The global contract logistics market size was estimated at USD 264.3 billion in 2022 and is predicted to reach around USD 519.21 billion by 2032, growing at a CAGR of 6.99% during the forecast period 2023 to 2032.
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Growing government measures for economic diversification lead to infrastructure development, digitization, and industrialization. They are likely to increase the market for contract logistics and e-commerce, producing huge demand for contract logistics services. The rise in foreign direct investments (FDIs), rapid growth in the e-commerce sector, and focus on risk management in supply chains are calling in existing players with various non-asset entrants.
Additionally, the manufacturing sector's rapid expansion and focus on core competencies, the growing demand for job optimization, achieving cost efficiency, and technology supply chain integrations help to drive market growth. Some limitations and difficulties will prevent the development of the contract logistics sector. For instance, logistic database management is challenging because of elements, including potential misunderstandings that result in incorrect interpretations of facts, data, and information. The lack of experienced individuals who can comprehend and fix issues to retain transparency causes regional differences and the supply chain's complexity to affect the overall process negatively. Budget restrictions are another possible hindrance to the market.
Report Scope of the Contract Logistics Market
|Market Size in 2022||USD 264.3 Billion|
|Market Size by 2032||USD 519.21 Billion|
|Growth Rate from 2023 to 2032||CAGR of 6.99%|
|Forecast Period||2023 to 2032|
|Segments Covered||By Type, By Service, By Industrial Vertical|
|Regions Covered||North America, Europe, Asia-Pacific, Latin America, Middle East & Africa|
Technology keeps transforming logistics and supply chain systems, disrupting them. Increasing adoption of IoT and innovative technologies across all industries will accelerate the development of the contract logistics market. The use of logistic software enhances operations and removes hassles with workflow. Businesses that invested in logistics management software experienced notable advancements in processes, delivery, and procedure, which fueled the expansion of the contract logistics market. Industry experts anticipated that mobile, cloud, and new technology adoption will alter logistics operations. In 2021, these technical developments affected supply chains and logistics.
Logistics companies will utilize artificial technology, or AI, to find patterns in data and provide insights. For instance, operations, including route optimization, intelligent transportation, demand forecasting, and budget planning, will benefit from its advancement. Furthermore, AI-driven logistics optimization may reduce costs through behavioral coaching and real-time forecasting to drive the contract logistics business. The projected incremental value of AI in the logistics & transportation business will be higher than that of others.
Cloud-integrated logistics management software makes it feasible to track & update pricing and inventory and monitor in real-time. Software for logistics that runs on the cloud provides real-time accuracy and total system & process control. The lifecycle of a product can be followed from ordering through distribution. It enables significant cost savings for lost goods and delayed delivery, as well as the capacity to track a single shipment at any point in its journey and reroute a misplaced consignment. All participants in a trade network can link and share data in real-time, make quick choices, and scale to meet the demands of the contract logistics market owing to cloud-based logistics software.
Over the past two decades, innovative logistic robotic companies have worked hard to incorporate AI & machine learning, better sensors & reaction times, logistics management software, and warehouse management software. The supply chain has lately seen an increase in warehouse automation, and vast amounts of money and investment have been made in the sector. While Google invested $500 million in JD's automated logistics, Alibaba invested $15 billion in robotic logistics infrastructure. The worldwide market for warehouse robotics in the supply chain is likely to reach $22.4 billion by the end of 2021.
Blockchain, commonly referred to as distributed ledger technology enables secure and enduring recording of interpersonal transactions. The contract logistics business is driven by eliminating third parties and intermediaries who check records and coordinate transactions in a supply chain thanks to blockchain-enabled shared and secure databases. Blockchain enhances the reliability and trustworthiness of shared data, digitizes physical assets such as contracts & essential papers, streamlines office procedures, lowers costs, and allows for efficient supply chain data audits in the contract logistics sector.
Covid 19 Impact
Following the start of COVID-19, several logistics firms encountered challenges such as government limitations and supply-chain capacity constraints, which led to the suspension of essential services along with specific routes and supply chain management and cost pressure concerns. On the other hand, adopting automated technologies among contract logistics service providers has benefitted handling the outbreak and the ensuing lockdowns.
Based on type, the contract logistics market is divided into outsourcing and insourcing segments. Throughout the forecast period, outsourcing is anticipated to dominate the market and account for more than 55% of revenue share in 2022. outsourcing is anticipated to dominate the market as it is a low-cost strategy for expanding a business's international footprint and profitability. The cost associated with hiring staff and renting storage is less than hosting activities internally. Companies that employ an outsourced supply chain can focus on their core business functions while creating new concepts, goods, and services and entering new markets. It may be time and money-saving to outsource logistics operations to a reputable partner with substantial training and experience. A contract logistics sector provides significant flexibility advantages. Depending on the current inventory, they may modify the available space, labor, and transportation. They can aid in easing the change from one season to another and consider industry variations.
Businesses may easily alter their standards to accommodate customers' actual needs. Additionally, the contract logistics sector may use its expertise to improve projections, helping to optimize inventory levels and save holding costs. Client businesses can also create additional channels for distribution, switching from a B2B-focused strategy to an omnichannel that includes B2C clients.
The segments of the market are based on services, transportation, distribution, warehousing, aftermarket logistics, and others. Due to cost savings throughout the entire supply chain process, distribution management is a crucial function. It benefits all contract logistics services, including mode network optimization, network analysis, warehousing, and vendor compliance monitoring. Thus, distribution management offers a better value-added service in the contract logistics industry.
Industry Vertical Insights
Based on industry vertical, the market is divided into manufacturing, retail, and e-commerce, among others. Retail and e-commerce held the largest share of the overall market. While the retail industry is predicted to increase due to rising urbanization, e-commerce is still in its nascent phase and is anticipated to develop exponentially over the next few years.
Asia Pacific and Europe dominate the global contract logistics market. At the same time, Middle East & Africa are likely to develop at the most significant CAGR over the forecast period. Early adoption of technology in e-commerce will advance the sectors.
Several bilateral and multilateral trade agreements have been made with the United Arab Emirates. In the GCC, the United Arab Emirates has close business connections with Kuwait, Bahrain, Saudi Arabia, and Oman. The United Arab Emirates enjoys free trade connectivity to Egypt, Bahrain, Jordan, Iraq, Lebanon, Kuwait, Libya, Oman, Morocco, Qatar, Palestine, Syria, Saudi Arabia, Tunisia, and Yemen via the Greater Arab Free Trade Area Agreement (GAFTA). Along with other nations, the Emirates has struck agreements with Algeria, Pakistan, South Korea, India, and the Netherlands. This will drive the contract logistics market in Middle East & Africa over the projected period.
Key Market Players
Segments Covered in the Report:
By Industrial Vertical
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