Contract Logistics Market Size to Worth Around USD 519.21 BN by 2032

Tokyo, Dec. 22, 2022 (GLOBE NEWSWIRE) -- According to Precedence Research, the global contract logistics market size was valued at USD 264.3 billion in 2022. The collection of procedures from production to distribution at the point-of-sale final can be referred to as contract logistics. Contract logistics is a more comprehensive strategy that combines traditional logistics with supply chain management procedures; it does not just involve transferring products. The outsourcing of resource management functions to a third-party organization is known as contract logistics. These tasks range from developing facilities, transporting and distributing items creating and planning supply chains, and monitoring inventory.

Key Insights:

• By type, the outsourcing segment has accounted 55% of revenue share in 2022.
• By services, the warehousing and logistics segment has held had a sizable market share, In 2022.
• On the basis of the industrial verticals, the retail and e-commerce segments held the largest share.
• On the basis of geography, the Middle East and Africa are likely to develop at the most significant CAGR from 2023 to 2032.

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Regional Snapshot

In 2021, the North American area held a 45% market share. The United States has seen a sharp rise in warehouse space rental from regional logistics players in recent years. Retailers are increasingly outsourcing more services due to rising service requirements like e-commerce and same-day delivery.

While the US market is the biggest and is progressively expanding, Canada's e-commerce market is expanding at the fastest pace in the area. The Mexican e-commerce market is expected to grow at a healthy clip over the coming five years despite the country's comparatively low user penetration of e-commerce. Most e-commerce businesses award contracts to logistics service providers for storage and distribution. Business models for high-velocity e-commerce demand and the deployment of technical tools speed up fulfillment processes.

North America's top contract logistics providers include FedEx, UPS, DHL, XPO Logistics, DB Schenker, and Ryder System. However, the North American contract logistics sector is fragmented, with numerous businesses taking part and offering services at different levels. Corporations are following the patterns of consolidation and growth to gain a foothold in the market. For instance, to better serve current and potential clients, DB Schenker built three new contract logistics sites in the United States in 2018 and moved one existing location to a much larger facility. The business will make six or seven more contract logistics facilities by 2020.

In 2021, Europe will likely have the second-largest contract logistics market. Due to the rising demand for flexible solutions, data management, and more integrated services, the contract logistics sector is likely to increase. Contract logistics is becoming the best option for enterprises as the demand for specific operations along the value chain and comprehensive services increases.

More than three-quarters of the market's revenue comes from Western Europe, with Germany acquiring a significant share. Nevertheless, future growth in Eastern and Central European nations will likely be swift. The retail industry is an important end-user market segment for contract logistics.

Report Highlights

• By type, the contract logistics market is divided into four types, including Aftermarket Logistics, Distribution, Warehousing, and Transportation. In 2022, warehousing and logistics had a sizable market share. Local businesses, regional businesses, worldwide businesses, and personally controlled markets exist.
• Outsourcing logistics is a low-cost strategy for expanding a business's international footprint and profitability. Hiring staff and renting storage is frequently less expensive than hosting activities internally. A contract logistics sector provides significant flexibility advantages over the internal supply chain.
• By Application, Distribution, Transportation, Warehousing, Aftermarket Logistics, and Others are market segments. 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.
• The market is divided into vertical industry segments: manufacturing, retail, and e-commerce. Retail and E-commerce held the most significant market shares, with manufacturing and retail holding the second and third positions, respectively. The retail industry is likely to proliferate due to rising urbanization, while e-online shopping is still underdeveloped.
• By geography, Asia Pacific and Europe dominate the contract logistics market. At the same time, the Middle East and Africa are likely to develop at the most significant CAGR over the forecast period. Most economic gains come from the early adoption of new technology, E-Commerce, infrastructural expansion, industrialization, and digitalization.
  
  

Key Developments

• In 2018, DHL declared its plan to provide the latest technologies by investing USD 300 Mn in 350 of its 450 sites in North America and, thus, providing customers with an end-to-end visibility solution called "MySupplyChain."
  
  

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Scope of the Report

Market Dynamics for Contract Logistics Market:

Market Driver:

Logistics Software development demand leads to a significant market share.

Technology keeps transforming logistics and supply chain systems. The growing use of IoT and other technologies across industries will aid the application of the contract logistics industry. The use of logistics software enhances operations and removes hassles in the workflow. Businesses that invested in logistics management software experienced notable advancements in processes, delivery, and procedure, which fuelled the expansion of the contract logistics market. The industry will likely utilize mobile, Cloud, and modern technology to alter logistical operations. In 2021, these technical developments will affect supply chains and logistics.

Logistics companies will utilize artificial technology, or Artificial Intelligence, to find patterns in data and provide insights. Operations, including route optimization, intelligent transportation, budget planning, and demand forecasting, will benefit from the advancement. The contract logistics market may be pushed by AI-driven logistics optimization that reduces costs via behavioral coaching and real-time forecasting. The expected incremental value of AI (89%) will be higher than that of Other in the logistics and transportation business.

Cloud-integrated logistics management software makes it feasible to track and update pricing, inventory, and monitoring in real time. Software for logistics that runs on the Cloud provides real-time accuracy and total system and process control. The lifecycle of a product can be followed from purchasing through distribution, which enables significant cost savings for lost goods and delayed delivery, as well as the capacity to monitor a shipment at any point in its journey and reroute a consignment that was misplaced. All participants in a trade network can connect 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 and machine learning, better sensors and reaction times, and logistics and warehouse management software. The supply chain has recently seen an increase in warehouse automation, and a massive amount of money and investment has been given to the sector. While Google invested $500 million in JD's automated logistics, Alibaba invested $15 billion in robotic logistics infrastructure. The global market for warehouse robotics in the supply chain is anticipated to reach $22.4 billion by the end of 2021.

Blockchain, commonly referred to as distributed ledger technology, enables the 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 owing to blockchain-enabled shared and secure databases. Blockchain enhances the reliability and trustworthiness of shared data, digitizes physical assets like contracts and important papers, streamlines office procedures, lowers costs, and allows for efficient supply chain data audits in the contract logistics sector.

Market Opportunities:

In the market for contract logistics, cloud-based SaaS is paving the way for the future.

In 2021, a new approach to data processing will be made public as cloud computing gains popularity. The logistics and supply chain processes have evolved due to technological advancements in 2021. In 2021, there will be a shift from on-premise to SaaS solutions due to the increased use of logistics solutions and supply chains.

By 2021 and beyond, a subscription-based SaaS model is expected to rule the supply chain management industry. Adopting a cloud-based supply chain system has benefits for cost, cost-effectiveness, and flexibility. The emergence of free and open-source software has transformed the cloud into the worldwide logistics industry's preferred alternative, driving the contract logistics sector.

Systems for supply chains that are cloud-based SaaS offer several benefits. It provides a holistic perspective of all logistics activities by increasing transparency and teamwork. Putting in place a cloud infrastructure reduces both the upfront and recurring costs. Additionally, it increases the efficiency of the supply chain in the contract logistics sector and offers the ability to scale up to suit the needs of the business.

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Market Segmentation

By Type

• Insourcing
• Outsourcing

By Service

• Warehousing
• Transportation
• Aftermarket Logistics
• Distribution
• Others
  
  

By Industrial Vertical

• E-Commerce
• Retail
• Manufacturing
• Others

By Geography

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa (MEA)
  
  

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