2012 TT Top 50 Logistics Companies: E-Commerce’s Steep Growth Drives Logistics Strategies
This story appears in the Nov. 5 print edition of Transport Topics.
The rapid growth of e-commerce is forcing all kinds of businesses — from retailers and wholesale distributors to manufacturers and import-export companies — to change the way they distribute goods.
More than a decade after the dot.com boom and bust, inventory replenishment is giving way to direct shipment of goods to homes and offices. Warehouses and distribution centers are becoming e-fulfillment centers.
And for many of the companies on Transport Topics’ 2012 Top 50 Logistics Companies list, Internet commerce represents a major growth opportunity. One of the driving forces behind the e-commerce revolution — Amazon.com — is building its own network of local distribution centers to facilitate faster delivery of virtually any product purchased online.
The Seattle-based company, started less than 20 years ago to sell books online, is on track to generate $62 billion in sales this year and is growing 35% annually — 10 times as fast as overall retail sales.
“Internet retailing is here to stay,” said Mike Roth, vice president of North American operations for Amazon Fulfillment. “One of the main challenges for us is not to be an impediment to the company’s enormous growth.”
As of July, Amazon.com had 45 fulfillment centers in the United States and Canada — 75 globally — and has announced plans to build 12 more to support sales growth.
Consumers spent $162 billion online in 2011, accounting for 8.7% of retail sales, according to data compiled by comScore Inc., Reston, Va.
Deloitte Consulting projects online retail sales will grow to 24% of retail sales over the next five years.
To accommodate the surge in online orders, logistics companies are putting in place new distribution strategies.
3PD Inc., based in Atlanta, for instance, is rolling out a national delivery service for furniture, appliances and other large goods, such as big-screen TVs and exercise equipment, using an expedited freight carrier to move the goods over longer distances.
“Speed is important to someone purchasing online,” said David Faulkenberry, senior vice president of 3PD.
Kenco Logistics Services, Chattanooga, Tenn., hooked up with Hermes Fulfillment, based in Germany, to provide online retail support for goods purchased in the U.S. from European retailers, such as Austrian luxury garment maker Wolford and furniture retailer Bombay.
In return, Kenco’s domestic clients gained access to Hermes’ online distribution services in Europe.
The challenge for many logistics service providers is to find ways to merge the supply chain for goods purchased on-line with traditional store delivery.
“We’re in the early stages of seeing systems merge,” said Patrick Kelleher, senior vice president of business development for Exel in Westerville, Ohio. Exel ranks No. 1 on the 2012 Top 50 Logistics list.
Click here to download the 2012 Transport Topics Logistics 50.
