Germany as an industrial location, along with its production processes, would simply be unable to survive without general cargo logistics. The processes are highly complex and the level of organisation is correspondingly professional. This is where German medium-sized enterprises display their strengths.
Germany is World Champion. Not only on the football pitch, but also in logistics. In the Logistics Performance Index published by the World Bank on 31 March 2014, Germany recaptured the top ranking and prevailed in a comparison with 160 countries thanks to its high-quality retail and transport infrastructure. This top position that the logistics location Germany holds in an international comparison is also documented by the significance of logistics in a domestic sector comparison.
Logistics is the third-largest business segment in Germany after the automobile industry and the retail sector. With over 2.8 million employees, this sector ranks ahead of mechanical engineering and the electronics industry. According to the “The TOP 100 in European Transport and Logistics Services 2012/2013” study by the Fraunhofer Supply Chain Services (SCS), the sector generated an annual turnover of EUR 228 billion. Thus, the sector had a 24.5 per cent share of the overall logistics turnover of EUR 930 billion generated in the European economic area in 2012. This makes Germany a “Leader in Logistics” not only in a worldwide, but also in a European comparison.
There are many reasons why Germany is ahead of the rest. As part of the European heartland, Germany shares its borders with nine countries and must therefore “serve” as a transit country. However, Germany, with its strong industrial core, is also part of a global, specialised economy. Supply chains are established across borders and must function reliably and on time in order to support just-in-sequence production processes. In addition, supplying over 80 million consumers in a relatively small area must be ensured by the retail trade’s distribution channels. This adds particular significance to the submarket of general goods logistics.
While this segment only has a 4.4 per cent share, equal to approx. EUR 10 billion, of the cake that makes up the logistics market, its significance for many sectors is immense. As a conveyor belt between the different manufacturing levels and as a link between producers and whole sale and retail trade, the clocked and synchronised transport system offered by the German logistics services providers an essential requirement for the success of the entire distribution of work. No surprise that the Fraunhofer Institute described this submarket as the “backbone of the German economy” in its “Challenges 2013” study.
This is documented by the considerable trust that clients place on their general cargo forwarding companies. While the general logistics market only commissioned service providers with one-half of the market potential, the share held by outsourcing in industry and retail trade in the general cargo market equals almost 95 per cent according to the Frauenhofer Institute. This can be explained, on the one hand, by the efficiency advantages that forwarders can implement by consolidating different shipments from different clients and which they can then pass on to their clients. On the other hand, German general cargo forwarders offer a comprehensive network, which could hardly be operated profitably by individual companies in the shipping business.
The typical general cargo transport (also: forwarders groupage) is characterised by the following:
– Heterogeneous consignment volume in the weight range
from 30 bis a maximum of 2,500 kilogrammes (often stackable and suited for shipment on pallets).
– Consignments by different clients are picked up on a
regional basis (precarriage) and sorted in a turnover
depot according to relations.
– Identical relations are consolidated for long-distance shipping (main run) and consolidated into short-distance
tours once the shipments reach the receiving depot
at the destination (follow-up).
– Alternatively, all shipments are delivered to a central
transshipment depot (hub) and distributed to the regional
depots from there, where they can then be distributed
to short-distance delivery vehicles.
– Special feature: clocked traffic, meaning the vehicles
travel within a fixed time schedule. The processes are
standardised and industrialised. Using shipment tracking
systems, bar codes and IT-supported order processing
is today considers to be “state of the art”.
Processing general cargo shipments is generally handled by a network of 30 or more regional transshipment depots. These belong to a corporation or are made up of depots operated by regional partners of general cargo cooperations. Most deliveries within Germany can be made within 24 hours. A performance that is unequalled in a European comparison.
This is that much more remarkable considering that the general cargo market is predominantly made up of medium-sized enterprises, which, by the way, also applies to the customer base. One-half of the customers come from the food and beverage industry (19 per cent), followed by metalworking and mechanical engineering (17 per cent) and the construction industry (14 per cent). The other half of the customer base comes from virtually all other business sectors. This is why the general economic development in Germany is virtually identical to the development of the general cargo market. (Source: “Challenges 2013”, Fraunhofer SCS working group)
This also applies to the international focus of this market. Just as the German economy has a considerable international focus, the general cargo networks follow this trend and are increasingly expanding their European and international contacts. This, for one, is achieved by establishing local branch offices and also by including international partners in the network of German forwarder cooperations. The total European turnover in the general cargo market equals EUR 44 billion which equals a share of five per cent of the total turnover in the logistics sector.
The significance of general cargo logistics in a modern, collaborative and globally focussed economy is vital. This is underscored by the value attributed to the subsegment by the German Freight Forwarding and Logistics Association (DSLV). According to its last industry conducted by the DSLV in 2010, 54 per cent of its members are involved in the general cargo forwarding/forwarder groupage business. This is in fact the main focus of logistics activities for 28 per cent of the DSLV member companies. This is why the association supports a variety of working groups dealing with typical topics faced in this segment, such as the pallet/loading equipment management, the processes at the loading ramps in industry and retail trade or the analysis of the costs development in the general cargo segment.
You can find more information at www.dslv.org
The author, born in 1957, is freight forwarding specialist and holds a degree in Business Administration (university of applied sciences) with a focus on transportation. He joined the family-operated business in 1981 and has headed the Krage Speditionsgesellschaft mbH since 1986 as a managing partner. Mr. Krage is President of the German Freight Forwarding and Logistics Association (DSLV).