Insight:
- Logistics and transportation are important industries in the global economy.
- There are many potentials to increase this market in the future.
The transportation and logistics industry has become the most important in recent years. The research by many Logistics & Supply Chain Management organizations and the Logistics Research Institute of America, the cost of logistics accounts for 10-13% of GDP in developed countries. From this data, transportation, and logistics play an important role in business operations.
What’s new in the global transportation and logistics market?
The global freight and logistics market is forecasted to reach $18.69 billion in 2026 and the CAGR is 4.4%. Focus on the logistics sector, this market is expected to reach $6.55 trillion in 2027 and the CAGR is 4.7% from 2022-2027.
The freight and logistics market includes selling services by businesses that transport products by rail, air, roads, and water. They also use large vessels in the planning and execution of efficient transportation and storage of products from point A to B to suit customer needs more in time and cost-effectively.
It also covers warehousing, management, shipping, delivery, consultation, packaging, and legal services. The clients of this particular service normally are the industrial companies of such a branch like automotive, oil and gas, mining, agriculture, fishing, forestry, construction, and retail, as well as those of other sectors. The most popular logistics models are 1PL (the first-party logistics), 2PL (the second-party logistics), and 3PL (the third-party logistics).
Logistics become indispensable in the global economy because it helps businesses expand their market to other countries. This sector helps businesses store and transport resources such as equipment, inventory, food, and materials to the desired destination.
It helps companies to create added value, save money, increase customer experience, and improve brand standards. The Asia-Pacific region is the largest in the freight and logistics market, and North America is forecasted to grow fastest from now to 2027.
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The market trends
Many factors boost the increase of the logistics market. The most important factor is the popularity of e-commerce. Nowadays, more consumers use online shopping methods cause of their convenience. The increasing consumer demand for home delivery led to the growth of logistics services.
Nowadays, many companies offer logistics monitoring systems with advanced technology like blockchain, augmented reality, artificial intelligence, and the IoT. These technologies allow them to follow real-time information and provide predictive warehouse management, transportation, and delivery alerts.
For example, with modern technology the shipped products can be tracked to their exact location. Even some technology that helps the transit time is nearly 50% compared to the traditional shipping methods.
In the future, with the update of technologies, GPS trackers, RFID sensors, and Bluetooth become more popular. These allow owners and receivers of products to track their packages in real-time using smartphone apps.
Beyond that, self-service kiosks at warehouses help retailers reduce manual paperwork and promote electronic data interchange technology, which will shape the market in the future.
E-commerce significantly impacts the logistics industry, especially after the pandemic; online shopping become a customer behaviour. The global e-commerce sales are going to reach $6.3 trillion in 2024. This impressive increase leading the growth of the overall volume of shipments, pressuring logistics companies to deliver faster and more efficiently. E-commerce growth also presents challenges including managing returns of products, offering same-day delivery, and handling a more extensive variety of products.
Some transportation and logistics challenges
The global transportation and logistics industry faces many challenges in today’s dynamic environment. The biggest challenge is rising costs. Fluctuating fuel prices directly impact transportation costs, making it challenging to maintain profitability and offer competitive pricing. Labour costs and Infrastructure costs are also significant challenges in the logistics field.
Another obstacle is an unstable supply chain caused by different factors, such as those that arise from the geopolitical situation, which are natural and other objective ones. The logistics field is one where the rapid progress of technology causes the most difficulties. Companies need to spend more money on new technologies and other employee training.
Nevertheless, the overreliance on technology makes companies vulnerable to cyberattacks, thus the arrest of the operations and the exposure of secret data.
This sector is in the challenges of reducing carbon and compliance with regulations. The transportation sector significantly contributes to greenhouse gas emissions, and there is growing pressure to adopt more sustainable practices. Meeting increasingly stringent environmental regulations can be challenging and costly for logistics companies.
Consumer expectations are driving significant changes in logistics, with faster and more reliable delivery times becoming the norm. This puts pressure on companies to optimize their operations for speed and efficiency.
Furthermore, customers demand increased transparency, wanting real-time visibility into the status of their shipments, which necessitates sophisticated tracking and communication systems. Finally, meeting the diverse needs of individual customers requires flexible and adaptable logistics solutions that can provide personalized service.
Capacity constraints pose a significant challenge to the logistics industry, with port congestion due to increased global trade causing delays and driving up costs. Additionally, a shortage of qualified truck drivers limits transportation capacity and increases transportation expenses.
Furthermore, securing adequate and affordable warehouse space, especially in urban areas, presents a considerable hurdle for logistics companies.
These are just some challenges facing the global transportation and logistics industry. Companies must be adaptable, innovative, and customer-focused to succeed in this dynamic environment.
Conclusion
The global transportation and logistics sector continues to grow impressive. Logistics is a vital component of business operations, aiding in market expansion. The transportation and logistics sector has several challenges, including rising fuel and labor costs, supply chain disruptions, technological progress, and environmental sustainability. Companies must be adaptable, innovative, and centered on customer needs to thrive in this fast-paced environment. Follow our blog for more market information!
