Logistics Services Market Size, Share & Trends Analysis Report By Logistics Model (1 PL, 2 PL, 3 PL, 4 PL), By Deployment Model (Roadway, Airway, Waterway, Railway), By End-User Verticals (Industrial and Manufacturing, Retail, Healthcare, Oil and Gas, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2018-2026

Market Overview

The global logistics services market size was valued at USD 12.21 billion in 2023. It is estimated to reach USD 23.02 billion by 2032, growing at a CAGR of 7.3% during the forecast period (2024–2032). The escalating e-commerce industry and expansion of global trade are the main factors fueling the demand for logistics services. Logistics plays a vital role in both the e-commerce business and international trade. Moreover, there is a noticeable increase in the rate of smartphone use and internet penetration. The increasing prevalence of high-speed internet connection is fueling the rapid growth of e-commerce, hence driving market expansion.

Logistics services include organizing, arranging, and carrying out the movement of materials and products between various locations. The efficient and seamless flow of supplies and products throughout the supply chain depends on these services. Logistics services encompass transportation, warehousing, inventory management, packaging, distribution, customs clearance, and other associated operations. Logistics services can be categorized into two distinct types: third-party logistics (3PL) and fourth-party logistics (4PL). 3PL suppliers offer their clients a range of logistics services, whereas 4PL providers oversee their clients' complete supply chain, including the selection and coordination of 3PL providers.

Highlights

• 4PL dominates the logistics model segment
• Airways dominates the printing deployment model segment
• Healthcare dominates the end-user verticals segment
• North America is the highest shareholder in the global market

Market Dynamics

Market drivers

Increasing globalization and trade activities

Logistics services optimize the seamless and effective movement of goods and commodities across international borders, different areas, and even continents. They also enable the merging of markets and supply chains. The explosive growth of the worldwide economy and the augmentation of global trade have escalated the need for logistics services. The United Nations Conference on Trade and Development (UNCTAD) study indicates that global trade in goods retained its strength, while trade in services has returned to levels before the COVID-19 pandemic.

Moreover, the global trade volume surged to a record-breaking USD 28.5 trillion in 2021. This represents a 25% surge compared to the previous year, 2020, and a 13% surge compared to the year before 2019, before the impact of the COVID-19 pandemic. Although most global trade expansion occurred during the first six months of 2021, it persisted throughout the latter half of the year. Following a sluggish performance in the third quarter, trade expansion gained momentum in the fourth quarter, with the value of goods traded hitting a record-breaking USD 5.8 trillion, representing a surge of over USD 200 billion. The resurgence of global trade is anticipated to stimulate the demand for logistics services.

Rising e-commerce industry

The e-commerce sector has experienced significant expansion in recent years due to the rising prevalence of internet access, widespread adoption of smartphones, availability of digital payment methods, and evolving customer preferences. Statista informed that global retail e-commerce sales reached around 5.2 trillion U.S. dollars in 2021. The projected growth rate for this figure is 56 percent during the upcoming years, with an estimated value of about 8.1 trillion dollars by the year 2026.

Additionally, the e-commerce sector depends on logistics services to efficiently and conveniently deliver products to customers within the expected timeframe. The logistics services market offers a range of solutions, including express delivery, last-mile delivery, reverse logistics, and fulfillment services, to meet the diversified and ever-changing demands of the e-commerce industry. The logistics services market utilizes advanced technologies, including artificial intelligence, big data, cloud computing, and the Internet of Things, to improve the efficiency, visibility, and security of e-commerce logistics operations.

Market restraint

High operational costs and regulatory challenges

The logistics services market encounters various obstacles that impede its potential for expansion. A significant obstacle lies in the high operational expenses of logistics services, encompassing fuel, staff, maintenance, infrastructure, and technology. The logistics services industry must adhere to many rules and standards set forth by governments and bodies, including environmental, safety, security, and customs.

Furthermore, the laws and regulations about logistics service providers differ throughout countries and regions and are subject to regular changes, posing challenges for adaptation and compliance. The logistics services market is susceptible to interruptions and uncertainties from various sources, including natural catastrophes, pandemics, political instability, trade wars, and cyberattacks. These events have the potential to hinder the seamless functioning of logistical operations.

Market opportunities

Development of novel technologies such as ai, iot, and blockchain in logistics 

Emerging technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and Blockchain are increasingly adopted in various sectors. End-users have utilized these technologies for many applications. IoT facilitates the increasing interconnections between goods, packaging, transportation hubs, and vehicles in the logistics department. The implementation of this technology has led to the generation of additional data, which aids in the remote management of assets, prediction of risks, ensuring proper handling of cargo, and forecasting traffic congestion.

Moreover, AI is employed for supply chain predictive analytics and demand forecasting of products to enhance the efficiency of their warehouse utilization. Conversely, blockchain technology assists logistics companies in diminishing bureaucratic procedures, automating the complete purchase process, and eliminating human fallibility. The development and integration of these technologies into logistics services are expected to give industry operators a competitive edge. Consequently, this is expected to generate opportunities for market expansion over the forecast period.

Regional Analysis

Based on region, the global market is bifurcated into north america, europe, asia-pacific, latin america, and the middle east and africa.

