Report Overview

The global contract logistics market was valued at USD 258.65 billion in 2022 and is estimated to reach approximately USD 499.88 billion by 2031, at a CAGR of 7.6% from 2023 to 2031.

The contract logistics industry is essential to the global supply chain because it offers businesses in a wide range of industries customized, all-inclusive solutions. This industry comprises contracting with specialist third-party providers to handle a range of logistics tasks, such as fulfillment, distribution, shipping, and warehousing. Contract logistics was first introduced as a solution to the complicated needs of contemporary industry. Its goals are to maximize productivity, lower expenses, and improve operational flexibility for companies all over the world. By leveraging the knowledge and resources of logistics experts, companies can streamline their supply chain management and concentrate on their core capabilities. The market has grown dramatically over time as a result of changes in client expectations, technology breakthroughs, and the complexity of international trading. The contract logistics market, which provides scalable and customized solutions to meet the constantly shifting demands of a competitive market landscape, continues to be a dynamic and essential part of the larger logistics and transportation industry as businesses look for ways to optimize their operations.

CONTRACT LOGISTICS MARKET: REPORT SCOPE & SEGMENTATION

Global Contract Logistics Market Dynamics

Globalization, trade rules, changing customer preferences, and technology improvements all influence market dynamics in this industry. Logistics providers continue to face pressure to innovate and adapt in response to customer expectations for more personalized services, transparent tracking, and faster deliveries. Technology is essential because it optimizes warehouse management, route planning, and inventory tracking through the integration of automation, AI-driven analytics, and Internet of Things solutions. Supply chains have grown as a result of globalization, which has raised the complexity and reach of logistics operations. Businesses frequently look to contract logistics providers for specialized services and expertise as they aim to maximize costs and efficiency. Furthermore, changes in regulations affecting transportation, shifts in the price of fuel, and concerns about environmental sustainability pushing the adoption of greener methods all have an impact on market dynamics. The COVID-19 pandemic has an additional impact on market dynamics, emphasizing the necessity for flexible supply chains that can withstand interruptions. The demand for omnichannel logistics assistance and last-mile delivery solutions surged along with the growth of e-commerce. The dynamics of the contract logistics industry are shaped by a variety of factors, including globalization, consumer behavior changes, technical innovation, regulatory changes, and unanticipated upheavals. These factors constantly alter the tactics and services that suppliers offer in this dynamic environment.

Global Contract Logistics Market Drivers

• E-commerce Expansion

The way that items are moved through the supply chain is fundamentally altered by the exponential rise of online retail. The need for effective, flexible logistics solutions is growing as more and more customers shop on digital platforms. In this trend, contract logistics companies are at the forefront, meeting the complex demands of e-commerce. Agile warehousing techniques that can handle large volumes of various products are necessary due to the growth in online sales. Specialized storage and fulfillment systems are often required to meet these demands. In addition, the last-mile delivery market experiences a major change. Logistics firms prioritize route optimization, creative delivery strategies, and improving customer experiences with flexible delivery options and real-time tracking.worldwide e-commerce growth necessitates seamless cross-border logistics, which drives providers to build worldwide networks and capabilities. Logistics companies are compelled to implement scalable, technologically advanced solutions due to the complex nature of e-commerce, which is marked by variable demand patterns and seasonal peaks. The integration of automation, robots, and data analytics becomes crucial, facilitating expedited order processing, effective inventory control, and demand forecasting using predictive analytics.

• Technological Advancements

Conventional logistics operations have been completely transformed by the incorporation of cutting-edge technology like automation, data analytics, Internet of Things (IoT), and artificial intelligence (AI). Route planning, warehouse management, and inventory tracking are all improved by AI algorithms, which also increase accuracy and efficiency. Robotics and autonomous cars are examples of automation that reduces error margins and speeds up operations by automating repetitive jobs. Real-time shipment tracking is provided by IoT-enabled devices, guaranteeing improved supply chain visibility and facilitating proactive decision-making. Logistics companies can also use data analytics to make strategic decisions by using the insightful information it offers about consumer behavior, demand trends, and operational efficiency. These developments improve client experiences in addition to operational capabilities. Tech-driven solutions make it possible to achieve transparency, speed, and personalization while satisfying the changing needs of a digitalized economy. Furthermore, technology advancements open the door to flexible, adaptable logistics systems that can quickly react to unanticipated disruptions and changing market conditions.

