The Logistics Market is estimated to be valued at USD 12.35 Bn in 2024, exhibiting a CAGR of 8.5% over the forecast period (2024-2031). Furthermore, the growth of the e-commerce industry and the need for seamless logistics services are expected to drive significant opportunities in the market.
Market Dynamics:
The growth of the logistics market is driven by the expanding e-commerce sector and growing international trade. E-commerce companies extensively utilize logistics services for delivery and transportation of goods to customers. With rising internet penetration and improving lifestyle, the e-commerce sector is witnessing strong growth worldwide. This is creating a substantial demand for logistics services. Moreover, international trade volumes have increased considerably over the past few decades with growing globalization. Manufacturers are increasingly outsourcing production activities to other countries, driving the demand for cross-border transportation and logistics services. Logistics companies allow the smooth flow of goods across borders through advanced warehouse management and transportation management. The growing cross-border trade activities are thereby expected to propel the logistics market during the forecast period.
Market Drivers
Globalization of business operations is driving cross-border transportation needs
As companies expand their operations globally, there is an increasing need for the transportation of goods across borders. Logistics players which can provide seamless transportation services across multiple countries are seeing higher demand. The growth in international trade volumes is a major driver benefiting the logistics market. Logistics companies which have a strong global network are well-positioned to tap into the opportunities arising from the globalization of business activities.
Rise of e-commerce is driving the demand for efficient logistics services
The explosive growth of e-commerce retailers is a significant driver for the logistics market. Companies like Amazon, Flipkart, etc. have driven the demand for logistics services that can sort, package, and deliver products to customers within promised timelines. 3PL companies which have integrated technology solutions allowing them to efficiently handle sorting, tracking shipments and last-mile delivery are witnessing higher business from e-commerce clients. The demand for warehouse and fulfillment centres is also growing to support the logistics needs of e-commerce retailers.
Market Restraints
High operating costs are impacting the profitability of logistics companies
Logistics is a relatively asset-heavy business involving costs of vehicles, warehousing infrastructure, labour etc. Rising fuel prices, driver salaries, and property rents increase operating costs. Logistics players struggle to pass on cost increases fully to clients in a competitive market. This puts pressure on profit margins, especially for smaller operators. Cost optimization through efficient vehicle utilization, technology solutions, and rightsizing of assets is crucial for logistics companies.
Shortage of skilled workforce is hampering growth
The logistics industry faces significant skill gaps, particularly for roles involving technology, data analytics and operations planning. Getting required manpower with modern skillsets is challenging in many markets. This limits the ability of 3PL firms to take on complex projects and scale operations. Companies invest heavily in training programmes but attrition remains high as mobility opportunities are plenty. Talent shortage acts as a bottleneck for growth.
Market Opportunities
Growing demand from emerging industries like e-commerce, autoparts, and pharma are opening up new verticals
While traditional industries will remain key clients, new-age digital industries are contributing significantly to logistics demand. 3PL players which customize solutions for the specific needs of promising verticals like e-commerce, autoparts, and cold-chain pharma logistics stand to capture a large share of growth. Tapping niche vertical expertise allows companies to command premium pricing as well.
Technology innovations in areas like AI, IoT, and automation are paving way for new revenue models
Emerging technologies are revolutionizing logistics operations and enabling data-driven insights. 3PL companies are investing in AI-based optimization, IoT fleet tracking, autonomous vehicles, Blockchain solutions, etc. This allows them to launch value-added services on top of traditional transportation and warehousing. As a result, logistics is transforming from a commodity to a technology service industry opening up significant monetization opportunities.
Link - https://www.coherentmarketinsights.com/market-insight/logistics-market-4388
Key Developments:
- In March 2024, Aramex enhanced its presence in Saudi Arabia by opening a new regional office in Riyadh. This expansion aims to significantly boost Aramex's capabilities in serving both new and existing businesses in the region, supporting Saudi Arabia's Vision 2030 objective of becoming a global logistics hub. Additionally, Aramex introduced a fleet of fully electric motorcycles for last-mile delivery in the U.A.E. This move is part of Aramex's strategic goal to transition to a fleet comprising 98% electric vehicles (EVs) by 2030, in alignment with the Science Based Targets initiative (SBTi). The e-bikes were selected after rigorous testing to ensure optimal performance and stability in local weather conditions.
- In February 2024, DHL and Fraport AG, the operator of Frankfurt Airport (FRA), initiated the construction on a new air freight facility spanning 55,000 square meters. The project is set to be completed in approximately twelve months, with DHL planning to open the air cargo center by mid-2025.
Key Market Players:
Key companies covered as a part of this study include A.P. Moller - Maersk, Agility Logistics, Bolloré Logistics, C.H. Robinson Worldwide Inc., CEVA Logistics (a subsidiary of CMA CGM), DB Schenker, DHL (part of Deutsche Post AG), DSV, Expeditors International of Washington, Inc., FedEx Corporation, GEODIS, Hellmann Worldwide Logistics, Kerry Logistics Network Limited, Kuehne+Nagel Inc., Nippon Express Co., Ltd., Panalpina (part of DSV), Sinotrans Limited, United Parcel Service of America, Inc., XPO Logistics, Inc., and Yusen Logistics Co., Ltd.