North America's logistics services industry share is expected to expand substantially during the forecast period. The North American market had most of the market share, primarily due to its highly advanced and stable logistics industry. This region has a significant presence of prominent logistics service providers, including FedEx, UPS, and C.H. Robinson. The region also gains advantages from the substantial level of trade and economic integration among the nations, particularly the United States, Canada, and Mexico, facilitated by the United States-Mexico-Canada Agreement (USMCA). Moreover, the region is projected to experience substantial growth at a CAGR during the forecast period because the logistics sector has adopted more and more cutting-edge technologies, such as big data, artificial intelligence, cloud computing, and the Internet of Things.

Furthermore, the rising demand for e-commerce and omnichannel retailing and the growing recognition and implementation of environmentally friendly and sustainable logistics practices are contributing factors. As per Statista, the E-commerce market in the United States is projected to experience a steady growth in revenue from 2024 to 2028, with a total gain of 462.7 billion U.S. dollars or 43.58 percent. Following ten straight years of growth, the indicator is projected to reach 1.5 trillion U.S. dollars, marking a new record in 2028. Moreover, several emerging businesses are solidifying their presence in the regional market. For instance, in January 2024, Cainiao, Alibaba's logistics subsidiary, announced the introduction of a "consolidated shipping" service in the United States, enhancing its range of international logistics solutions. The cross-border service consolidates many shopping orders from different Chinese e-commerce platforms. It transports goods to customers in the United States using air and sea routes, resulting in delivery periods as short as five days. Therefore, the reasons mentioned above are expected to boost the market growth.

The logistics services market in the Asia-Pacific region is characterized by its dynamic nature and rapid growth. Prominent logistics service providers like Nippon Express, DSV, and Geodis dominate it. The region boasts a rapidly evolving and increasing transportation and logistics infrastructure, encompassing large road, rail, air, and water networks. In addition, numerous diverse end-user industries are venturing into the logistics service sector. In August 2023, Radiant, a prominent cash management services company, entered the lucrative logistical services sector to transport diamonds, bullion, and jewelry. The newly established division has been created to transport precious jewelry from production centers to retail jewelry stores throughout India. It aims to generate around Rs 300 crore revenue within the next four years.

Furthermore, there has been an increase in partnerships and collaboration among market participants, government entities, non-governmental organizations, and other stakeholders. For instance, in November 2023, Ola Cabs extended its cooperation with the Open Network for Digital Commerce (ONDC) to offer last-mile small-box logistics services to both buyers and sellers. The objective is to commence the provision of services across the entire country of India by January at the earliest. Ola Cabs will collaborate with ONDC to employ its e-bike taxis for the final leg transportation of diverse goods, encompassing pharmaceuticals, apparel, and groceries. Therefore, these factors collectively enhance the expansion of the Asia-Pacific logistics services market.

Segmental Analysis

The global market is bifurcated into logistics models, deployment models, and end-user verticals. 

Based on logistics model, the global market is bifurcated into 1st party logistics (1 PL), 2nd party logistics (2 PL), 3rd party logistics (3 PL), and 4th party logistics (4 PL). 

The 4PL segment dominates the global market. 4th party logistics (4PL) is experiencing significant growth in the global logistics services market throughout the projected timeframe. The 4PL segment is projected to grow substantially due to the comprehensive supply chain management and integration services provided by 4PL providers. These services enable clients to enhance their supply chain performance and efficiency. 4PL providers oversee all aspects of supply chain operations, including storage, processing, procurement, distribution, and other related activities.

Moreover, companies often opt for this logistics service because of its advantages, including centralized assets and a single point of contact for the logistics network. It also requires less time and money for logistics operations and offers uniformity and consistency, which may be lacking in alternative logistics models. Many organizations have issues such as limited resources, globalization, and transparency. These challenges can be addressed by utilizing 4 PL services, which involve leveraging collaborative operating capabilities.

Based on the deployment model, the global market is bifurcated into railways, airways, roadways, and waterways. 

The airways segment is anticipated to be the largest contributor to the market share. The air transport segment is projected to experience substantial expansion due to its ability to provide the fastest and most dependable means of transportation for logistics services, particularly for high-value and time-sensitive products. No further infrastructure investment is necessary for the airways. Moreover, there has been a notable expansion in air cargo, particularly in emerging nations, in recent years. As per the Ministry of Civil Aviation, in 2019, international cargo accounted for 60% of the total air cargo tonnes handled in India, showing a growth rate of 15.6% compared to the growth rate in 2016. On the other side, domestic air cargo experienced an 8% growth. This is expected to stimulate the growth of the segment.

Based on end-user verticals, the global market is divided into industrial and manufacturing, retail, healthcare, oil and gas, and others. 

The healthcare segment owns the highest market share. The expansion of the global healthcare market and the trade of medical equipment and other related products are driving the global logistics market in the projected timeframe. According to a survey by GlobalData, the worldwide healthcare sector was valued at USD 166.22 billion in 2022 and is expected to increase at a CAGR of 10.77% to reach USD 277.21 billion by 2027. The increasing need for healthcare items, medical equipment, and related services in the rising healthcare industry drives the expansion of the logistics services market.

Recent Developments

• January 2024- CEVA Logistics, a subsidiary of the CMA CGM Group, entered into a new long-term contract to maintain its provision of comprehensive logistics services for Scuderia Ferrari's vehicles and equipment during Grand Prix events, as well as for GT races and Ferrari Challenge events. This extension signifies the deepening of the bond and reciprocal confidence between two prestigious businesses in the realm of motorsport and logistics.
• January 2024- Noatum, the key entity within AD Ports Group's logistics cluster, introduced Noatum Logistics Middle East, its new brand that reinforces its dedication to providing top-tier logistics services in the Middle East region.