Restraints:

• Supply Chain Disruptions

Pandemics, natural disasters, geopolitical unrest, and unanticipated occurrences all affect the supply chain by obstructing the flow of commodities. Transportation delays, shortages of completed goods or raw materials, and higher expenses as a result of expedited or rerouted shipping are all possible outcomes of such interruptions. Strong backup plans are required because of the instability of globally linked supply networks, which is highlighted by these disruptions. The seamless flow of goods across borders can also be hampered by abrupt changes in trade laws, tariffs, or geopolitical unrest, which can be confusing and difficult for logistics companies handling international shipments. The COVID-19 pandemic brought to light the weaknesses in supply networks by resulting in extensive disruptions brought about by changes in consumer demand, transit limitations, and plant closures. The ensuing difficulties such as uneven inventories, longer lead times, and trouble sourcing highlight the necessity for flexible, agile logistics plans that can reduce these kinds of risks.

• Infrastructure Limitations

The smooth flow of commodities can be hampered by antiquated or inadequate infrastructure, which includes ports, warehousing facilities, and transportation networks. The efficient movement of goods through the supply chain is hampered by inadequate infrastructure, which causes congestion, longer transit times, and higher transportation costs. Furthermore, significant difficulties brought about by urbanization include a shortage of space for distribution hubs and an increase in traffic, especially in densely populated areas. Last-mile delivery is hampered by this congestion, which impacts customers in metropolitan areas by affecting timely and economical service. Moreover, the absence of infrastructure in developing or less developed areas presents challenges for logistics companies seeking to create extensive networks. These restrictions limit the availability of modern warehousing facilities and effective transportation options, which limits the growth of logistics services in these locations. Large financial investments, cooperation between the public and private sectors, and long-term planning are frequently needed to address infrastructure constraints.

Opportunities:

•  Increasing Demand for Global Logistics

There is an international demand for dependable and effective logistics solutions as more and more organizations operate on a worldwide basis. The increasing tendency of businesses procuring materials, producing goods, and marketing them in various international marketplaces is the cause of this need. Contract logistics companies are well-positioned to take advantage of this potential since they have broad worldwide networks and experience handling intricate international trade regulations. Businesses may streamline their international supply chains by taking advantage of our complete end-to-end logistics solutions, which include warehousing, shipping, customs clearance, and distribution. Furthermore, the growth of cross-border trade and e-commerce increases the demand for specialist logistics services designed to manage shipments internationally. Offering smooth, economical, and flexible logistics solutions that can adjust to various legal, cultural, and geographic contexts will provide providers a competitive advantage. By branching out into international logistics, one can establish alliances, partnerships, and collaborations with local organizations across the globe, thereby cultivating a vast network capable of meeting a variety of industrial demands.

• Urban Logistics Solutions

An enormous opportunity exists for contract logistics providers to develop effective and sustainable delivery methods in densely populated areas as a result of the growing need for creative urban logistics solutions brought about by urbanization. The problems of last-mile delivery, gridlock in the streets, and a shortage of space for distribution centers get worse as cities continue to fill up with people and enterprises. This situation presents an opportunity for logistics companies to create customized urban logistics plans. There are ways to expedite last-mile delivery, cut down on delivery times, and lessen environmental effect by utilizing technology, such as intelligent delivery systems and route optimization algorithms. Faster order processing and shorter transit times are made possible by using micro-fulfillment centers near metropolitan areas, which satisfies urban consumers' demands for same-day or even within-the-hour delivery services. Moreover, the combination of evolving consumer behavior and the growth of e-commerce calls for logistics models that are specifically tailored to urban settings. In order to develop sustainable logistics solutions, such as fleets of electric vehicles or alternative delivery methods, this opens up chances for collaboration with local government agencies, corporations, and creative entrepreneurs. These efforts will help to minimize traffic and pollution in the environment.

