- Logistics is on the move: Package delivery alone is worth an estimated 240 billion euros a year globally.
- The industry is characterized by digitization, automation, and strong competition.
- Investors would therefore be well-advised to have an eye on the potential of technology providers.
The Internet of Things, electromobility, autonomous vehicles, and drones – technologies such as these will strongly influence the new decade. One industry in particular, more intricately networked than any other, will be strongly affected by these technologies: the logistics industry.
For industry players such as DHL, UPS, and FedEx, business is currently running smoothly. The boom in the logistics industry is being strongly driven by e-commerce, in particular. According to the management consultancy McKinsey, the business of delivering packages is now valued at over 240 billion euros annually. Germany is hereby among the top markets: each resident orders an average of 24 packages per year from businesses such as Amazon, Zalando, etc. This is topped only by the Chinese.
McKinsey forecasts the global market to grow ten percent annually until 2030 – five times faster than for bricks-and-mortar shops. This means that the proportion of e-commerce sales could grow to equal 30 percent of the overall total by the end of this decade. This is accompanied by another development that can already be seen today. Online retailers are developing their own logistics systems. These are expected to handle over half the global volume of packages sent to end customers worldwide within the next five years – thereby posing a serious threat to the current industry leaders.
Online giant Amazon, for example, explicitly mentions transport and logistics services providers as competitors in its 2018 annual report. The American company is viewed as a technological pioneer in the field of logistics ever since it unveiled its first drone in 2013. The latest model will soon be used in regular operations, according to the company.
DHL has also begun using drones for certain customers in the Chinese metropolis of Guangzhou, where 13 million people reside. In Germany, the Deutsche Post subsidiary is currently focusing on increasing the number of electric vehicles in its fleet. Over 10,000 e-scooters produced by the company itself now cruise the streets. That represents approximately a fifth of the company’s fleet. Other manufacturers of electric vehicles, such as the U.S. firm Rivian, have greatly expanded their production. Experts view it as highly likely that parcels will be transported by autonomous vehicles in the foreseeable future, and that these will be accompanied by the delivery robots currently undergoing tests worldwide.
72.8 billion €
This is the forecasted 2020 total online sales volume for Germany. This number is expected to rise to 97 billion euros by 2024.
Source: Statista.de, eCommerce – Deutschland
Profiting from future growth
The logistics boom will become predominantly a business of innovative suppliers and technology providers who are leaders in the fields of data analysis, digitization, automation, sensor technology, and mobility. These are the entities that will enable the parcel service providers to optimize their supply chains and make deliveries to any location in the shortest amount of time and at the lowest cost.
These trends have been the focus of the fund DWS Invest Smart Industrial Technologies. This fund doesn’t include shares in the logistics sector, but rather focuses on those providers that today already have the solutions for the logistics industry of tomorrow. “Logistics is increasingly becoming a hot topic,” says funds manager Marcus Poppe. “We concentrate less on the shippers themselves, and more on the companies that will facilitate this growth both now and in the future: technology providers and mechanical engineers as well as electronics suppliers.”