- North America spending 6.7% of total CPG sales on logistics whilst Europe spends just over 10.5%
- Markets in the emerging economies have much higher cost bases- possibly twice that of the US
- Obstacle to growth of CPG sector in emerging markets remains poor efficiency of logistics
“The Consumer Packaged Goods sector is one of the largest customers for contract logistics. With estimated revenues of over half a billion it is a global business that can make unique demands of logistics services. The Global CPG Logistics 2015 report looks at both the size of the logistics operations supporting CPG and the nature of what the CPG demands from logistics providers” according to author and Ti Senior Analyst Thomas Cullen.
June 25th, London, UK: The consumer packaged goods (CPG) sector (also known as FMCG) is a giant with global sales exceeding $550bn. The markets that make up this global sector are diverse in character and research for Ti’s latest report, Global CPG Logistics 2015, has identified the key differences between them.
Within developed economies there is a marked difference between the CPG sector in North America and Europe. Ti’s research indicates that the channels of consumption have become increasingly important in determining the logistics cost and nature of CPG supply chains and that this now accounts for the difference between Europe and North America. In fact Ti’s research shows that the CPG sector in North America spends just 6.8% of revenue on logistics, in Europe logistics spend is up at 10.5%, largely because of Europe’s stronger disposition towards e-commerce.
Between the developed world and emerging markets the principal differences are the sophistication of logistics services available, the costs and limitations inherent in those services and the disparity in growth rates.
Naturally the developed world’s long standing middle class has for decades demanded immediate access to CPG, leading to long term moderate growth after the initial boom. In contrast the emerging middle class in developing nations is only now beginning to find its appetite for CPG. As this trend continues Ti expects it to constitute one of the major drivers of growth in the global CPG sector and consequently in demand for complex logistics services. Demographic projections suggest that by 2030 emerging markets will account for some 90% of the global middle class and therefore much of the demand for CPG and associated logistics services.
Just as Ti found significant differences in the characteristics of CPG logistics in the developed world, the company’s research has also uncovered considerable gulfs between different emerging markets. This is clearest when looking at the scale and buying power of the middle classes in China and South East Asia, which massively outstrips their counterparts in India and Brazil. These differences in demand are also reflected in the disparity in the sophistication of logistics services between developing markets. For instance Ti’s in depth examination of the service offerings of LSPs in emerging markets showed significantly more complex solutions on offer in China than in Brazil or India.
The report shows that the CPG sector is quite stable in the developed world but that changing channels of consumption mean that there is scope for new service offerings and solutions to be implemented. Meanwhile in emerging markets there is a surging demand for more sophisticated logistics services to cater for growing demand for CPG.
Notes to Editors
About Global CPG Logistics 2015
Global CPG Logistics 2015 offers insight into the consumer packaged goods market, with analysis of the main CPG businesses and their supply chains, as well as the logistics providers they do business with. In addition, Ti has sized the CPG market and, based on bespoke research, is sharing its estimate of logistics costs across developing and emerging markets.
About Transport Intelligence
Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.
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