Segment Overview

By Service

Based on service, the global contract logistics market is divided into transportation, warehousing, distribution, aftermarket logistics. The transportation category dominates the market with the largest revenue share in 2022. This segment focuses on the movement of goods from one location to another. Contract logistics providers offer transportation services using various modes such as road, rail, air, and sea. They manage and optimize transportation routes, negotiate carrier contracts, and ensure timely and efficient delivery of goods to their destinations. This segment includes freight forwarding, shipping, and managing transportation networks. Warehousing services involve the storage, handling, and management of inventory. Contract logistics providers operate warehouses and distribution centers where goods are stored, sorted, and organized. They employ advanced inventory management systems to optimize storage space, ensure inventory accuracy, and facilitate quick retrieval of products when needed. Additionally, they may offer value-added services like packaging, labeling, and quality control within warehouse facilities. Distribution services involve the management of the flow of goods from warehouses to their final destinations, which could be retailers, wholesalers, or directly to customers. Contract logistics providers design efficient distribution networks, manage inventory replenishment, and handle order fulfillment to ensure products reach the intended recipients on time and in optimal condition. Aftermarket logistics segment covers the management of goods after they've been sold and delivered to end-users. It includes activities such as returns management, repair services, spare parts logistics, and reverse logistics. Contract logistics providers handle product returns, refurbishment, recycling, or disposal, ensuring a seamless process for handling post-sale activities while minimizing costs and maximizing efficiency.

By Type

Based on the type, the global contract logistics market is categorized into insourcing, outsourcing. The insourcing category leads the global contract logistics market with the largest revenue share in 2022. Insourcing refers to the practice of handling logistics functions and operations internally within a company. In this approach, an organization retains complete control and ownership of its logistics processes, managing warehousing, transportation, distribution, and other supply chain activities using its own resources, infrastructure, and personnel. Companies that insource logistics typically invest in building and maintaining their own logistics capabilities, including establishing and managing warehouses, maintaining a fleet of vehicles, hiring logistics staff, and deploying technology systems for supply chain management. Outsourcing, on the other hand, involves contracting third-party logistics (3PL) or contract logistics providers to manage some or all aspects of a company's logistics operations. Companies opt to outsource logistics functions for various reasons, including cost efficiency, access to specialized expertise, scalability, and flexibility. Outsourcing allows businesses to leverage the specialized infrastructure, technology, and expertise of logistics providers without bearing the full burden of maintaining in-house logistics capabilities.

By Industry Vertical

Based on industry vertical, the global contract logistics market is segmented into retail, e-commerce, aerospace, automotive, industrial, high-tech, pharma and healthcare, others. The retail segment dominates the contract logistics market. Retail logistics involve managing the movement of goods from manufacturers or suppliers to retail stores or directly to consumers. This segment focuses on efficient inventory management, timely deliveries, and optimized distribution networks to meet consumer demands. E-commerce logistics deal with the complexities of online retail, including order fulfillment, last-mile delivery, reverse logistics for returns, and managing high-volume and diverse product lines to meet the expectations of online shoppers. Aerospace logistics encompass handling the transportation, storage, and distribution of components, equipment, and parts crucial to the aerospace industry. This involves strict compliance with regulations, specialized handling, and precision in delivery timelines. Automotive logistics involve the transportation, warehousing, and distribution of vehicles, parts, and components across global supply chains. This segment requires efficient inventory management and just-in-time delivery to support manufacturing processes. Industrial logistics focus on managing the supply chain for heavy machinery, equipment, raw materials, and industrial products. It involves specialized handling, often requiring large-scale transportation and storage solutions. High-tech logistics deal with the transportation and storage of sensitive electronic components, devices, and technology products. Precision, security, and specialized handling are critical due to the delicate nature of these goods. Logistics in the pharmaceutical and healthcare industry demand strict adherence to regulatory standards, temperature-controlled storage, and specialized handling for sensitive and perishable goods like medications and medical devices.

By Mode of Transportation

Based on the mode of transportation, the global contract logistics market is categorized into railways, airways, roadways, waterways. The airways category leads the global contract logistics market with the largest revenue share in 2022. Airways represent the domain of air transportation, which offers unparalleled speed and global connectivity for time-sensitive or high-value goods. In contract logistics, air freight plays a crucial role in expedited deliveries, especially for perishable goods, high-tech products, or urgent shipments. Contract logistics providers leveraging airways prioritize speed and reliability, utilizing air cargo services for efficient global transportation, often offering door-to-door delivery options and expedited supply chain solutions. Railways serve as a crucial mode of transporting goods over land. In the context of contract logistics, rail transportation involves the movement of bulk goods, raw materials, finished products, and intermodal containers over extensive networks of railway tracks. Contract logistics providers may utilize railways for long-distance transportation, especially for heavy or bulky cargo, where cost-effectiveness and efficiency in moving large volumes are essential. Roadways, including trucking and other ground transportation, form the backbone of many logistics networks. Contract logistics providers extensively use road transportation for its flexibility, providing direct access to various locations and enabling last-mile deliveries. Roadways are vital for short to medium-haul transportation of goods, offering agility, accessibility to diverse destinations, and the ability to handle diverse cargo types, from small parcels to oversized freight. Water transportation, mainly through oceans, rivers, and canals, is a cost-effective and efficient mode for transporting bulk goods and commodities over long distances. Contract logistics providers utilize waterways, especially for international trade, to transport large quantities of goods, such as raw materials, containers, and bulk cargo, between ports globally.

