Bath, UK: The contract logistics market grew at its slowest pace since 2014 (other than the Covid contraction in 2020), due to the global economic slowdown and subsequent softening economic activity, according to TI’s latest Global Contract Logistics Report.
The report cites lack of warehouse space as one of the constraining factors for logistics providers. Nia Hudson, research analysts, TI, said: “2022 has brought an increasingly challenging operating environment for contract logistics providers, characterised by high inflation and weak demand. Contract logistics companies have largely mitigated inflationary issues at the top line by largely passing increasing costs on to customers. However, from a demand perspective, the market does not seem to have fared as well following the markets post-pandemic bounce back in 2021. Ti’s real terms growth forecast, which shows underlying market growth and changes to market performance, illustrates this well.”
The report examines core trends influencing the contract logistics market, such as M&A, robotics and automation in the warehouse, warehousing availability and costs, and some of the key challenges effecting the contract logistics market.
Report highlights:
- Europe and the US contract logistics markets are not performing as well as Asia Pacific markets
Total contract logistics market grew by 2.9% in real terms in 2022 - The MENA region exhibited the strongest growth in 2022, driven by strong GDP, post-pandemic measures and benefits and financial incentives
- The market is expected to grow at a slightly quicker pace in 2023, driven predominantly by the Asia Pacific region
- M&A deals have been particularly prevalent the past several years, however acquisitions seem to have slowed somewhat into 2023.
90% of 3PL respondents in Ti’s State of the Logistics Market 2023 Survey stated that they were currently experiencing increased pressure on margins, driven predominantly by increased costs. Online retailers are expected to continue their outsourcing habits over the next five years, indicating the fundamental change that the market has been undergoing for some time.
