Logistic industry is mainly about distribution and transportation of products or goods. It is the management of flow of distribution of goods from one place to another. This is the most precise and brief definition of logistics industry; however, it is a very wide industry. Here is the PESTEL analysis of Logistics industry.
Political Factors
This is very important factor to be considered buy logistic service providers as it defines labour laws, taxation, legislations, trade-related policies, restrictions and official custom duties, charges, or tariffs. Moreover, every logistic service company needs to consider the political conditions of each economy it is planning to operate in or provide services. Europe’s political conditions is very stable, and rules are not strict so it’s easy for companies to gain their market. Economy with unstable political conditions will result in less sales and more costs of the businesses (Louhar, 2017).
Economic Factors
These factors involve the economic issues like economic growth, fluctuation in interest rates, changes in currency value, price sensitivity, purchasing power of people, income distrust etc. This has great impact on the logistics industry in both long and short term. If any economy is suffering from low purchasing power, it is likely to have less consumers and vice versa. For transferring goods from one place to another be it inter-city, within the country or abroad, logistics companies have to make sure all the stated factors to run its operations profitably (Louhar, 2017).
Social Factors
This part analyses the social trends, lifestyles, attitudes, age distribution, education levels, family demographics, falling and rising trends etc. Logistics company that are dealing in exports or imports consistently look forward for it because seasonal sales peaks comes and goes in certain time for every business and during that they may have more business. This helps the companies to plan and set their strategies. Moreover, due to Covid-19, online buying and selling is at its peak, logistic companies work hard to promote themselves through social and digital media to increase its revenues (Jaiswal.et.al, 2015).
Technological Factors
This is very important for logistic companies to have advance technology to run its operations fast. Efficient and effective supply chain with latest technology helps the company to grow. For example, Aramex is one of the best companies in providing parcels across the globe with live tracking system. It also offers shop and collect service for the people who are in different country and want something from other country. Logistic companies also work hard in automating the services so that it will help in providing more quality service, security of products, less price and cost (Leinonen, 2020).
Environmental Factors
World is moving towards more sustainable and environmentally friendly products and services. Global warming is increasing, and people are concerned about it. Hence, it is necessary for the logistic industry to be more concerned about it as transportation causes pollution which is the most important concern of environmentalist and people. Efficient supply chain helps in reducing the pollution level cause for delivering packages, use of sustainable packaging is also worthwhile. Companies should involve in CSR activities. Logistics companies who are involved in contributing positively to the environment are always the customers’ priority (Jaiswal.et.al, 2015).
Legal Factors
Logistics companies like DHL, Fed Ex, Aramex etc. are working across the globe, hence it is important for them to consider all the countries rules and regulations into consideration while working in that economy. Every country has different laws related to transportation, infrastructure use, employment rights, safety rules, hence all single laws are needed to be considered while operating the business. And it is difficult and critical in logistics industry as the companies here are dealing with the whole world (Leinonen, 2020).
Conclusion
It is very important for the logistics industry to consider all these factors to run its operations successfully. The companies also make sure they are working as per the PESTEL analysis, as this will help them in leading the industry and can gain market share.
References
Jaiswal. A. et.al, 2015. Porter’s five forces and PESTEL framework of logistics industry. [Online], Available at: https://vdocuments.mx/porters-five-forces-model-and-pestel-framework-analysis-of-the-logistics.html, [Accessed on: 8th June, 2021].
Leinonen, V. 2020. Future of Logistics. [Online], Available at: https://www.theseus.fi/bitstream/handle/10024/333761/Future%20of%20logistics%20Opportunities%20and%20Threats.pdf?sequence=2&isAllowed=y. , [Accessed on: 8th June, 2021].
Louhar, P. 2017. logistics industry and pestle and marketing mix swot analysis of it. [Online], Available at: https://www.slideshare.net/PratikLouhar/logistics-industry-and-pestle-and-marketing-mix-swot-analyis-of-it, [Accessed on: 8th June, 2021].