% drop.1
Today, figures from the same source reveal a picture of continuing challenges:
“Passenger Demand Grew as Air Cargo Declined in 2012: The International Air Transport Association (IATA) announced full-year traffic data for 2012 showing a 5.3% year-on-year increase in passenger demand and a 1.5% fall for cargo.”2
Offsetting the overall decline in cargo traffic was the development of trade between Asia and Africa which supported strong growth for airlines based in the Middle East (14.7%) and Africa (7.1%) – a reflection of the contribution emerging economies are making to recovery.
In the developed economies, meanwhile, organisations continue to look at strategies for optimising their supply chains.
According to the 2013 Third-Party Logistics Study, outsourcing is widely seen as an important part of the way forward:
“Despite challenging business conditions, aggregate global revenues for the 3PL sector continue to rise, and far more shippers (65%) are increasing their use of 3PL services than returning to insourcing (22%) some 3PL services. Nearly three in five (58%) shippers are reducing or consolidating the number of 3PLs they use. Shippers report spending an average 12% of revenues on logistics, and an average 39% of that figure is spent on outsourced logistics services.”3
The critical question for these organisations is precisely which aspects of their supply chain should be outsourced.
PwC suggest that for the most successful the answer is often to outsource support functions such as warehousing, manufacturing and assembly whilst continuing to insource core strategic functions such as sales and operations planning, or research and development.4
This certainly mirrors the experience at Xchanging where we work with one of the biggest names in this sector.
For this customer, we provide Application Management Services and manage their data and transactions to support their international express, overland transport and air freight services across more than 220 countries and territories worldwide.
This removes complexity and simplifies business processes so that the customer can concentrate on their core business activity.