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Global contract logistics market to grow 7.1% on strong e-commerce after an 8.7% rise in 2021
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But the market is expected to slow to a CAGR of 4.9% in 2026, Transport Intelligence says in a report
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APAC will remain the largest global contract logistics market with an 8.5% rise this year
All regions should expect the global contract logistics market to continue growing for the remainder of 2022, with Asia Pacific still the largest market by region as people take to e-commerce for purchases amid COVID-19 restrictions, a new research report says.
The report, “Global Contract Logistics Market Size & Forecasting: 2021-2026” released on April 25 by Transport Intelligence, says the global contract logistics market surpassed its pre-pandemic market value in 2021, growing 8.7% to a market value of €238.007 billion (US$254.48 billion).
Ti’s latest market sizing data show global growth will 7.1% in 2022 to €254.85 billion for the full year. Regional growth will continue, too, with all regions surpassing pre-pandemic levels.
“After contracting by 3.3% in 2020, the global contract logistics market grew 8.7% year-on-year in 2021 to a value of €238.007 billion, surpassing its pre-pandemic market value,” Ti said. It attributed the rebound to an efficient vaccine rollout and fewer lockdowns in 2H 2021 that lifted GDP. The global market should log a CAGR of 4.9% to €302.255 billion in 2026, Ti said.
Ti said the e-commerce vertical was a big growth driver in 2021 and is arguably one of the fastest-growing segments for contract logistics providers, with the COVID-19 pandemic accelerating digital transformation and global internet penetration.
The report cited Statista’s estimate of retail e-commerce sales in 2021 reaching about €4.3 trillion globally with forecast 50% growth in the next four years to €6.5 trillion by 2025.
The pharmaceutical industry had seen continued growth driven by the global COVID-19 vaccine rollout in 2021. Grand View Research reported that the global pharmaceutical logistics market size was valued at US$78.5 billion in 2021 and should expand at a CAGR of 8.6% from 2022 to 2030 on increasing demand for over-the-counter medicines.
The automotive sector suffered throughout 2021, with low production growth mainly due to supply chain bottlenecks and semiconductor shortages that should continue into 2022.
Asia Pacific is the biggest contract logistics market worldwide. Ti said the APAC contract logistics market had a real growth rate of 10.0% y-o-y to €94.65 billion, recovering from a contraction. The 2022 market is valued at €102.68 billion, with growth of 8.5% y-o-y.
Despite the headwinds from new pandemic peaks, the region should be the fastest-growing in the world led by China and India. Especially in China, production disruptions in the pharma and electronic industries were minimized after the first COVID-19 wave was brought under control.
High-tech exporters are expected to seize on external demand and favorable financial conditions and push growth forward amid high demand for electrical and electronic goods. Ti said the market will be worth €135.327 billion in 2026, with a 2021-26 CAGR of 7.4%, the only major contract logistics market to outperform the global forecast.
Europe is the second-biggest contract logistics market. According to Ti, in 2021, the European contract logistics market grew 7.3% y-o-y in real terms to €72.08 billion, recovering from a 5.0% contraction in 2020.
Contract logistics market growth was aided by factors including manufacturing averaging a yearly growth of 10.1% on the gradual reopening of facilities related to the ability of businesses to adapt to the new normal. Retail spending also increased 6.1% in the region.
European contract logistics market is forecast to slow down slightly, but still grow 6.2% to €76.56 billion in 2022. Growth is expected to slow down as the base effect wanes, and the market is forecast to grow at a 2021-2026 CAGR of 2.8% to €82.74 billion.
The electronics sector is likely to take the largest hit in the future as raw materials from Russia and Ukraine could become increasingly scarce or expensive because of the conflict.
Ti said the North American 2021 contract logistics markets grew 8.1% y-o-y to a total market value of €57.53 billion. The US was the biggest market worldwide in 2021 and will still be in 2022. In 2021, recovery rode on strong fiscal and monetary support to small businesses and stimulus checks for households.
Mexico saw double-digit real growth in its contract logistics market, the fastest in the region with the biggest growth in manufacturing. GDP growth was also the fastest at 6.1% in 2021. Ti said the North American market will be worth €66.267 billion, with a 2021-26 CAGR of 2.9%.
