Transportation & logistics


Only a minority of transportation & logistics CEOs are very confident of growth in the next 12 months.

Transportation & logistics CEOs are less optimistic than peers about growth in nearly every region

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A bleak outlook for 2013

Transportation & logistics CEOs are much less optimistic than last year, and they’re less confident than their peers in other sectors too. Only 24% are very confident of growth over the next twelve months – that’s the lowest score for the sector since 2008. It’s even 1 point lower than the results in 2009, during the depths of the economic crisis. That may be because more transportation & logistics CEOs expect the economic outlook to worsen, compared to the overall sample. And in nearly every region where they have key operations, more transportation & logistics CEOs expect to tread water this year, compared to peers across the overall sample.

Glimmers of hope in South-east Asia, Africa
For the transportation & logistics CEOs already operating in South-east Asia, growth prospects look strong. Only a small number of the sector companies we surveyed already have key operations in Africa, so data about this region is still preliminary. But for those that do operate there, the situation looks bright, with 80% expecting to grow.

Infrastructure gaps remain a worry
Transportation and logistics companies are dependent on transport infrastructure, and 44% of sector CEOs worry that existing infrastructure won’t be adequate to support growth. More than a third of transportation & logistics CEOs are increasing their own investment plans in response. And they’re calling on governments to do the same.

CEOs’ concern is understandable. As we discussed in our Transportation & Logistics 2030 report in 2010, the need for transport infrastructure is enormous – and there are major hurdles for governments, particularly when it comes to financing.

Rethinking risk
Currently, the majority of transportation & logistics CEOs tell us their companies (71%) manage risk centrally – that’s more than the average across the overall survey sample. Sector CEOs are evenly split about how best to allocate their risk management resources: around half say they’re primarily focused on anticipating high-impact risk events, while the other half are concentrating more on their ability to get any supply chain disruptions quickly under control.

With 59% of transportation & logistics CEOs saying they’ll change their approach to managing risk in the next 12 months, this picture may look different next year.

Getting more efficient …
Improving operational effectiveness is tied for #1 on transportation & logistics CEOs’ list of top investment priorities this year. Four out of five sector CEOs said they implemented a cost reduction initiative over the past 12 months, and 37% outsourced a business process or function. For the coming year, strategic alliances and JVs are high on the agenda, with nearly half planning such a deal – almost twice as many as say they joined forces over the past 12 months.

… while improving customer satisfaction
The other top investment priority? Customers. Growing the customer base is tied for the #1 spot, and enhancing customer service follows close behind. It’s a much bigger priority for transportation and logistics CEOs than across the sample as a whole. And when it comes to areas where sector CEOs expect to change course this year, customer growth, loyalty and retention strategies top the list.

Getting better at engaging with their own people too.
More than three-quarters of transportation and logistics CEOs are changing their strategies for managing talent and for 19% the shifts will be major. And more than half say they’ll increase investments in workforce development over the next three years.

Sector CEOs already take their employees seriously. Nearly half of transportation & logistics CEOs say that employees (including unions/work councils) have a significant influence on their business strategy. And they’re also already using a number of initiatives designed to develop their leadership pipeline.

Diversity programmes gaining traction
In other research we’ve found that diversity brings significant benefits, and the sector may be starting to take note. Compared to the overall sample, more transportation & logistics CEOs say they are using programmes that encourage diversity amongst business leaders to develop their leadership pipeline, and most of these execs are satisfied that they are having an impact. And nearly half of sector CEOs say they plan to increase their focus on workforce diversity and inclusion more generally.

The environment and strong ethics are on the radar too
More than half of transportation & logistics CEOs plan to increase their focus on reducing their company’s environmental footprint, and nearly as many will pay more attention to enhancing their efforts to support a culture of ethical behaviour.

CEO interview quotes

"Naturally, our customers (we call them our guests) are a big influence on us. They’re going to buy our product so we need to be able to understand them, to get the right kind of feedback, to be able to customise our service to their needs. So they are the key."

Aireen Omar
Chief Executive Officer of AirAsia Berhad

"We see it as really important to capture the market in Southeast Asia with its 600 million population base. It has a geographical landscape which is very conducive to air travel ... It also has one of the highest growing GDPs in the world, with a median population age of about 27 to 28 years, and it has one of the highest growth rates in terms of middle income earners."

Aireen Omar
Chief Executive Officer of AirAsia Berhad

"Cost is always a key priority. The cost structure has to be simple and easy to monitor. As a group operating in various countries in this region, we’re able to gain certain economies of scale that other airlines cannot."

Aireen Omar
Chief Executive Officer of AirAsia Berhad

"For the shipping industry, it’s a question of finding a balance in demand and supply. The positive side about shipping right now is that because of lack of access to financing, we’re not going to have an explosion of supply. Currently, no one is building new ships."

Dr. John Coustas
President and Chief Executive Officer of Danaos Corporation

"During the past, we saw significant growth in Europe but that growth was largely fuelled by debt. Now, in order to move from growth that is fuelled by debt to growth that is fuelled by investment and productivity we need to change labour relations. We’re very much in need of deep structural changes."

Dr. John Coustas
President and Chief Executive Officer of Danaos Corporation

"Trust is a key word here: you trust that you have employed the best people to help you with your expansion plan. When you have that trust and you delegate as much as you can, you give employees the freedom to be creative and reward them for it. That is extremely motivating for anyone who wants to build a career."

Aireen Omar
Chief Executive Officer of AirAsia Berhad
These interviews contain the opinions and views of the CEOs interviewed, and do not necessarily represent the opinions and views of PwC.


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