Contract Logistics Market - By Service (Transportation, Warehousing, Distribution), By Mode (Railways, Airways, Roadways, Waterways), By Type (Insourcing, Outsourcing), End-use (Retail, E-commerce, Healthcare, Automotive), Global Forecast, 2023 - 2032

Contract Logistics Market Size

Contract Logistics Market was valued at USD 281.4 billion in 2022 and is anticipated to register a CAGR of over 7% between 2023 and 2032, driven by globalization and the positive outlook of international trade.
 

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The WTO forecast indicates that global merchandise trade volume could experience a 1.7% growth in 2023 and a subsequent acceleration to 3.2% in 2024. In 2022, the total value of worldwide merchandise trade reached USD 25.3 trillion, with a significant portion of this increase attributed to elevated global commodity prices. Additionally, the value of international commercial services trade witnessed a remarkable 15% surge in 2022, reaching USD 6.8 trillion. Notably, digitally delivered services exports alone accounted for a substantial value of USD 3.82 trillion in the same year.
 

As businesses expand their operations across borders, there is a growing need for efficient and cost-effective supply chain solutions. Contract logistics providers play a crucial role in managing the movement of goods, customs compliance, and distribution on a global scale, thus stimulating industry landscape.
 

The rapid growth of e-commerce and the shift toward omnichannel retailing have increased demand for contract logistics services. According to the US Census Bureau, the e-commerce estimate for the second quarter of 2023 shows a growth of 7.7 percent compared to the same period in 2022. E-commerce sales constituted 14.7 percent of the total sales in the second quarter of 2023. Companies require sophisticated warehousing, order fulfillment, and last-mile delivery solutions to meet customer expectations for quick and flexible delivery options, strengthening the contract logistics market outlook.
 

However, regulatory and compliance challenges could drive down industry growth over the next ten years. The contract logistics industry is subject to a multitude of regulations, especially in terms of customs, environmental standards, labor laws, and safety regulations. Complying with these regulations can be costly and time-consuming for logistics providers. Changes in the regulatory framework, such as trade restrictions and customs duties, can also affect the flow of goods and create uncertainties in the market.
 

COVID-19 Impact

The COVID-19 pandemic had a profound impact on the contract logistics industry. Disruptions in global supply chains, lockdowns, and shifts in consumer behavior led to a surge in demand for e-commerce and healthcare-related logistics services. Simultaneously, logistical challenges, including labor shortages and transportation constraints, put considerable pressure on contract logistics providers. Adaptation to rapidly changing circumstances and the need for enhanced safety measures became paramount, reshaping the industry's landscape.
 

Contract Logistics Market Trends

Growing focus on sustainability and rapid adoption of green logistics will accelerate contract logistics business expansion. Contract logistics providers are increasingly focusing on sustainable practices, including reducing carbon emissions, adopting eco-friendly transportation options, and implementing more efficient warehouse management to minimize environmental impact. Clients are demanding greener supply chain solutions, and providers are integrating sustainability into their services, which, in consequence, will foster the adoption of contract logistics services.
 

For instance, in May 2023, Merck Lifescience entered into a strategic agreement with LP Logiscience, the warehousing and contract logistics division of the renowned Liladhar Passo group. In a significant development, LP Logiscience has introduced its inaugural electric vehicle (EV) to distribute finished products from their Rasayani facility to Merck Lifescience customers throughout Mumbai. This collaboration is an integral component of both Merck and LP Logiscience's shared dedication to advancing mutual sustainability objectives and transitioning toward environmentally responsible distribution services with a focus on carbon neutrality.
 

Contract Logistics Market Analysis

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Based on service, the market is divided into transportation, warehousing, distribution, and others. The transportation segment held major market share in 2022. The transportation segment will expand at a noteworthy CAGR over 2023-2032. The expansion of global trade and e-commerce has heightened the need for efficient and flexible transportation solutions. Shifting consumer expectations for faster, more reliable deliveries necessitates robust transportation networks. Additionally, the evolving supply chain landscape, marked by increased complexity, requires dependable transportation options to navigate challenges. Furthermore, the integration of advanced technologies and data-driven analytics has raised the bar for transportation efficiency, further driving the demand for modern, tech-savvy logistics providers.
 

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Based on type, the contract logistics market is categorized into outsourcing and insourcing. The outsourcing segment held around 58% market share in 2022 and is poised for significant growth over the forecast period. Companies are increasingly focusing on their core competencies and cost-efficiency, leading them to outsource non-core logistics functions to specialized providers. This allows businesses to access the expertise, technology, and infrastructure that contract logistics providers offer, ultimately streamlining their supply chain operations.
 

Additionally, the volatility in the global business environment and the need for scalability have made outsourcing an attractive option, as it provides flexibility and the ability to adapt to market fluctuations quickly. Overall, outsourcing contract logistics has become a strategic move for companies seeking improved operational agility and cost savings.
 

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Asia Pacific held a dominant market with a revenue of USD 100.8 billion in 2022 and is poised for significant growth over the forecast period due to the region's robust e-commerce sector, driven by consumer demand for convenient online shopping. Major players like Amazon have expanded their distribution networks, creating a substantial need for contract logistics services. In addition, Asia Pacific’s well-developed transportation infrastructure and strategic location for global trade contribute to its attractiveness for logistics providers. The surge in cold chain logistics to support vaccine distribution during the COVID-19 pandemic highlights the industry's resilience and adaptability in the region, further fueling its growth.
 

Contract Logistics Market Share

Major players operating in the contract logistics industry are:

• A.P. Moller - Maersk
• CJ Logistics Corporation
• Kuehne+Nagel
• XPO, Inc.
• DB Schenker
• DHL Supply Chain
• DSV

Firms operating in the contract logistics sector are actively pursuing various strategic measures to enhance their position in the market. These initiatives encompass cutting-edge advancements in technologies, forming key partnerships, expanding their service offerings, and bolstering data security protocols. These actions are aimed at efficiently meeting the dynamic demands of their customers while also ensuring alignment with evolving regulatory standards.
 

Contract Logistics Industry News

• In October 2023, Kuehne+Nagel forged an exclusive partnership agreement with Tamer Logistics in the Kingdom of Saudi Arabia to meet the growing demand for logistics solutions. This collaboration allows Kuehne+Nagel to exclusively work with Tamer Logistics in offering contract logistics services, further enhancing the freight forwarding operations already established by Kuehne+Nagel in the country. Through this partnership, Kuehne+Nagel's globally recognized contract logistics expertise, cutting-edge digital solutions, and adaptable approach are now complemented by Tamer Group's extensive local network featuring a robust fleet and advanced warehousing facilities.
   

The contract logistics market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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By Service, 2018 – 2032

• Transportation
• Warehousing
• Distribution
• Others

By Mode, 2018 – 2032

• Railways
• Airways
• Roadways
• Waterways

By Type, 2018 – 2032

• Insourcing
• Outsourcing

By End-use, 2018 – 2032

• Retail
• E-commerce
• Healthcare
• Automotive
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia 
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • UAE
  • South Africa