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Freight and Logistics

Service expansion will decide the winners in logistics

October 18, 2021

3-MINUTE READ

In brief

  • Accenture surveyed 800+ logistics executives and interviewed 20+ industry experts to identify winning growth strategies for logistics companies.
  • We found that the most important driver of change in the industry is evolving customer expectations.
  • 91% of logistics companies acknowledge that customers are now asking for end-to-end logistics services handled by a single provider.
  • In response, winning logistics companies will expand their service portfolios, either through vertical or horizontal integration.

According to recent Accenture research, nine out of ten logistics companies believe their customers want them to offer a broader set of logistics services. This means either extending their service portfolios to include upstream and/or downstream solutions or expanding their existing services across more geographies, industries or modes of transport.

This new imperative could spell trouble for logistics companies that have built their reputations on the delivery of targeted services such as freight forwarding, transport or customs brokerage. But it also presents a tremendous opportunity to rethink the scope and end-to-end nature of their services and create a more customer-focused approach to service delivery.

Logistics customers want end-to-end services

Today’s customers desire more than a provider of basic logistics services. Beyond better reliability, last-mile delivery capabilities, 24/7 customer support and instant quoting, they are looking to team with a trusted provider that delivers new services such as advisory and supply chain consulting services, reverse logistics, data and analytics capabilities, e-commerce channel management capabilities and even algorithms that match demand and supply.

91%

of logistics companies acknowledge that customers are now asking for end-to-end logistics services handled by a single provider.

Traditional logistics companies have no choice but to change. They must become more responsive, more agile and resilient. Their customers count on it. And their relevance—and very existence—depends on it.

43%

of logistics companies strongly fear becoming a takeover target if they don’t proactively invest in expanding their offerings portfolio.

Two paths to service expansion

Logistics companies that expand their offerings and reach will be better able to address customers’ demands, deliver more impactful solutions and maintain their relevance in a fast-changing industry.

 

We believe there are two ways for logistics companies to expand their services:

Vertical integration

This strategy involves transitioning into a one-stop logistics provider or, at a minimum, a provider that offers an expanded array of services to meet more of their customers’ needs across the value chain. Traditional logistics companies adopting this strategy have the opportunity to integrate upstream, as well as downstream services.

Horizontal integration

In contrast, this strategy focuses on expanding current offerings in the same domain. Companies expanding in this way double down on the service areas that offer them the greatest competitive advantage. In doing so, they not only grow market share and shareholder value, but also buying power—which leads to cost efficiencies and leaner operations.

Four steps to success

Logistics companies looking to integrate and expand their offerings vertically or horizontally should take four steps:

1. Understand the drivers of change

Companies need to understand what customers want, what their competitors are doing and assess the main drivers for change in demand.

2. Assess change-readiness

Logistics companies must assess their existing capabilities and identify the service gaps they must fill to add the most value to their customers.

3. Formulate an integration strategy

Logistics providers need to determine whether their goals will be best addressed through vertical integration, horizontal expansion, or both.

4. Execute the new strategy

Logistics companies must take several critical actions to launch and sustain their expanded business model.

Future-oriented logistics companies are already making their moves to protect and grow their business by expanding their service offerings. Others are at risk of falling behind if they don’t follow their lead.

About the Authors

Sarah Banks

Managing Director – Global Lead, Freight and Logistics

MICHAEL EICHSTEDT

Senior Manager – Freight and Logistics

Contributors

Matthias Wahrendorff

Senior Thought Leadership Principal – Accenture Research, Global IIoT and Industrial Research Lead

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