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In 2005, 21% Of Total European Logistics Will Be Online, Forrester Calculates

Amsterdam, Netherlands, August 21, 2001 . . . Total online logistics revenues will grow to €133 billion by 2005, equaling 21% of logistics overall, as freight exchanges die out and make room for a network consisting of logistics hubs, eMarketplaces, and private hubs, according to a new report from Forrester Research B.V. (Nasdaq: FORR).

"European executives are right to be bullish about online logistics -- we project that as a result of increased international online trade, the use of the Net to monitor and move goods will grow fifteenfold within the next five years," said Forrester Senior Analyst Charles Homs. "Almost a third of online logistics revenue will be generated through combined support services, and with logistics moving to the Net, primary transport activities will not dominate. Trucking will become king of the information highway with €69 billion; indeed online logistics transactions for road transport will amount to more than 50% of the total online logistics activity. Transport support services will capture 20% of total online logistics, making these supporting activities the second largest logistical activity and amounting to €35 billion by 2005. Finally, airfreight will benefit from online logistics, but will remain small, as only 3% of all airfreight-related logistics activities will go online by 2005."

Forrester argues that as industries pick the optimal transportation mode, they will also have to choose which online venue best suits their product characteristics and supply chains. Construction will take the lead in moving logistics online, and although the industry spends only 5.2% of cost of sales on logistics, the total logistics costs will amount to €137 billion by 2005. Paper and office products will perform well in public eMarketplaces, and as logistics costs surge to a whopping €15 billion by 2005, this category will account for almost a third of the total logistics costs tied to public eMarketplaces. Logistics for consumer goods are among the most expensive cost items, taking 10% of cost of sales. The perishable nature of the products and the complexity of packaging and routing consumer goods transports are the main reason for the high costs. Even though EDI and bilateral trade make up the bulk of the consumer goods trade, private hubs will rise quickly in importance.

"As many public eMarketplaces die out or transform to private hubs, firms will seek an online connection to logistics providers. Fourth-party logistics providers (4PLs) also offer the IT infrastructure required for logistics and will pick up the logistics tasks unfulfilled by eMarketplaces. With their vast amounts of internal resources, unsurpassed industry knowledge, and established IT infrastructure, 4PLs will become hubs in the eBusiness network. While the road to online logistics will not be smooth, the online logistics industry in its entirety will evolve over the next four years to serve the respective opportunities," Homs added. "Firms tracking their move of logistics to the Net must act immediately on direct benefits. And as this space evolves over the next two years, firms must analyze online logistics needs by online venues, they must tie online sales into online logistics, and finally, they must defragment the supply chain to benefit from online logistics."

For the report "Europe's Online Logistics Push," Forrester interviewed 30 logistics executives at large European firms to understand their use of the Internet and eMarketplaces for logistics activities.

Forrester Research is a leading emerging-technology research firm, analyzing technology change and its impact on business, consumers, and society. Forrester's "Whole View" provides clients with a comprehensive set of research that reveals how technology change affects their customers, drives their business strategies, and dictates their investment in technology. Clients receive continuous research and analysis through Forrester eResearch® Reports, an array of Advisory Services, Assessment Tools, and topical Events. Established in 1983, Forrester is headquartered in Cambridge, Mass., with North American Research Centers in San Francisco, Calif., and Toronto, Canada. Forrester's European Research Center is located in Amsterdam, Netherlands, its UK Research Centre is located in London, and its Research Center Deutschland is located in Frankfurt, Germany. Additional information about Forrester Research can be found at www.forrester.com.

Contact:

Clive Savage
European PR Manager
Forrester Research B.V.
+31 20 305 4868
csavage@forrester.com