Contract Logistics Market Size, Share & Industry Analysis, By Type (Insourcing and Outsourcing), By Service (Warehousing, Transportation, Distribution, Aftermarket, and Others), By End Use (Automotive, Aerospace & Defense, High-tech, Healthcare, E-Commerce, Industrial, Retail, and Others), and Regional Forecast, 2024-2032

The global contract logistics market size was valued at USD 426.00 billion in 2023 and is projected to be worth USD 454.74 billion in 2024 and reach USD 805.40 billion by 2032, exhibiting a CAGR of 7.41% during the forecast period. Asia Pacific dominated the contract logistics market with a market share of 33.15% in 2023. Moreover, the contract logistics packaging market in the U.S. is projected to grow significantly, reaching an estimated value of USD 121.15 billion by 2032, driven by the growth of the manufacturing sector coupled with the need for supply chains that are cost-effective and technologically integrated.

Contract logistics comprises the outsourcing of resource management tasks by one company to a third-party company. The companies providing such logistics services are specialized in designing facilities, warehousing, planning & creating supply chains, transporting & distributing products, managing inventory, processing orders & collecting payments, and handling aftermarket logistics. Major end-use industries' rising demand for warehousing and distribution services enhances the global market growth. Moreover, the upsurge in demand for outsourcing of logistics services by businesses boosts the market share.

The COVID-19 pandemic triggered a huge and unprecedented change in the logistics sector. The shutdown of businesses, disruptions in the supply chain, unavailability of labor and raw materials, and a halt in transportation activities majorly affected the contract logistics market. However, the market growth flourished with the growth in the e-commerce sector.

Contract Logistics Market Trends

Surging E-commerce Sector Emerges as a Key Market Trend

Contract logistics play a major role in the e-commerce sector. It helps in outsourcing several logistics functions to a particular service provider, further enabling companies to modernize their supply chain operations and focus on their core competencies. Partnering with the logistics provider on a contract basis helps e-commerce businesses optimize their supply chain activities and enhance overall efficiency. In addition, as these providers bring additional expertise, knowledge, tools, and resources to face logistics complexities, timely and smooth order fulfillment is achieved. The massively growing e-commerce sector worldwide and the surging demand for these services from the sector are collectively emerging as a key market trend. The efficient management of inventory, processing & fulfillment of orders, ease in the shipping process, and better management of aftermarket logistics boost the demand in the e-commerce sector, thus booming the growth of the market worldwide.

Contract Logistics Market Growth Factors

Rising Utilization of Artificial Intelligence in Contract Logistics Bolsters Market Growth

The logistics industry involves the whole process of supply chain management, such as procuring raw materials, storing, transporting & distributing them. However, the rising incorporation of Artificial Intelligence (AI) in the industry has reduced operational costs and majorly driven productivity & seamless operations. The rise in the utilization of AI by major manufacturers in the contract logistics sector is driving market growth. The changing consumer demands have also enhanced the digitization of processes, which in turn enables smooth logistic operations.

AI-driven supply chain management is also essential in filling gaps & expediting error-free supply chain management. AI capabilities have also enabled organizations and businesses to use real-time data in their forecasting efforts. The AI-powered demand forecasting methods have notably reduced the error rates as compared to traditional forecasting methods. The massive growth of the manufacturing sector coupled with the need for supply chains that are cost-effective & technologically integrated thus boosts the global contract logistics market growth.

Noteworthy Benefits Offered by the Contract Logistics Services Aids Market Growth

Contract logistics has become increasingly prevailing in various end-use industries as they recognize the benefits of leveraging the expertise & infrastructure of external logistics partners. The service is essential in the order fulfillment process, which comprises receiving customer orders to packaging & shipping. The significant infrastructure & expertise to handle order picking, labeling, packing, and preparing shipments for delivery benefits businesses worldwide, further driving the growth of the global market.

It also offers warehousing solutions close to consumer hubs that allow for faster delivery & reduced transit times. The healthcare sector has unique logistics needs, such as temperature-controlled storage, stringent compliance with guidelines, and timely delivery of critical supplies, owing to which it opts for these services. The major benefit of the service is resource savings, which, in turn, has generated huge demand from several end-use industries worldwide. Moreover, the expansion of the customer base, high production unit cost, upgradation of warehouse operations, and several potential benefits are encouraging the market growth.

RESTRAINING FACTORS

High Logistics Costs and Lack of Total Control Hinders Market Growth

The solution offers cost-efficiency, reliability, and several other significant benefits. However, there are some factors, such as higher logistics costs and poor logistics infrastructure, which are analyzed to hamper market growth. The service also requires higher initial costs to manage all the tasks from warehousing to shipping and aftermarket logistics. The higher upfront costs thus impede market growth. Managing logistical databases is also problematic due to the rising misconceptions leading to inaccurate analyses of facts and data. In addition, contract warehousing does not allow manufacturers to have total control over the facility; thus, the lack of total control appears to be a potential drawback of the service.

Contract Logistics Market Segmentation Analysis

By Type Analysis

Significant Benefits of Outsourcing Logistics Drives the Segmental Growth

Based on type, the market is segmented into insourcing and outsourcing. Outsourcing is the dominating segment and holds the largest contract logistics market share. The outsourcing of logistics benefits organizations from avoiding any hefty capital expenditures. It also offers potential benefits to the businesses, such as lower operating costs and higher productivity. Moreover, businesses can increase their supply chain management as they have access to additional tools and knowledge. In addition, updating systems with new functionalities and features sustains additional costs for businesses. Such significant benefits of outsourcing logistics contribute to segmental growth.

Insourcing is the second-dominating type segment as it provides several benefits, such as enhanced control and flexibility, decreased costs, and improved quality as the tasks are performed in-house.

