Contract Logistics: End-to-end storage, distribution and more.

It hasn't escaped my attention that e-commerce is driving a revolution in how goods are delivered from manufacturer to consumer.

Faster delivery to your doorstep combined with the greater availability and variety of goods is making it easier than ever to buy the things we need, possibly even spelling the end for traditional bricks and mortar stores. Yet to grow this new way of shopping at scale, businesses need to adapt their supply chains – make them more agile. And they can’t do it alone.

That is where Contract Logistics comes in. Rather than investing in the infrastructure and technical expertise required to make, shift and deliver ever growing volumes of specialist goods at speed, companies worldwide can seek out Contract Logistics specialists to do the heavy lifting for them.

For manufacturers and customers alike, this model offers numerous benefits, from cost-saving to rapid capacity expansion – which is perhaps why the global Contracts Logistics market is set to grow over 7% in the next 9 years, totalling USD$505.3 billion.

To explore this field further, I spoke to our own Head of Contract Logistics in Europe, Michael Schuetrumpf, to find out more.

In conversation with Michael Schuetrumpf

Rashid: Let’s start with the basics: what is Contract Logistics?

Michael: In the simplest terms, Contract Logistics is a long-term service provided to businesses that manages anything from the distribution and storage of goods to overseeing a company’s production lines. For example, if you buy a TV from an online shop, that vendor may not handle your order directly. Instead, their Contract Logistics provider will manage it, sourcing the TV from a warehouse or making it to order, then deliver the item to your house on the vendor’s behalf, and installing it.

Beyond the basic practicalities of Contract Logistics, I also consider it a means of adding value to a product. From supporting building cars to shipping cargo for that final mile, we are responsible for preparing goods in the best and most efficient way for our clients and their customers.

R: Why is it relevant and beneficial to the European market now?

M: I think a better question is what the business case for this service for global markets is – not just Europe.

Rising costs and consumer demands, paired with calls for greater visibility, efficiency and sustainability, are putting a lot of pressure on companies and manufacturers across the globe. And it may sound strange, but the process between an item being sold, supplied and delivered hasn’t always been considered a core activity for many companies. A necessity, yes – but not a fundamental step in the business model.

So, in today’s world, where all these challenges combine with the added difficulties of geopolitical barriers like the Ukraine war, businesses are finding themselves in need of fast solutions to keep their goods in production and moving at speed. Contract Logistics specialists have such infrastructure and expertise in place for all sectors, so we are increasingly becoming a fundamental part of their strategies.

Through a specialist service like us, a company can immediately tap into a diverse network of transport solutions, set up custom-made warehousing in freezones so they can save money, and outsource labour to cheaper, skilled staff without having to spend extortionate sums on sophisticated infrastructure. At its core, this gives them agility. It also optimises their balance sheets while ensuring high quality production standards.

Plus, through one Contract Logistics provider, a company can boost visibility for their customers and partners as their supply chains are managed through one party.

R: How do the Contract Logistics solutions your team oversees at DP world fit into this sphere?

M: We serve various end customers from Automotive, Chemical and Industry to Technology and Healthcare – and e-commerce applies to all these as well as forming its own growing sector. Within each of these sectors we have the capability to support service parts management, export packing, fulfilment, line feeding (via Just-in-Time and sub assembly) and rack and stack, to name a few. Further, we have these capabilities throughout Europe, across 11 countries and 130 sites.

What makes our offering competitive, however, is how the expertise and technology we have at our disposal is underpinned by the broader DP World end-to-end network. The supply chains, equipment and digital mapping services we use within Europe are elite because they are based on what we use for our global end-to-end solutions. Our time in the sector has also enabled us to build a large geographic footprint and key partnerships, giving us market access and insight few can compete with.

All these qualities combine to make DP World Contract Logistics agile and expert in providing tailor-made solutions, supported by the latest technologies and automation software to keep goods flowing in volume to wherever and for whomever they’re needed.

R: The Contract Logistics market in Europe is expected to grow in the next five years. Can you explain how e-commerce affects this growth?

M: For me, e-commerce has been valuable in transforming Contract Logistics into the service it is today – mainly by enhancing visibility.

The Just-in-time nature of e-commerce has forced us to implement software that gives us greater visibility of goods within our supply chains; it’s what manufacturers, our teams and end customers need to trust and invest in products and the services we provide.

So, if we are to grow in line with the e-commerce boom and support other key sectors over the next five years, harnessing the benefits of both aspects of this visibility is key. After all, demand for goods is increasing, so we need to constantly improve our supply chain transparency. Yet we must also nurture the interest of potential talent to secure our workforce and keep goods moving. ?

Therefore, to ensure Contract Logistics can provide a strong foundation for its own growth and those of the sectors it supports, we plan to further our geographical footprint for DP World’s Contract Logistics offering.

We’ll leverage our market knowledge across Europe by increasing our existing USD$1.2bn platform up to USD$2.4bn in the upcoming years. This strong growth will be achieved through strategic mergers and acquisitions and generating employment opportunities throughout the region.

Already, we have transformed out Warehouse Management System, setting it up in more strategic locations throughout Europe and making them multi-client solutions, so we can serve more businesses in a smarter, cost-efficient way.

As for the power of acquisitions, I joined DP World following their acquisition of syncreon – specialists in automotive and technology Contract Logistics. We also have the expertise of Imperial and Unico at our disposal following their merger with the business last year.

Combined, we are a force that is already changing what’s possible in the Contract Logistics sphere. Through further collaboration, we’ll further expand our capabilities for the customers of today and tomorrow.