Analysis of the reasons for the stagnation of supply chain logistics revenue

In 1980s, the growth rate of the US economy slowed down. Under the cost issue, enterprises began to reduce costs and increase efficiency and innovate services. In the 1980s, the long-term accumulation of logistics innovation in the United States, the 1990s US logistics field moved from logistics to SCM (Supply Chain Management), logistics from the internal integration stage of a single enterprise to the comprehensive integration stage of the industrial chain, logistics needs more diversified and professional. Under the influence of this change, the United States logistics has a new service format - third-party supply chain logistics services. In 1980s, the US economic growth shift and basic capacity were fully informatized, triggering a major outbreak of supply chain logistics in the 1990s.

But then there was a stagnation in revenue. Why?

1. The supply chain logistics industry is subject to customization and does not have economies of scale.

Business model determines industry attributes: highly customized; customer stickiness; traffic entry

The high degree of customization has made it impossible to expand on a large scale and has no scale effect. Endogenous development is difficult to speed up.

The customer is sticky and the strong can't take it. Customized customers have higher conversion costs, and it is more difficult for supply chain logistics providers to compete for rival customers.

The flow entrance is diverted to the transportation department. For integrated logistics providers, supply chain logistics has the role of diverting to the logistics business unit. Supply chain logistics seems to have no growth in revenue, and actually it is to give profits to the transportation sector.

2. The downstream of supply chain logistics in Europe stops growing, and the optimization space is small.

The retail and automotive industries are the two most important industries downstream of supply chain logistics. European automobile production has been stagnant for a long time, with a GAGR of only 0.3% in 15 years. The European retail industry is in a low-speed growth phase, and the supply chain logistics has little room for incremental growth.

The European supply chain industry is at a mature stage, and the inventory optimization space is small. Europe is the most developed region in the world's supply chain logistics. According to data released by the World Bank in 2018, there are 8 European countries in the Top10 global logistics performance index and 15 in the Top20.

Reprinted from the network