Summary

Apparel logistics caters to the supply chain needs of apparel manufacturers and retailers. From retailers to manufacturers, apparel supply chains compete strongly to provide latest trends and best customer experience. Apparel industry plays a pivotal role in developing a country’s economy in terms of revenue generation and creation of employment. Meanwhile, changing consumer expectations and fulfillment models are putting pressures on apparel businesses. With e-commerce reaching 10 percent of all U.S. retail sales in 2018, there is a need for speed and agility among apparel retailers. According to an industry survey, 73% of the top 100 retail brands now offer same-day or next-day shipping, as they also explore last-mile fulfillment models such as click-and-collect and locker pickup. With the U.S.-China tariff battle still steeping, global trade uncertainty is forcing apparel businesses to reexamine their sourcing and logistics strategies.

Starting from the purchase of material, to the quick movement of samples and quality control of production, right to the direct delivery of finished products to stores, logistics companies offer solutions for the entire logistics value chain of the fashion industry. The global apparel industry is extremely dynamic due to the ever-changing fashion trends. Due to the intense competition, apparel companies are implementing new technologies such as data analytics and AI. Additionally, these players also use proper software to forecast production and pricing to accurately cater to the growing demand. Some retailers has developed a fast-fashion business model that transfers products from design to stores in less than 2-3 weeks. With several companies adopting this kind of business model, there is a need for fashion logistics players to provide services that ensure fast replenishment of inventory. Since the implementation of efficient logistics service in the apparel industry ensures the quick availability of products at stores or retail outlets, the demand for textile logistics services is only expected to grow in the coming years.

The apparel industry has huge outsourcing operations that provide logistics players with huge opportunities in domestic and international operations making it a highly competitive industry. Any sort of disruption in the supply chain lead to a huge loss for the apparel company. To have a minimal impact on their supply chain, apparel companies usually prefer to outsource their operations to logistics players.

Key Market Trends

Growing Online Apparel Sales and Changing Consumer Behavior Demands Efficient Logistics Operations

As per the industry sources, in 2018, world apparel players has witnessed store downsizings and lesser retail growth. On the other hand, they experienced increase in sales due to digital market presence. This effect has fuelled changes in the approach of the market players and this is expected to continue in the coming years with more emphasis on the growth of e- commerce, mobile shopping and meeting ever rising expectations of personalization among customers.

While consumers frequently hit websites to compare prices and products, global online platforms plans to expand their fashion brand partnerships and develop additional engagement methods to stay competitive in the digital shopping space. To handle the growing online orders, third party logistics companies are absorbing millions of square feet of space and letting it out to consumer goods, ecommerce, manufacturing and apparel companies. In the past, CEVA Logistics, one of the world’s leading supply chain management companies, was awarded four ten-year contracts worth a total of USD 400m to provide warehousing, store deliveries, e-commerce fulfillment, international distribution and 4PL services to leading fashion retailers Coast, Karen Millen, Oasis and Warehouse. These new agreements represent significant progression into the e-commerce market for CEVA, which will undertake the co-ordination of around 1 million orders per annum for the four brands.

Asia-Pacific Leads the Global Apparel Logistics Market

As per the industry analysis, Asia-pacific region leads the current market studied and is also expected to be the fastest growing region. Sales of apparel items in emerging Asia-Pacific countries will continue to grow in 2019 while it is expected to decline in other major regions, including Europe, Middle East and Africa and Latin America. Further, the region’s fashion industry is ready to lead the way in both international growth and innovation. Consumer technology brands have long targeted online shoppers in markets such as Australia, Japan, and South Korea, but now brands in sectors such as apparel and beauty also are targeting the region. Hence, Brands will continue focusing on localization and catering to the millennial customer who is the key buyer of these products.

Global sports apparel and footwear brands like Nike and Adidas are ditching other regions and increasing their production in emerging Southeast Asian countries like Vietnam. This is a positive outlook for the transportation companies and other third-party logistics service providers. But, there exists some challenges also. According to Vietnam Textile and Apparel Association (VITAS), Apparel and textile firms across Vietnam are rapidly losing their competitiveness owing to higher logistic cost for exporting products. The cost involved in the logistics for garment and textile firms was nearly USD 2.79 billion in 2017, which is notably 9.1% of Vietnam’s total export turnover. High cost of transportation, surcharges at seaports as well as limited infrastructure of seaports have been cited as some of the major causes of companies losing competitiveness.

Competitive Landscape

The apparel logistics market is fairly fragmented in nature with the presence of large global players and small and medium sized local players with quite a few players who occupy the market share. Most of the global logistics players has a retail and apparel logistics division to meet the market needs and demand. Additionally, local players are increasingly enhancing their capabilities in terms of fleet size, service offerings, products handled, and technology. The surging e-commerce sales are creating opportunities as well as challenges to the logistics companies in terms of speed, delivery, etc. The global companies who have high capital and assets can invest in advanced storage spaces and fulfilment centers and can benefit from the above mentioned scenario. On the other hand, regional and local players are also coming up with better sector solutions to support the needs of the production companies as well as retailers.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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