By Bruce Stubbs, Director, Industry Marketing, Intermec by Honeywell
The logistics industry is experiencing growth at exponential rates on a global scale. Projected growth rates are highest in Asia-Pacific at approximately 16 percent, followed by North America with approximately 11 percent and Europe with approximately 8 percent. The high growth regions in China and India are main contributors to the higher growth rate in APAC. What is driving these growth rates? The growth of 3PL can be attributed to three main factors: Re-Shoring, traceability and omni-channel distribution models.
Re-Shoring is the boomerang effect of the Off-Shoring trend that took place in the past few decades. There are several contributing factors to the Re-Shoring that is taking place. The once very attractive wage rates in the regions that were targeted for outsourcing have begun to rise. While this is advantageous for countries exporting to those regions as the consumer buying power has increased, it is making the cost of outsourcing operations to those regions rise. Coupling this with the perceived –and in some cases real drop in quality of goods produced – makes it attractive to bring these operations back closer to home.
A second factor that makes Re-Shoring an option is the instability and political upheavals that have plagued some of the growth regions targeted for past outsourcing. There have also been some very unfortunate natural disasters that have played major roles in the disruption of global supply networks. These factors have also caused operations executives to investigate moving operations closer to home.
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