By Service Analysis

Increasing Demand for Contract Warehousing Among Several Industries Boosts the Segment’s Growth

Based on service, the market is segmented into warehousing, transportation, distribution, aftermarket, and others. The warehousing is the dominating service segment and is an essential service as it involves storing and managing goods. Contract logistics providers offer services catering to the needs of businesses, such as storage space, efficient inventory handling, and security. Moreover, the providers leverage advanced warehouse management systems & optimize space utilization, ensure smooth operations, and track inventory movements. The rising demand for warehousing from the majority of end-use industries due to these potential benefits drives the segment’s growth.

Distribution is the second-dominating service segment. The logistics service on a contract basis is effective for every industry as it lowers transportation costs, increases efficiency, and improves customer service.

By End Use Analysis

Value-added Services Offered by Solution Providers to Foster the Automotive Segment Growth

Based on end use, the market is segmented into automotive, aerospace & defense, high-tech, healthcare, e-commerce, industrial, retail, and others. Automotive is the dominant end-use segment and is estimated to witness massive growth over the forecast period. The automotive industry comprises complex logistics operations, such as focused handling of automotive parts, on-time delivery, and global distribution. The logistic service on a contract basis is essential for this industry as the providers hold the expertise, infrastructure, and global networks to support automotive suppliers and manufacturers. The solution providers also offer value-added services such as sequencing, line feeding to support production lines, kitting, and optimizing supply chain efficiency. The globally expanding sector majorly demands such logistic services, thus fostering the segment’s growth.

Retail is the second-leading end use segment and has highly benefited from the logistic service as it offers fast and accurate order fulfillment, proficient inventory management, and dependable transportation solutions.

REGIONAL INSIGHTS

The market is analyzed across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

Asia Pacific is the dominating region of the global market driven by the rising demand for fast and accurate same-day deliveries and the growth of the e-commerce sector in the region. The presence of small and medium-sized firms that transport the region’s major electronic goods from China, Korea, & Japan to Germany or the U.K. also contributes to regional growth.

Europe is the second-dominating region, and is analyzed to experience rapid market growth. The region’s well established healthcare and retail industries drive the demand for contract logistics services such as safe distribution and transportation, thus enhancing the region’s growth.

North America is the third-leading region in the market. The well-developed economy, coupled with the developed e-commerce sector, boosts the demand for effective and dependable contract transportation services, especially for same-day and next-day deliveries. In addition, the rising demand for contract warehousing from the automotive sector propels regional growth.

Latin America is analyzed to witness steady growth in the upcoming years. The increased demand for contract warehousing and distribution services by the retail and manufacturing sector for effective resource management and mile deliveries drives regional growth.

The Middle East & Africa is slated to experience moderate growth in the forthcoming years. Various countries in the region provide the lowest setup and operating costs for a logistics business, which further encourages the businesses to invest, impelling the market growth in the region.

List of Key Companies in Contract Logistics Market

Key Market Participants to Witness Significant Growth Opportunities with New Product Launches

The global market is highly fragmented and competitive with few significant players dominating the market by offering innovative packaging solutions. These players constantly focus on expanding their customer base across regions by innovating their existing product range. Major players in the industry include Nefab Group, DHL Supply Chain, GXO Logistics, Inc., Kuehne + Nagel, LOGISTEED Group, CEVA, and others. Numerous other companies operating in the market are focused on market scenarios and delivering advanced packaging solutions.

LIST OF KEY COMPANIES PROFILED:

• Nefab Group (Sweden)


• DHL Supply Chain (Germany)


• GXO Logistics, Inc. (U.S.)


• Kuehne + Nagel (Switzerland)


• LOGISTEED Group (Japan)


• CEVA (France)


• Geodis (France)


• Ryder (U.S.)


• UPS Supply Chain Solutions (U.S.)


• DB Schenker Logistics (U.S.)


• Nippon Express (Japan)


• Broekman Logistics (Netherlands)


• I.D. Logistics (France)


• I.Q. Packaging & Logistics Inc. (Philippines)


• GAC (UAE)

KEY INDUSTRY DEVELOPMENTS:

• February 2024 – Bolloré Solutions Logistique, a Bolloré Logistics’ contract logistics subsidiary, announced the acquisition of STEF Logistique Santé (SLS). The acquisition majorly aims to develop its contract logistics business and strengthen its expertise in the pharmaceutical sector.


• October 2023 – Ryder announced the acquisition of Impact Fulfillment Services to add contract packaging and manufacturing capabilities to its existing business. IFS focuses on contract packaging, warehousing, and contract manufacturing for some of the largest and best-known consumer brands in the U.S.


• March 2023 – Kuehne+Nagel Asia Pacific declared the launch of a new Transport Operation Centre in India as a part of its contract logistics service. The new center simplifies a complete view of the supply chain network of the company to boost efficiency, streamline operations, and eliminate costs through a tactical planning process.


• January 2023 – JAS declared the rebranding of Tigers and launched JAS Contract Logistics. The launch has allowed JAS to offer its customers a broader range of solutions to meet the customers’ supply chain and shipping needs.


• January 2022 – Röhlig Logistics, a German-based logistics provider, developed a joint venture in partnership with Penske Logistics to offer contract logistics services in the European region, beginning with the Netherlands and Germany. The venture also provides additional scale, service levels, and additional growth opportunities in Europe.

REPORT COVERAGE

The research report provides a detailed market analysis and focuses on aspects, such as key players, competitive landscape, product/service types, segments, and Porter’s five forces analysis. Besides this, it also offers insights into the market trends and highlights key industry developments. In addition to the abovementioned factors, the report encompasses several factors that have contributed to the market intelligence and growth in recent years.

REPORT SCOPE & SEGMENTATION