Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination. It is a business-planning framework to manage material, service, information, and capital flows. Logistics manages the flow of resources from the point of production to the point of consumption, in order to meet the requirements of customers. These resources may include physical items such as food, liquid, materials, and abstract items such as energy or information. Some of the foremost logistics operations include procurement, production, disposal, distribution and after-sales logistics.
The global logistics market is estimated to account for US$ 8627.4 Mn in terms of value by the end of 2027, exhibiting a CAGR of 5.3% during the forecast period (2020-2027).
Market Dynamics- Drivers
Logistics offer various advantages including improvement in delivery performance, reduction in operational cost, and increase in customer satisfaction levels. Hence, it is being considered a vital aspect of the business by many manufacturers and retailers worldwide. Furthermore, it helps to make an organization more competitive in regards of delivery, flexibility, cost, and quality. Globalization is another factor supporting growth of the market with a number of multi-national companies outsourcing their logistics solutions. Moreover, logistics helps organizations segregate different parts of a production process across different countries. This significantly brings reduction in the overall cost of production. Therefore, these factors are expected to drive growth of the global logistics market during the forecast period.
Internet retail market includes the display and purchase of items via internet and the delivery of the purchased item to the consumer. The popularity of online shopping has increased globally in the last couple of years. This is due to increasing access to the internet and the rising preference of customers for online shopping over traditional shopping. Moreover, ease of access, convenience related to the home delivery of objects and advantages such as customization and refinement of results from a variety of objects are supporting the market currently. Therefore, these factors are expected to propel the market growth over the forecast period.
Asia Pacific region held dominant position in the global logistics market in 2019, accounting for 33% share in terms of value, followed by North America, Europe, Middle East & Africa (MEA), and Latin America respectively.
|Base Year:||2019||Market Size in 2019:||US$ 5,831 Mn|
|Historical Data for:||2016 to 2019||Forecast Period:||2020 to 2027|
|Forecast Period 2020 to 2027 CAGR:||5.3%||2027 Value Projection:||US$ 8627.4 Mn|
Changan Minsheng APLL Logistics Co., Ltd., China Ocean Shipping Company (COSCO), Deutsche Post DHL, FedEx Corporation, Jiangsu Aucksun Co. Ltd., Kuehne-Nagel, Inc., Orient Overseas (International) Ltd., Shenzhen Feima International Supply Chain Co., Ltd., Sinotrans Limited, United Parcel Service, Inc.
|Restraints & Challenges:||
Figure 1: Global Logistics Market Share (%), in terms of Value, By Region, 2019
Market Dynamics- Restraints
Major challenges for growth of market include poor infrastructure, low diversification, and lower wages. Currently, various logistics companies have deficient recruiting and hiring processes and thus have few young and skilled personnel. The wage levels in the industry are comparatively poor to wage levels of other industries. Therefore, these factors are expected to restrain growth of the global logistics market during the forecast period.
Although globalization is a driving factor, regulation, and protectionism to protect local industries is increasing in emerging economies such as Brazil, India, Argentina, and Canada. Hence, domestic producers seek protection from the influx of imports. These producers and other commercial interests join forces to promote regulations related to restricting imports. For instance, regulatory protectionism is evident in a number of U.S policies that provide protection from foreign competition. Moreover, protectionism inhibits the trade between two foreign parties and imparts a negative impact. Therefore, these factors are expected to hinder the global logistics market growth over the forecast period.
The E-commerce market is experiencing high growth rate due to increasing popularity of online shopping and increased customer reliance on online vendors. The market is further expected to grow with addition of new online stores for different consumer goods such as shoes, clothes and musical instruments among others. However, cross-border delivery of goods is acting as a challenge to the market in regions such as the Middle East, where government rules and regulations change constantly.
A large number of companies do not have Warehouse Management System (WMS) or have WMS that lacks in features such as zone picking, directed put away, and interfacing with ERP or TMS system. With the focus of companies on improving these services, WMS up gradation is expected to increase in the coming years.
Figure2 : Global Logistics Market Value (US$ Mn), 2017 - 2027
The global logistics market was valued at US$ 5831.4 Mn in 2019 and is forecast to reach a value of US$ 8627.4 Mn by 2027 at a CAGR of 5.3% between 2020 and 2027.
ERP systems installed in companies presently do not have all the functions needed to manage transportation and warehousing. These systems lack the effectiveness present in the modern systems. Moreover, companies are expected to replace or enhance their present systems that are more effective, in the near future.
During the past few years, manufacturers have shifted their production to low-cost countries. However, with increasing logistics cost due to rising fuel prices, the logistics industry has seen a decline in shoring of goods in the recent years. Key players in countries such as China, Turkey, and Mexico among others are focusing on manufacturing goods close to their markets to save time and cost related to offshoring.
Value Chain Analysis
The global value chain of logistics market plays a crucial role in spreading technology, connecting countries and promoting best practice around the world. There are a large number of lead firms involved in this value chain including major express delivery, shipping and freight forwarding firms. The logistics value chain is important, as it is a key for the performance of other sectors of the economy. For example, manufacturing and agriculture both depend on the delivery of goods to consumers quickly and reliably and thus they use logistics services.
Global Logistics Market - Impact of Coronavirus (Covid-19) Pandemic
Coronavirus (COVID-19) Pandemic have negatively affected the economies of various countries around the globe. In China, sudden halt in production has left many industries are in loss due to a temporary shutdown. This in turn, is expected to hamper the growth of the global logistics market during the forecast period.
Key companies operating in the global logistics market are Changan Minsheng APLL Logistics Co., Ltd., China Ocean Shipping Company (COSCO), Deutsche Post DHL, FedEx Corporation, Jiangsu Aucksun Co. Ltd., Kuehne-Nagel, Inc., Orient Overseas (International) Ltd., Shenzhen Feima International Supply Chain Co., Ltd., Sinotrans Limited, United Parcel Service, Inc.
Logistics is the process of managing the movement, procurement, and storage of materials, by the organization and its marketing channels in such a way that future and current profitability are increased through goods fulfillment of orders. Furthermore, logistics activities include all the activities of the supply chain such as transport service, inventory management, information exchange, cargo handling, packaging, and warehousing.
The rising technological developments in freight transport is expected to propel the global logistics market growth over the forecast period. For instance, on March 2, 2019, SNCF Logistics, a division of the SNCF Group, entered into a partnership with Marseilles-based shipping container technology firm Traxens to develop a digital freight train. The new digital freight trains will help improve the performance of the logistics market.
Furthermore, rising demand for package shipping is expected to opened larger logistics facilities in India. For instance, in October 2018, United Parcel Service, a logistics company, opened new facilities in Ahmedabad and Hyderabad in India.
However, lack of domestic warehouse space is one factor that is expected to hamper growth of the global logistics market.
This report segments the global logistics market on the basis of transport infrastructure, end-use industry, and region. On the basis of transport infrastructure, the global logistics market is segmented into road, sea, rail, and air. On the basis of end-use industry, the global logistics market is segmented into manufacturing, retail, trade & transportation, government & utilities, healthcare, media & entertainment, telecommunication, banking & financial services, and others. On the basis of region, the global logistics market is segmented into North America, Latin America, Europe, Asia Pacific, and Middle East & Africa (MEA).
Key features of the study:
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