Pune, India -- (SBWIRE) -- 03/07/2019 -- The Global Contract Logistics Market is estimated at US$ 203.9 Bn in 2017 and is expected to reach US$ 298.8 Bn by 2025. Geographically, Asia-Pacific currently dominates the market, however, the market is anticipated to be in favor of the Middle East & Africa, which is projected to witness remarkable growth rate owing to the increase in demand for service integration, data management, and inclination of manufacturers towards more flexible solutions. Saudi Arabia's contract logistics market is expected to exhibit immense growth during the forecast period.

The international trade scenario has witnessed a drastic change in recent years. Commonly, logistics refers to the moving of goods from one place to another. However, presently, the market demands wide-ranging services and precise logistics practices thus, making contract logistics an ideal solution for businesses wanting to monitor as well as manage their operations. Contract logistics market is gaining immense popularity worldwide and is considered as an optimum solution by companies to manage the increasing cross-border flow of goods while expanding the logistic process concept.

In the Middle East region, Saudi Arabia is experiencing high growth in its contract logistics marketplace. In 2016, Saudi Arabia's government had launched 'Vision 2030, which is focused on transforming Saudi Arabia into a go-to logistics hub for the region. This would enable the country to efficiently link trade across three continents, i.e. Europe, Asia, and Africa. Also, as a part of this vision, the government reformed certain structures and regulations thus, paving the way toward market liberalization as well as private-sector participation. Additionally, public-private partnerships are facilitating investments in the infrastructure and bringing in competences from the major logistics markets. It is anticipated that by 2030 the country will be among the leading logistics hubs in the region.

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The global contract logistics market has been segmented on the basis of type, services, and end user. On the basis of type, the contract logistics market is categorized into insourcing and outsourcing. Amongst them, insourcing is the dominant segment as many of the companies are shifting their insourcing the logistics services. On the basis of service, the market is classified into transportation, warehousing, packaging processes and solutions, distribution, production logistics, aftermarket logistics, and others. Transportation is the leading segment which is expected to grow at a CAGR of 5.3% during the forecast period. On the basis of the end user, the market is segmented into aerospace, automotive, consumer, high-tech, industrial, pharma & healthcare, retail, and others. Amongst them, a retail segment dominated the market in 2017 with the market share of 26.8%, and it is expected to maintain its lead during the forecast period.

The country's dedication to develop itself as a leading logistics hub is based on its economic weight as well as privileged geographic location. Saudi Arabia is the largest economy in the Levant, the Arabian Peninsula, and the Iraq region, which accounts for nearly 38% of GDP and 21% of the population. Furthermore, its central location is excellent for distribution to the Levant, Arabian Peninsula, and East Africa. Also, the country is located on the Asia-to-Europe trade route, through which 12% of container trade moves annually.

Owing to the significant investments in the logistics sector of the country, the contract logistics market is anticipated to flourish in Saudi Arabia. Recently, Al-Futtaim Logistics expanded its warehouse facility in Riyadh, Saudi Arabia. Need for an efficient supply chain system for the manufacturing sector is driving the contract logistics market.

The overall contract logistics market is fragmented with the presence of several large, medium, and small scale companies. Major players having significant market share are Deutsche Post AG, XPO Logistics Inc., Kuehne + Nagel International AG, CEVA Logistics AG, DB Schenker, Hitachi Transport System Ltd, Geodis, Neovia Logistics Services, UPS Supply Chain Solutions, and Ryder System.

The 21st century is characterized by cut-throat competition in all the industry sectors. The manufacturers of various products face stiff competition with their competitors on account of costs, quality, service, and time-to-market. Also, manufacturers have faced monumental challenges concerning maintaining a perfect balance between the demand and supply of the product in the diverse geographies. Manufacturing industries thus tend to focus more towards their core competencies of manufacturing and outsource the rest to other stakeholders in the value chain. The need for an efficient supply chain system for the manufacturing sector seemed to be imminent as contract logistics players focus on several aspects of supply chain management and provide advanced and assured management of goods from the production line until the consumer and reverse, the role of contract logistics becomes much more critical.

