International transport and logistics market grows to €2.7 trillion

01 December 2016

The transport and logistics industry has seen considerable revenue growths in recent years, although across many companies profitability growth has been lacklustre. A new report explores trends and key dynamics in the industry, finding that the market is valued at around €2.7 trillion, yet, when it comes to financial performance, the differences between segments is considerable.

The transport and logistics (T&L) industry is huge. Globalisation, coupled with population growth and consumption behaviour, has seen ever increasing demand for products from all corners of the world. The rise of e-commerce has added to the transport boom, and over the past decade considerable growth has been seen across the industry’s value chain as a whole.

In a new report from The Boston Consulting Group (BCG), titled ‘Transportation and Logistics in a Changing World’, the consulting firm explores, among others, recent market trends for the various segments that make up the wider value chain of logistics related activity. The research covers data related to 500 T&L companies across 16 industry segments.

Logistics execution dominate €2.7 trillion industry

Transport & Logistics market size

The T&L market is relatively diverse across its value chain in terms of companies interacting to bring about the markers’ wider economic and on the ground effects. In terms of market segments contributing the most to the €2.7 trillion industry, logistics execution comes out far ahead, at €2.3 trillion, led by road transport with an almost €1.4 trillion impact. Sea transport, which has entered troubled waters in recent years, took the second spot – totally €312 billion in revenues. Other segments, such as logistics infrastructure, generated €257 billion, while logistics services managed €658 billion, while €16 billion can be attributed to logistics advisors. €586 billion of ‘consolidation’ is removed by the firm, in relation to the effect of double counting within the wider value chain.


Since 2005 the industry, on average, has seen a modest uptick in revenues. Indexed against 2005, revenues have increased 22% with CAGR of 2.9% across the industry. Profitability has been considerably harder to achieve, even on increasing revenues, with average EBIT up 2% in the same period at CAGR 0.3%. Considerable variation exists across companies in their respective segments, with the top 10 T&L companies per segment significantly outperforming the average on revenue, up 37% on average with CAGR of 4.6%, while EBIT was multiples higher, at 18% for the period at CARG 2.4%.

According to the firm’s analysis, the considerable variation in performance, between average and top performers, resulted, in some instances, from failed growth strategies seeking to boost market share in new geographies are partly to blame for lacklustre results, as well as poorly executed M&A deals, whereby integration didn’t result in expected gains. Top performers however, the firm believes, were able to implement a range of best practice strategies and take advantage of global megatrends.

Market comparison

While return on capital employed for the T&L industry was less than the cost of capital during the period 2011 to 2015, the industry only just missed the mark. Fashion and luxury dominated the index, at 22.9% on average, followed by technology, at 19.9% on average. The results for T&L come in at 10.1%, just slightly behind mid-cap pharmaceutical at 11.1% and in front of travel and tourism, at 9.6%.

Companies posting good returns across segments

The T&L industry’s average total shareholder returns (TSR) were, however, not too bad, coming in at 11.4% annual average return over the period 2011 to 2015, just shy of 12% average for all major industries. For top performers, TSR came in considerably higher, at 26%, although well shy of market leader mid-cap pharmaceutical which has averaged an almost criminal 60.1% TSR average per year over the same period.

Performance spread

The research also explored the range of returns generated by companies across segments in terms of their annual return of assets (ROA). The research highlights that hinterland terminal companies have the most positive spread, with the poorest performer managing -0.4% ROA between 2010 and 2014, while the average company in the segment managed 10.8% and the top performer 19.7%. Road transport showed considerable variation however, with the top performer bringing in 25.6% while the lowest performer managed -23.8% – the average for the segment stood at 6.5%, just above the total industry average of 4.6% over the period. 

Container shipping and tanker shipping saw the lowest average ROA in the period 2010 and 2014, at 1.7% and 0.8% respectively. Rail network providers, port authorities, warehousing, air transport and postal delivery all, too, saw below average ROA over the period. 

Growth expectations across T&L segments

Future outlook

In terms of growth of the wider industry, logistics infrastructure will see almost across the board real growth in the years between 2014 and 2018. Hinterland terminals, which saw impressive 13.2% CAGR between 2010 and 2014, will see growth drop to 5.4% CAGR, while rail networks will remain relatively stable at 5.2% and 5.1% CAGR respectively over the same period. Airports are the only category in the segment which is expected to see growth fall below inflation within the industry, at 2% CARG between 2014 and 2018, following strong growth of 6.8% CAGR between 2014 and 2018.

Logistics execution will see a number of industries fail to meet real growth, postal delivery is the hardest hit, falling from 0.9% to 0.6% CAGR between the periods 2010-2014 and 2014-2018. Sea transport, will pickup slightly, increasing from 0.3% CAGR to 2.2% CAGR. Logistics advisory services will, according to the study, enjoy strong growth, falling slightly from 10% to 9% CAGR between the two periods.


How data insights helped Network Rail improve the South-East route

11 April 2019

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.