Logistics Market

Logistics refers to a robust network of roadways, railways, airways, and seaways engaged in storing, managing, transporting, and delivering products from their point of origin to their point of termination. Including GPS trackers, RFID sensors, and Bluetooth in cargo monitoring technologies augment the global logistics market. Advances in computing technologies, such as IoT, AI, ML, and Big Data, can also be attributed to the industry's growth.

The global logistics market is estimated to grow from USD 258.7 billion in 2022 to USD 445.8 billion by 2027, at a CAGR of 11.5%. Factors such as increasing fleet connectivity, infrastructure development and advancement of logistics management with technology integration are driving the global logistics market.

Market Dynamics

DRIVER: Increased demand in the e-commerce industry and integrated logistics management for operational excellence

Technologically enabled logistics platforms and the growing online shopping industry have strongly contributed to the growth of both the eCommerce and logistics sectors. The number of online shoppers has increased in recent years and is expected to increase by a factor of two in the coming years. According to the World E-Commerce Forum (WORLDEF), the global e-commerce volume is expected to reach USD 6.5 trillion by 2023, USD 5.5 trillion by the end of 2022, and up 14% from $4.9 trillion in 2021. The COVID-19 pandemic further triggered the spread of e-commerce. According to India Brand Equity Foundation (IBEF), the Indian eCommerce market will grow by 21.5% in 2022, reaching $74.8 billion. Adopting advanced technology based on data analytics drives the growth for global logistics sector by facilitating provisions for comparing shipping rates from multiple carriers on a single platform. It also facilitates cloud-calling for order confirmation, real-time tracking, and selecting the most cost-effective carrier partner based on various key metrics. Thus, developing and increasing the usage of integrated logistics management platforms and the growing e-commerce industry is expected to drive the global logistics market.

RESTRAINTS: Lack of uniform governance standards in the fragmented logistics industry

One of the major restraints to the widespread adoption of digital logistics is the lack of governance. High levels of fragmentation within the logistics industry need developing a standard IoT platform. Transportation and logistics businesses around the globe are focused on maximizing supply chain efficiency to sustain profitability and viability. Maintaining governance as standard as possible is necessary to avoid confusion. A common standardization in the logistics and supply chain system would make it easy and convenient for every service provider to offer a majority of solutions in one package.

OPPORTUNITIES: Emergence of various technologies such as 5G, Artificial Intelligence, Machine learning and integrated logistics

To improve the overall transportation businesses/logistics Industry, AI is actively contributing to improving safety environments for drivers and optimization of vehicle maintenance and performance. Furthermore, AI is putting in more effort and is actively involved in developing self-driving or driverless cars. AI also helps to advance other kinds of technologies in the logistics supply chain, like robotics. Around 60-65% of industry leaders believe that logistics, transportation, and supply chain will require profound transformation. This is because an AI-enabled supply chain helps to reduce operational costs significantly. AI-enabled supply chain management can help to reduce logistics costs by 15%, inventory levels by 35%, and service levels by 65%. According to various sources, 35-40% of large, mid-, and smaller organizations have successfully adopted AI capabilities for their logistics, increasing operational effectiveness and revenue. Thus, continuous developments of advanced computing technologies and integration in the supply chain are expected to drive the logistics market.

CHALLENGES: Higher upfront cost for technology adoption and regulatory checks

The varied regulatory norms accompanied by higher service delivery standards are one of the major challenges in the logistics industry. Also, the digitalization of logistics operations requires high capital investments, including installing automation equipment, software, and solutions, which incur high expenses. The initial upfront investments for newer technologies like drone delivery or establishing an integrated logistic model is one of the major challenges in the growth of the global logistic market.

Key Takeaways:

Key Market Players

The global logistics market is dominated by major players such as C.H. Robinson Worldwide Inc. (US), IJ.B. Hunt Transport Services (US), Ceva Holdings LLC (France), FedEx Corp (US), Expeditors International of Washington Inc. (US), XPO Logistics Inc. (US), United Parcel Service, Inc. (US), Deutsche Post (Germany), DHL Group (Germany), Americold Logistics (US), Kenco Group, LLC (US), and DSV Air & Sea Inc (UAE). These companies have strong distribution networks at a global level and offer an extensive product range. These companies adopt strategies such as new product developments, collaborations, and contracts & agreements to sustain their market position.

Recent Developments

• In October 2022, DHL compiled a list of 40 trends that will influence the direction of businesses, societies, and technologies in the global logistics community over the next decade. Decarbonization, robots, big data, supply chain diversification, and alternative energy solutions will most impact logistics transformation. Businesses are transforming logistics from a quiet, back-end operation to a strategic asset and value driver, according to DHL.
• In October 2022, DHL launched the GoGreen Plus service to help reduce CO2 emissions from road transportation. This is accomplished through carbon offsetting, which reduces carbon dioxide and other greenhouse gas emissions through investments in green transportation technologies and fuels. In contrast to offsetting, which aids in the compensation of carbon emissions through climate protection projects around the world, in setting focuses on decarbonizing road freight by investing in low- and zero-emission technologies and fuels such as electric vehicles, biogas (Bio-LNG or Bio-CNG), or hydrotreated vegetable oil (HVO).
• In August 2022, FedEx Corp., in collaboration with Ford Pro, announced that it will pilot ten Ford E-Transit vans across its FedEx SameDay City network as part of its goal to transition its entire pickup and delivery fleet to zero tailpipe emission vehicles by 2040, in line with FedEx's overall fleet electrification goal. FedEx SameDay City is the company's local shipping option, providing door-to-door delivery of time-critical parcels within hours with real-time notifications.
• In March 2022, FedEx Express, a subsidiary of FedEx Corp., collaborated with Elroy Air, a company based in the San Francisco Bay Area that is developing the world's first end-to-end autonomous vertical take-off and landing (VTOL) aerial cargo system. FedEx Express will develop plans to test Elroy Air's Chaparral autonomous air cargo system within the company's middle-mile logistics operations, moving shipments between sortation locations, in a first-of-its-kind agreement in the United States.
• In October 2019, Microsoft deployed blockchain, artificial intelligence, and the cloud for Maersk Line. The global logistics company will embrace IoT, developing a framework that will allow it to monitor every vessel in its fleet and the speed, course, and engine parameters. This system enables Maersk to optimize its routes across the 350 ports it serves in real-time.

Frequently Asked Questions (FAQ):