Contract Logistics Market is Witness High Growth Owing to Increased Outsourcing of Logistics Functions

 

Contract Logistics Market
Contract Logistics Market

The contract logistics marketoverview includes third-party service providers handling various logistics operations for their clients such as transportation, warehouse management, and value-added services. The demand for such services is rising owing to benefits offered like lower inventory and transportation costs, access to advanced logistics infrastructure and technology, and focus on core competencies. Contract logistics help companies improve operational efficiency by streamlining supply chain processes.

The global contract logistics market is estimated to be valued at US$ 461.27 billion in 2024 and is expected to exhibit a CAGR of 7.3% over the forecast period from 2024 to 2031.

Key Takeaways

Key players operating in the contract logistics 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 major players are focusing on acquisitions and partnerships to expand their global footprint and service offerings. For instance, in 2022, DHL Supply Chain acquired Kane Contract Logistics Market Trends to enhance its warehousing and omnichannel fulfillment capabilities across Southeast US.

The growing e-commerce industry worldwide presents significant opportunities in the contract logistics market. Third-party logistics providers offer value-added services like inventory management, packaging, labeling to support the specific needs of e-retailers. The contract logistics market players are expanding their operations globally to cater to the rising international trade. For example, DB Schenker has logistics hubs across 150 countries managing complex supply chain of international clients.

Market Drivers

Increased outsourcing of logistics functions: Manufacturing and retail companies are increasingly outsourcing transportation, warehousing, and distribution capabilities to third-party service providers to focus on their core business areas. This is a major driver for contract logistics market.

Market Restrain

Lack of real-time visibility: Contract logistics operations involve coordination between multiple parties and locations. Lack of end-to-end visibility across the supply chain can lead to delays, errors and increase costs. This acts as a restraint for the market growth. Customers demand higher transparency and traceability than what is currently offered.

Segment Analysis

The contract logistics market can be segmented based on the type of services offered: transportation, warehousing, packaging processes and integrated production. Among these, the transportation segment holds the largest market share as it covers diverse services including transportation by road, rail, sea and air. Road transportation dominates due to its cost effectiveness in transporting bulk volumes over short and medium distances.

Warehousing is the second largest segment driven by the need for inventory management, value-added services and supply chain visibility. Companies prefer contracting warehousing activities to third-party logistics providers as it optimizes capital investments and fixed costs. Growing e-commerce has further fueled demand for warehousing space across industries.

Global Analysis

Regionally, Asia Pacific commands the highest share in the contract logistics market and is expected to witness the fastest growth during the forecast period. This can be attributed to rising consumption, manufacturing activity and rapid infrastructure development in emerging countries of China, India and SouthEast Asia. North America and Europe currently dominate due to widespread outsourcing of supply chain activities by companies operating in these regions. However, their growth pace will be slower compared to Asia Pacific.

There is immense growth potential for contract logistics in Latin America and the Middle East & Africa fueled by increasing consumerism, trade activities and investments towards building logistics capabilities. Key players are expanding into these regions through acquisitions and partnerships with local providers to leverage business opportunities as regional markets mature.

Gets More Insights on, Contract Logistics Market


About Author:

Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. (https://www.linkedin.com/in/ravina-pandya-1a3984191)

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