Contract logistics involves management and execution of logistics activities or processes on behalf of an external company through a contractual agreement. This offers advantages like reduced fixed costs, access to modern technology and logistics infrastructure, and core competency focus for the outsourcing company. Key services include transportation, warehousing, packaging, and freight forwarding. With growing focus on core operations by manufacturing and retail companies, the need for flexible and cost-effective logistics solutions through outsourcing has increased steadily.
The global contract logistics market is estimated to be valued at US$ 461.27 Bn in 2024 and is expected to exhibit a CAGR of 7.3% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the contract logistics market are CJ Logistics Corporation, Kuehne Nagel, Deutsche Post AG, Ryder System, Inc., A.P. Moller – Maersk, CEVA LOGISTICS, United Parcel Service of America, Inc., YUSEN LOGISTICS CO., LTD., DB Schenker, Penske, DSV, XPO Logistics Inc., LOGISTEED, Ltd., Neovia Logistics Services, LLC., Agility, GEODIS, Hellmann Worldwide Logistics.
The growing Contract Logistics Market Trends for efficient supply chain and logistics from end-use industries like e-commerce, manufacturing, retail is a major factor boosting the contract logistics market. E-commerce companies require robust logistics networks to handle the volatile demand and ensure on-time deliveries. Similarly, manufacturing and retail industries rely on flexible logistics partners to manage international distribution of goods.
Globally, companies are ramping up logistics infrastructure and offerings in emerging markets like Asia Pacific and Latin America through partnerships and acquisitions. This is helping them gain access to new customers and revenue streams. Regional players are also consolidating to offer integrated services and compete better in the highly competitive contract logistics landscape.
Market Key Trends
Growing adoption of digital technologies by contract logistics providers is a key trend. Advanced analytics, IoT, AI and automation helps optimize operations, boost efficiency, gain real-time visibility and deliver superior customer experience. Sustainable logistics is another trend with companies focusing on green solutions like electric vehicles, route optimization, pallet sharing etc. to reduce carbon footprint. With demand volatility and talent crunch, application of emerging technologies will be crucial for contract logistics companies to sustain growth.
Porter’s Analysis
Threat of new entrants: The contract logistics market requires high capital investment for warehousing infrastructure, transportation fleet and advanced IT systems. This creates barriers for new entrants.
Bargaining power of buyers: Large logistics service buyers have significant bargaining power due to the competitive nature and fragmentation of the contract logistics market.
Bargaining power of suppliers: Suppliers of logistics-related equipment and services have moderate bargaining power due to the broad availability of supply options.
Threat of new substitutes: The threat of substitution is moderate as contract logistics services can be provided in-house but at a higher cost.
Competitive rivalry: The contract logistics market is highly competitive with the presence of global and regional players.
Geographical Regions
Europe accounts for the largest share of the Contract Logistics Market Regional Analysis in terms of value due to the strong presence of logistics companies and manufacturing industry in Western European countries.
The Asia Pacific region is expected to grow at the fastest pace during the forecast period. Emerging economies like China and India are witnessing rapid industrialization and infrastructure developments, fueling demand for third-party logistics services.