Home » 3PL/4PL, Breaking News » Contract logistics sustains strong market growth in 2018—Ti report

The global contract logistics market grew 4.9% in real terms in 2018, one of the fastest growth rates seen in recent years, new research from Transport Intelligence (Ti) reveals.

Ti’s latest market report, Global Contract Logistics 2019, paints a picture of a healthy market, with 2018’s expansion well above annual growth rates seen over much of the last decade, Ti said.

Andy Ralls, quantitative analyst at Ti, said, “The global market for contract logistics grew at a strong pace in 2018, down only slightly on what was an excellent year in 2017.”

Growth is expected to remain at such levels over the forecast horizon too, suggesting ongoing strength in core manufacturing and retail markets at a global level.

Ti forecasts a slight slowdown in 2019; looking ahead to 2023, the five-year compound annual growth (CAGR) rate forecast for the global contract logistics market suggests an expansion rate of 4.7%.

The latest round of contract logistics market sizing reveals a mixed picture in major economies, however. China’s contract logistics market shows remarkable vigor with a 2018 growth rate of more than double the global rate, powered by an expanding consumer market and the growth of advanced manufacturing fields such as robotics, IoT and 3D printing.

In the U.S., while the contract logistics market had positive growth, the rate of expansion was more modest and well below the global rate. The five-year CAGR to 2023 for the U.S. is muted at 2.0%.

“2018 was a strong year for contract logistics providers in many respects,” said Nick Bailey, Ti’s head of research. “While the fundamentals remain positive, players in the market need to take advantage and react to some significant changes in the market. Across key verticals like retail, pharmaceuticals, automotive and beyond, demands are changing and shippers are expecting higher levels of service, digital offers and greater end-to-end value. The pressure is on contract logistics providers to make sure their offer stays relevant.”

Moreover, increasing automation in the warehouse is seen to change the role of contract logistics providers, noted the report.

Meanwhile, DHL Supply Chain was well ahead of its nearest competitors XPO and Kuehne + Nagel as the largest contract logistics provider globally last year, with a 6.2% market share.

Said Ralls: “There are some stark contrasts between the significant bright spots in China, India and South East Asia, when compared with developed markets in Europe, but even these are showing a reasonable level of expansion. This means that 3PLs across the world have had significant opportunities to grow their businesses.”

Photo: Axisadman

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