One of the industries that has been hardest hit by the economic downturn has been the logistics industry. The industry is fully tied to how quickly the global economy can rebound.
For China, this slowdown has been particularly hard on its logistics industry as 3PLs, Ports, ship builders, and container manufacturers have all been hit. It was an industry that only a few years ago was beginning to see a lot of investment and large emerging players, but with a high number of low value providers still in the market, the industry is finding it difficult to adjust to the current conditions.
To understand and explain, the challenges that the logistics industry is facing, AT Kearney has released The Party is Over: How Logistics Companies in China Should Respond to the Global Economic Meltdown.
There are three vastly different projections depending on a few different models. Critical to the model that proves correct is going to be how quickly the economies take to rebound, should they "rebound".
For China’s firms, three options are on the table:
1. Defensive — Cope by employing quick-win solutions.2. Rebuild — Establish market presence by strengthening capabilities.3. Attack — Expand business to prepare for next stage of growth by employing structural improvement.
All Roads Lead to China states that this is an interesting analysis of the situation, one that encompases a number of the various players.
It also suggests three other policies which, although somewhere this side of nuttiness, have much to commend them for small companies.
Hug for warmth — Medium-sized players develop informal/ formal ties that enable them to weather the storm.Park and wait it out — Many smaller firms will be parking their truck and picking up a new line of work until the storm clears.Roll over and die — It is an unfortunate reality, but a lot of groups — especially those who were reliant upon an industry that has been heavily hit, are going to find times too difficult to survive.