Global Contract Logistics Market Overview by Region

The global contract logistics market is categorized into North America, Europe, Asia-Pacific, and the Rest of the World. Asia-Pacific emerged as the leading region, capturing the largest market share in 2022. A growing need for effective logistics services has been fueled by the region's strong economic growth and quick industrialization. The need for advanced supply chain solutions has been fueled by the substantial industrial and trade activities that have occurred in nations like China, India, Japan, and South Korea. Agile logistics networks that can handle the intricacies of e-commerce logistics, like last-mile delivery and inventory management, are required as a result of the reshaping of consumer behavior brought about by the growth of e-commerce and digitalization throughout Asia-Pacific. Furthermore, as a gateway between important markets in North America, Europe, and other continents, the Asia-Pacific region's advantageous geographic location has established it as a global hub for trade. As a result, there is now a greater need for all-inclusive logistics solutions to support global trade flows. The region's logistical skills have also been strengthened by continuous infrastructure improvements in transportation networks, including as ports, railroads, and highways, which have increased connection and efficiency. The Asia-Pacific area has become a prominent hub for contract logistics services due to a combination of factors including economic growth, technology advancements, rising e-commerce, strategic geographical positioning, and infrastructure improvements.

Global Contract Logistics Market Competitive Landscape

In the global contract logistics market, a few major players exert significant market dominance and have established a strong regional presence. These leading companies remain committed to continuous research and development endeavors and actively engage in strategic growth initiatives, including product development, launches, joint ventures, and partnerships. By pursuing these strategies, these companies aim to strengthen their market position, expand their customer base, and capture a substantial share of the market.

Some of the prominent players in the global contract logistics market include DSV, XPO Logistics Inc., Neovia Logistics Services, LLC., YUSEN LOGISTICS CO., LTD., Hellmann Worldwide Logistics, GEODIS, A.P. Moller - Maersk, CEVA LOGISTICS, CJ Logistics Corporation, DB Schenker, United Parcel Service of America, Inc., Deutsche Post AG, Kuehne Nagel, Agility, Ryder System, Inc., LOGISTEED, Ltd., Penske, and various other key players.

Global Contract Logistics Market Recent Developments

In November 2023, All of the stock of the English contract logistics firm KAMMAC Ltd. has been bought by Elanders. Kammac is a rapidly expanding corporation with very strong profitability and net revenues of over GBP 90 million over the previous 12 months.

In January 2022, Penske and Röhlig Logistics worked together to establish Rohlig Penske Logistics GmbH as a new joint venture. With intentions to expedite further expansion throughout Europe, the joint venture included 55,000 sqm of extra warehouse, transport management operations, and e-commerce logistics.

Contract Logistics Market Report Segmentation

Objectives of the Study

The objectives of the study are summarized in 5 stages. They are as mentioned below:

• Global Contract Logistics Market Size and Forecast:

To identify and estimate the market size for the global contract logistics market segmented by service, by type, by industry vertical, by mode of transportation, region and by value (in U.S. dollars). Also, to understand the consumption/ demand created by consumers of contract logistics between 2019 and 2031.

• Market Landscape and Trends:

To identify and infer the drivers, restraints, opportunities, and challenges for the global contract logistics market

• Market Influencing Factors:

To find out the factors which are affecting the sales of contract logistics among consumers

• Impact of COVID-19:

To identify and understand the various factors involved in the global contract logistics market affected by the pandemic

• Company Profiling:

To provide a detailed insight into the major companies operating in the market. The profiling will include the financial health of the company's past 2-3 years with segmental and regional revenue breakup, product offering, recent developments, SWOT analysis, and key strategies.

Intended Audience

• Business Executives
• Logistics Managers
• Supply Chain Professionals