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The services offered by logistics firms add substantial value to the manufacturing companies. These firms help different companies to reduce weak points that outcomes in loss of revenue or profits and further help to assure maximal profitability. Contract logistic companies specialize in several logistics operations which offer network analysis, mode network optimization, warehousing, management of vendor compliance, and other logistics operations. In contrast with this, it is challenging for the core companies to gain such logistic expertise such as inventory management & storage, contract packaging, assembly needs, or shipping, etc. in every business division. Thus, choosing a contract logistics firm, the company is opting for experts in logistics. This enables the company to devote their time and resources on areas of core competency & actual business instead of using it on managing logistic operations. Along with this, the company doesn't need to spend on building their warehouse facility, to hire additional labor, and installing several new technologies by opting for contract logistics which reduces the company's cost significantly.

The market for contract logistics is highly fragmented and is anticipated to become even more concentrated over time. This will result in the expansion of logistics services to more geographical locations. Currently, more than one-third of the market share is captured by Asia Pacific region owing to the presence of a strong manufacturing base as well as flourishing e-commerce industry. China is leading the contract logistics market in the Asia Pacific; however, emerging economies such as Malaysia, Vietnam, South Korea, and Indonesia are witnessing remarkable growth in their logistics sector.

Logistic industry can be considered as the wheel of globalization and competitive product availability for the increase in the number of global consumers. Asia-Pacific is the fastest emerging region owing to the economic development and dynamic business environment. Currently, Asia-Pacific is leading the global contract logistics market overtaking Europe. The growth in this region is attributed to the rising retail enactment, strong economic growth, and increase in disposable income. Moreover, the increase in urbanization and growth in middle-class population have supported the domestic consumption of fast-moving consumer goods, household items, and luxury items. As a result, an increase in retail sales in Asia-Pacific is augmenting the growth of contract logistics market in the region. Rapid growth in the e-commerce sector and rise in foreign direct investment is also attracting numerous non-asset entrants and existing players in this region and further drive the contract logistics market.

Swift growth of manufacturing industry and their focus laid on core competencies, burgeoning needs for achieving cost efficiency, task optimizations & technological integrations pertaining to supply chain activities, and benefits in managing seasonal variations of products are projected to drive the market for contract logistics market during the forecast period. However, regional diversities and the complex nature of the supply chain may negatively impact the market for contract logistics in the near future. Moreover, the factor such as the unprecedented growth rate of the e-commerce sector and enhanced focus on risk management in the supply chains and increasing collaborations are projected to generate remarkable growth opportunity for the industry players. These factors drive the demands for efficient service and further fuel growth of contract logistics market.

The overall contract logistics market size has been derived using both primary and secondary source. The research process begins with exhaustive secondary research using internal and external sources to obtain qualitative and quantitative information related to the Contract logistics market. It also provides the overview and forecast for the global contract logistics market based on all the segmentation provided with respect to five major reasons such as North America, Europe, Asia-Pacific, the Middle East and Africa, and South America. Also, primary interviews were conducted with industry participants and commentators in order to validate data and analysis. The participants who typically take part in such a process include industry expert such as VPs, business development managers, market intelligence managers, and national sales managers, and external consultants such as valuation experts, research analysts, and key opinion leaders specializing in the contract logistics industry.

Asia Pacific region accounted for the maximum market share in 2017, approximately more than one-third of the total market share is captured by Asian countries. The high growth of contract logistics is majorly attributed to the presence of large numbers of e-commerce providers and retailers. Europe is the second dominating market in the contract logistics market, owing to the presence of robust automotive industry and single market strategy followed by North America. Factors including continual economic development, growing urbanization, and growth in the middle-class population have supported the growth in domestic consumption of fast-moving consumer goods for everyday consumption, personal automobiles, household items, and luxury items. This, in turn, increases the retail sales and makes Asia-Pacific the leading market for the logistics service consumer. Also, APAC e-commerce sector is rising significantly pertaining to a constant increase in population and increasing penetration of the internet.

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