Photo by Jerome Monta on Unsplash

Interesting times lie ahead for global contract logistics, with a significant reshuffle on the horizon

According to estimates by analysts from Transport Intelligence, in 2023 the global contract logistics market is forecast to have experienced its weakest results in years. A rebound, expected this year, will be predominantly driven by Asian markets and effectively challenge the West in the years to come.

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The growth of the global contract logistics market in 2023 is anticipated to have been much slower than the previous year, marking the lowest annual expansion since 2016. The market value at the end of 2023 is projected to have reached €280.5 billion. The Asia-Pacific region holds the largest share, with an expected value of €111.7 billion, surpassing the European market (€80.7 billion) and the North American market (€70.9 billion).

During 2023, the Asia-Pacific market further widened the gap with its main rivals, growing at a rate of 6.1% year-on-year, while the European market contracted by 0.3%, and the North American market by 0.2%. This divergence may be attributed to the presence of China and Japan, as well as the economic slowdown affecting Europe and North America more severely than Asia.

The International Monetary Fund forecasts global GDP growth of 3%, with developed economies experiencing only 1.5% growth. Meanwhile, developing countries, primarily in Asia, are expected to have grown at a robust rate of 6.9%. Weak economic growth, high inflation, and low production and consumption levels, collectively impact the demand for logistics.

The picture in the US and Europe

In North America, the largest economy, the United States, is dragging down the region’s results, with a projected shrinkage of 0.7% in contract logistics for 2023. In contrast, the Canadian and Mexican markets are expected to have grown by 6.1% and 6.3%, respectively. The United States market, valued at €61.8 billion in 2022, is estimated to be worth €66.4 billion in 2023 when the 2023 figures are released.

In Europe, Germany dominates the contract logistics market, accounting for nearly 23% of the sector’s value on the continent. However, in 2023, the German market is expected to have shrunk by 1.3%, reflecting the economic slowdown more strongly felt in Germany than in other European countries. Notably, the German economy was forecasted to contract by 0.3% last year.

Among the largest European markets for contract logistics, only France is projected to have achieved year-on-year growth in 2023, albeit a modest 0.1%.

The year ahead

Looking ahead to this year, experts anticipate an improvement in the market situation, with global growth reaching 3.7% compared to 2023. The Asia-Pacific region is expected to lead this growth at a rate of 6.5%, while Europe and North America will also rebound, albeit at a slower pace.

European contract logistics is forecasted to increase by 1.4% year-on-year, while North American contract logistics is expected to grow by 1.9%. The United States market is projected to rebound by 1.8% as the pace of expansion in other North American countries slows down.

By the end of 2024, the Asia-Pacific market is expected to reach €118.9 billion, the North American market €72.2 billion, and the European market €81.8 billion. The largest logistics markets in Europe, including Germany, Great Britain, France, the Netherlands, and Italy, are forecast to return to the growth path with modest year-on-year increases.

In the medium term, the contract logistics market is anticipated to experience accelerated growth in the years 2022-2027, with an average annual rate of 3.8%, reaching a total value of €329.5 billion by the end of the period.

The last three years of the forecast period are expected to witness a more visible market expansion. The Asian region is projected to continue driving global market growth, with an average annual growth rate of 6.8% until 2027. The Chinese market, in particular, is expected to exhibit an impressive average annual growth rate of 8.7% until 2027.

Differing growth projections

This dynamic expansion positions China to become the largest global contract logistics market in 2027, with a forecasted value of €68 billion. In comparison, the currently leading American market is expected to be worth approximately €66.5 billion. Additionally, the Indian market is poised for dynamic growth, reaching €19.6 billion in 2027, surpassing Germany’s expected value for that year and approaching the third position globally, currently held by Japan.

The North American market is anticipated to grow at an average annual rate of 1.6% from 2022 to 2027. The United States, the primary player in this region, is expected to grow by approximately 1.5% during this period, indicating a challenge to maintain its position as the global leader.

In contrast, contract logistics on the European continent is projected to develop more slowly, with an average annual growth rate of 1.4% forecasted for the years 2022-2027.

Photo by Jerome Monta on Unsplash