The top four players in the global logistics market in 2015 collectively accounted for 14.7% of the overall revenue generation, indicating fragmented nature of this market. These four players are Deutsche Post DHL Group, UPS Inc., Ceva Logistics, and FedEx.
Transparency Market Research (TMR) observes that product development and innovation are the top priority for market leaders to expand shares in the market. For instance, in December 2015, FedEx Corp. introduced a technology that helps customers to find the rates for shipment and to locate the zone through zone locator. “Several players are also focusing towards opening new facilities to expand their business and strengthen local competitiveness,” says TMR’s lead analyst.
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2nd Party Logistics to Lead Revenue Generation through 2024
The global logistics market had a valuation of US$8,183.46 bn in 2015 and is poised to rise at a CAGR of 7.5% between 2016 and 2024, reaching US$15,522.02 bn by 2024. Based on model, the 2nd party logistics segment will continue to dominate until 2024, representing 33.6% of the overall market revenue. The 1st party logistics segment is anticipated to expand at a significant CAGR of 8.0% during the review period.
Geographically, Asia Pacific will continue to account for the lion’s share throughout the forecast period. The increasing trade activities between intra-Asian countries are translating into a greater uptake of logistics services. The region is estimated to command 48.1% of the overall market value by 2024, progressing at a CAGR of 7.9% during the same period.
Rapid Globalization Provides Boost to Uptake of Logistics Services
The booming E-commerce sector is providing a significant boost to the growth of the global logistics market. “Delivery time and after sales services play an important role in the internet retail market. Thus, an online retailer needs to have reliable logistics for creating and maintaining its patrons,” says a TMR analyst. Moreover, the advent of novel technologies such as global positioning system (GPS), warehouse management systems, and transportation management system (TMS) is working in favor of the market.
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Furthermore, globalization is playing a pivotal role in the growth of the market. Many multinational companies, operating on a large scale from manufacturing to goods distribution, are preferring to outsource their complete logistics activities or some activities to a third party logistics service provider. In addition, several international organizations are opening new distribution centers across different countries in the world, which is escalating the need of efficient logistics services.
Lack of Skilled Labor Takes its Toll on Market Growth
The dearth of skilled manpower is one of the primary factors keeping the global logistics market from realizing its utmost potential. The poor wage levels are compelling the industry to rely on the skills of older workers, which may lead to service quality degradation in the coming years. Additionally, the lack of infrastructure and low diversification are resulting in a major impediment to the growth of the market. Several countries, particularly developing ones, are facing a shortage of warehousing of products. However, emerging countries such as India, China, Brazil, and South Africa offer a massive scope of development, which makes them attractive markets for logistics.