The market for contract logistics in North America is anticipated to grow at a CAGR of approx 1. 23% during the forecast period (2020-2025). The slowdown in international trade, restriction due to the COVID-19 pandemic, and drop in the output of industries like manufacturing and automotive have led to the sharp decline in the contract logistics market in North America.
New York, Sept. 08, 2020 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "NORTH AMERICA CONTRACT LOGISTICS MARKET - GROWTH, TRENDS, AND FORECASTS (2020 - 2025)" - https://www.reportlinker.com/p05962031/?utm_source=GNW
Many business organizations prefer not to allocate in-house human resources and divisions to warehousing and transportation. As a result warehousing services are outsourced to logistics players.
There is a sharp rise in recent years in warehouse leasing from logistics players across the region. The increasing service levels, such as e-commerce and same-day delivery, are influencing retailers to further outsource their services.
As the United States reopened after a strict shutdown due to the COVID-19 pandemic, the logistics industry s showing signs of recovery, according to the June 2020 Logistics Manager’s Index Report. The logistics industry is continuing to recover from April’s all-time low overall score of 51.3, following May’s reading of 54.5, with an overall LMI score of 61.7, the highest reading since February 2019.
In relation to the cross-border movement of people and cargo vehicles between Mexico and the United States, it can be mentioned that the border between Mexico and the United States is one of the busiest in the world. Cargo trucks represent 7.9% of the total number of motorized vehicles that cross the northern border, with a monthly figure that fluctuates around 550,000 units, where almost 72% travel loaded and the remaining 28% circulate empty.
DHL, Ryder, and XPO are the some of the major contract logistics players in the North American market.
Key Market Trends
E-Commerce growth in the region is a major driver for the growth of contract logistics market
Among the three countries in the region, e-commerce market in Canada is the fastest growing market while the US market is the largest market growing steadily. The e-commerce user penetration is relatively low in Mexico and the Mexican e-commerce market is expected to witness healthy growth rate through the forecast period.
The majority of e-commerce companies award contracts to logistics service providers to provide warehousing and distribution service. The high velocity e-commerce business models necessitates the companies to have technological solutions that increase the speed of the fulfillment processes.
With the emergence of e-commerce, start-ups related to on-demand and cloud based warehousing are gaining popularity. These companies offer flexibility to the companies in terms of using the warehousing space according to the seasonal demand instead of long-term contracts for a fixed space. Few examples of such companies include Stord, Flexe, Flowspace. These companies are also being awarded long-term projects by their customers and some companies also offer fulfillment services. This presents tough competition to the existing traditional contract logistics service providers.
The traditional commercial real estate companies are also investing in technology. For instance, ProLogis, the logistics real estate giant has its own venture fund designed to invest in contract logistics technologies and further.
Manufacturing & Automotive is expected to witness high growth during the forecast period
Manufacturing companies spend a great deal of time looking for ways to beat their competition in new and innovative ways, whether it is through new manufacturing processes, better products, or improved supply chain management.
Logistics for the manufacturing industry comes down to proper routing management. Logistics company assists with bills-of-lading and freight scheduling to reduce the costs of shipping products to the vendors. In addition to reduced shipping costs, by contracting services to a logistics partners, manufacturers eliminate payroll, benefit, and liability costs that are necessary with in-house staff.
The manufacturing industry is at continued risk for disruption amid ongoing volatility in costs and policy decisions and major impacts from the COVID-19 pandemic.
The current pandemic-related shortages have fuelled calls from political leaders of both parties for U.S. manufacturers to start producing critical supplies domestically, relying less on European and Asian countries.
Logistics companies play a predominant role in managing the North American automotive supply chain. Most of the vehicle production in Mexico depends on several key components such as engine, gearbox, etc, which are sourced from the United States.
The contract logistics market in North America is fragmented with large number of players operating in the market and providing services at various levels. DHL, XPO Logistics, UPS, FedEx, DB Schenker, Ryder Systems are some of the prominent players in the market. The companies are following the trends of consolidation and expansion to gain foothold in the market. For instance, In 2018, DB Schenker opened three new contract logistics facilities in US to accommodate both existing and new customers and moved one existing location to a much larger facility. The company expects to open another six or seven contract logistics facilities by 2020.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
Read the full report: https://www.reportlinker.com/p05962031/?utm_source=GNW
ReportLinker is an award-winning market research solution. Reportlinker finds and organizes the latest industry data so you get all the market research you need - instantly, in one place.
CONTACT: Clare: email@example.com US: (339)-368-6001 Intl: +1 339-368-6001