The global freight & logistics market is forecast to grow to $18.69 billion by 2026 at a compound annual growth rate (CAGR) of 4.4%. When looking solely at logistics, the global logistics market is expected to reach $6.55 trillion by 2027, growing at a CAGR of 4.7% between 2022 and 2027.
The freight & logistics market includes the sale of services by companies that transport goods and commodities via rail, air, roads, and water, using large vessels in the process of planning and executing the efficient transportation and storage of goods from point A to point B with the goal of meeting consumer needs in a timely and cost-effective manner. It includes warehousing, management, transportation, delivery, consultation, packaging, and legal services. It is most commonly employed in sectors such as manufacturing & automotive, oil & gas, mining, agriculture, fishing, forestry, construction, distributive trade, and other end users. The most common types of logistics models are first-party logistics (1PL), second-party logistics (2PL), and third-party logistics (3PL).
Logistics has become an integral and growing part of the global economy as its worldwide applications enable businesses to mark their presence in the global market. The sector makes it possible for companies to store and transport resources such as equipment, inventory, food, and materials to the desired destination. It helps organizations create added value, save money, deliver a better customer experience, and improve brand standards. Currently, many companies around the world are looking for strategic logistics management to lower their transport expenses.
The manufacturing sector leads the global market share, as logistics help to improve efficiencies and production rates, cut costs, and boost customer satisfaction.
The Asia-Pacific region is the largest in the freight & logistics market, with North America looking to be the fastest-growing region between now and 2027.
The global logistics market is largely impacted by supply-side and demand-side trends. One of the major drivers of demand in the market is the rapid proliferation of trade agreements among various nations. Also, initiatives to increase global trade activities have expanded the demand for logistics to keep up with the needs of importers and exporters.
The logistics sector has also benefited from recent technological advancements, globalization, integration, new legislation, and alliances. Technological advancements include automated material handling equipment, biometrics, robotics, and GPS. They enable businesses to work more efficiently, driving the growth of the market worldwide. The continuing surge in e-commerce and online shopping is also supporting the market's growth. The pharmaceutical and food & beverage industries are also driving the market as they experience continued growth.
There are several factors driving the logistics market on a global scale. One of the most significant factors is the popularity of e-commerce, which continues to grow as the availability of high-speed network connectivity grows. More and more consumers just want to shop online, and more home delivery options are becoming available every day. This increases the demand for efficient logistics services.
Companies are now offering logistics monitoring systems integrated with advanced techs, such as blockchain, augmented reality, artificial intelligence, and the Internet of things. These systems enable them to monitor real-time information and offer predictive alerts for warehouse management, transportation, and delivery. For example, by using artificial intelligence, shipped goods can be tracked to their exact location, a technology that helps to reduce transit time by nearly 50% compared to the traditional trucking industry. Also, cargo-monitoring technologies now include GPS trackers, RFID sensors, and Bluetooth technologies. Such tracking technologies allow the owners and receivers of products to track their packages in real-time using smartphone apps. These advancements, along with the development of self-service kiosks at warehouses to reduce manual paperwork and promote electronic data interchange technology, will continue to shape the market in the future.
Another trend for the market is that manufacturers are focusing on adopting green logistic solutions and ESG policies to reduce environmental impacts and improve their "green" reputations.
Additionally, strained global supply chains due to the COVID-19 pandemic are leading to transitions from "just in time" to "just in case" supply chains.
Logistics operations are also benefiting from the rise of "last mile" gig economy delivery. When a product leaves a warehouse, it is loaded onto whatever series of transportation vehicles are needed and delivered to a customer's door. The "last mile" delivery is the final step of the process. Last-mile delivery is the most expensive and time-consuming part of the whole shipping process. This is because the final leg of delivery usually involves multiple stops and low drop sizes, a problem that is further exacerbated in rural areas where homes are farther apart and equally problematic in crowded cities where traffic slows the process. Last-mile delivery costs comprise 53% of the total cost of shipping. So, as the gig economy grows, retailers and logistics partners are using crowdsourcing technologies to connect directly with local, non-professional couriers who use their own transportation to make deliveries. This allows companies to get their e-commerce orders to customers faster and with lower logistics costs. And, with all the technology and integration with automation across sectors, it will not be long before we start seeing more robots, drones, and self-driving vehicles making deliveries.
M&A activity in the industry increased significantly in 2021. Companies are investing heavily in supply chain technologies to improve technology and make better daily decisions. Deals were on the rise last year because of the growth in e-commerce and because logistics is the key differentiator for consumer experiences. This year and looking ahead to 2023, strategic investors will continue to engage in M&A deals as so many organizations are focused on strengthening supply chains after so many problems that were due to the pandemic. Financial investors are also putting money into the sector to pinpoint growth opportunities and maximize portfolio returns.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntI.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
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