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Global logistics market forecast to grow by a CAGR of 4.7% to 2024

Ti’s new Total Logistics 2021 report shows the global logistics industry was worth €5.275 trillion in 2020. Over the forecast period, recovery from the Covid-19 pandemic will be healthy at a 2020-2024 CAGR of 4.7% as forecast by Ti’s analysts. Growth in 2021 is expected to be particularly strong as most logistics markets recover from contractions in 2020.

• Ti estimates that the total global logistics market will bounce back from 2020 and grow by a CAGR of 4.7% from 2020 to 2024
• North America’s total logistics market is expected to grow by 2.8% through to 2024, a stark difference compared to Asia Pacific’s predicted growth of 6.5%.
• The outbreak of COVID-19 has had highly complex and nuanced effects on supply chains which would have been impossible to predict prior to the pandemic
• The majority of the logistics industry has been remarkably robust during the pandemic, some sectors however have had to overcome overwhelming challenges

The story of the global economy and logistics industry in 2021 and up to 2025 is expected to be one of recovery and rebuilding from the effects of the pandemic, for some segments of the logistics market prospects look very strong, while others have seen growth significantly suppressed.

One of the well-told stories of the pandemic is the boost it delivered to online retail. As many “non-essential” bricks-and-mortar stores were closed, consumers moved online to buy goods ranging from electronics and home office supplies to health and wellbeing equipment and more, creating a surge in demand for last mile delivery services. The result was a year of growing volumes for express providers, many of whom also saw higher revenue. DHL’s preliminary results for 2020 show Express segment revenue rose 12% in 2020 to €19,120m, while EBIT grow 35% to €2,750m. The Express segment growth is predominantly related to online retail and reflects a growing share of B2C deliveries in DHL’s premium TDI product. UPS, meanwhile, also saw a shift towards increased B2C volumes, which accounted for 61% of its US Domestic volumes in Q3 2020. While it will bring renewed challenges to express providers globally, the growth in e-commerce will power market expansion. Ti’s new forecast data shows both domestic and international express are expected to see continued growth over the four years to 2024, expanding at CAGRs of 7.9% and 6.8% respectively.

The Covid-19 pandemic has been similarly impactful in the forwarding market, although in very different ways. The reduction in both air and sea capacity early in 2020 significantly disrupted global supply chains. As demand from consumers and manufacturers returned more quickly than air and sea capacity though, rates shot up over the second half of the year. WorldACD data for November 2020 illuminates the situation of air freight perfectly – year-on-year, global volumes were down 12.6%, while rates were some 79% higher. The near-global suspension of passenger air travel early in the pandemic effectively removed belly freight capacity from the market, eliminating around half of all air freight capacity. In November 2020, IATA data shows available CTKs were still 21.3% below 2019 levels.

In sea freight, rate volatility has been no less extreme. Data from Freightos shows the cost of transporting at TEU from China to the US West Coast in the week of January 22nd, 2021 was $4,261, an increase of 103% compared to the $2,102 the same TEU cost to transport during the same week in 2020. While carrier capacity has returned to the market more steadily than in air, a shortage of container availability and port capacity is creating acute problems in supply chains that are likely to keep rates high through the first half of 2021 at least. Ti’s new market forecasts for air and sea freight put CAGR expansions at 5.4% and 5.0% between 2020 and 2024 respectively.

Ti’s 2021 Total Logistics market sizing data forecasts a similar rate of growth in the global contract logistics market, setting a 2020-2024 CAGR of 5.4%. The closure of manufacturing and production facilities, as well as retail deemed “non-essential”, had a massive impact on the contract logistics market in 2020 – Ti’s market sizing 2020 shows a decline of 4.1%. While certain market segments like grocery and CPG retail partially offset declines, the contract logistics market faces deep change in the year ahead. The growth of online retail is creating an existential dilemma for physical retail stores, while secular change is also driving a rethink of supply chains in other industries like automotive.

The global logistics industry is unlikely to see a year like 2020 again. The global Covid-19 pandemic caused massive disruption and accelerated change across the logistics market.
Source: Transport Intelligence (Ti)

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