Logistics is an area of supply chain management and it focuses on the forward and backward flow of products, goods, and resources from the point of origin and production to the point of consumption. The logistics play a key role and it cements various elements and components together. Today, we’ll discuss the PESTLE analysis of Logistics Industry; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Logistics Industry
Some of the main political factors in the Logistics Industry PESTLE analysis are as follows;
I-Government Regulations
I-Government RegulationGovernment regulations on consumer protection and road safety are very strict and tight logistics companies. They focus on areas like vehicle maintenance, road safety regulations, labor laws, driving licenses, infrastructure, taxes, and others. However, the objective of strict government regulations is to ensure the smooth flow of products, goods, and supplies to the end consumers.
II-Infrastructure Development
The key to the growth of Logistics Industry is the infrastructure development and the proper network of roads across the country. Without proper infrastructure of roads, the cost and operational expenses for the Logistics Companies are very high. The government launches mega projects with the collaboration of investors for infrastructure development, and it allows them for the smooth running of operations.
III-Political Stability
A stable political environment plays a key role in the growth and development of Logistics Companies. In case of roadblocks, procession, and political conflicts across the country, then Logistics Companies can’t perform their operations and deliver the products and goods to the end consumers on time.
Economical Factors Affecting Logistics Industry
Some of the main economic factors in the Logistics Industry PESTLE analysis are as follows;
I-Economic Growth
The economic growth of the country plays a key role in the growth and development of Logistics Companies. When the country has a stable and proliferating economy, it means that businesses are growing and they’re distributing products, goods, and supplies across the country. The Logistics Companies would ensure the supply chain and distribution of products and goods.
II-Inflation
The inflation rate is the key economic indicator and it happens when the government starts printing more currency notes than the required level. The value of all the currency notes decreases and things become expensive as a result. When people can’t afford things, their overall sales drop and it negatively impacts the flow of goods by Logistics Companies.
III-Interest Rate
Interest rate is the other key economic indicator and it directly impacts the business investment rate, cost of loans, and the retail price of goods. When the government increases the interest rate, the cost of business loans increases and it reduces the investment rate on the infrastructure development. As a result, it negatively impacts the business growth of Logistics Companies.
Social Factors Impacting Logistics Industry
Some of the main social factors in the Logistics Industry PESTEL analysis are as follows;
I-Consumer Behaviors
The consumer behavior of the customer market is highly important and it outlines the needs and demands of the targeted customers. For instance, if the end consumers want the speedy delivery of products and goods, then logistics companies need to speed up their vehicles and deliver the products to the end consumers in a timely manner.
II-Insurance
In order to reduce the risk factor, Logistics Companies need to procure insurance plans for their vehicles. The insurance plan would help them to cover any type of accident or package loss. But it amplifies the operational cost of the Logistics Companies and the retail price, and negatively impacts the company’s sales, revenue, and profitability.
III-Customer Market Trends
The customer market trends are highly unpredictable and they keep changing due to various factors. Logistics Companies should pay heed to the growing customer market trends like same-day delivery, online shopping, home delivery service, reverse logistics, and others. It allows them to keep up with growing customer market trends and amplify the customer satisfaction level.
Technological Factors Affecting Logistics Industry
Some of the main technological factors in the Logistics Industry PESTEL analysis are as follows;
I-Advanced Technology
Logistics Companies are investing a lot of capital resources in the latest advanced technological tools like automation technology and robotics in the warehouse. It allows them to efficiently perform warehousing and logistics operations with optimum utilization and timely outflow of stock. As a result, the advanced technological tools have reduced the cost and resources.
II-Autonomous Vehicles
Logistics Companies are implementing the latest autonomous vehicle technology. It allows them to ensure the smooth flow of products and goods to the end consumers on time and reduces the risk of accidents. Most importantly, autonomous vehicle technology has a limited rate of human error.
III-Data Analytics
Logistics Companies are investing a significant amount of capital resources in the latest data analytical technology. It allows them to accurately predict the demand for deliveries in the upcoming holiday season based on the previous historical record. As a result, logistics companies reduce the risk of delayed deliveries and improve transportation management.
Legal Factors Impacting Logistics Industry
Some of the main legal factors in the Logistics Industry PESTEL analysis are as follows;
Regulatory Compliance
Logistics Companies need to comply with the government regulations of various companies. They comprise road safety and vehicle maintenance regulations, labor laws, data privacy, licenses, trade laws, and others. Regulatory compliance would help them to smoothly perform their operations without any delays and disruption.
Environmental Factors Affecting Logistics Industry
Some of the main environmental factors in the Logistics Industry PESTEL analysis are as follows;
Sustainability Initiative
Logistics Companies should make a strong commitment to the environmental sustainability initiative. It comprises investing in renewable sources of energy, fuel-efficient vehicles, and electric vehicles to reduce the carbon footprint. However, it allows them to keep up with the growing environmental sustainability trends.
Conclusion: Logistics Industry PESTLE Analysis |PESTEL Analysis of Logistics Industry |External Environmental Analysis of Logistics Industry | Strategic Analysis of Logistics Industry
After an in-depth study of the pestle analysis of Logistics Industry; we have realized that Logistics companies play a key role in the growth of the economy. If you are learning about the Logistics Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
