US Contract Logistics Market Analysis - Size and Forecast 2024-2028

US Contract Logistics Market Size and Trends

The US contract logistics market size is forecast to increase by USD 8.5 billion at a CAGR of 5.7% between 2023 and 2028.  The market is experiencing significant growth due to several key drivers. One major factor is the increasing e-commerce market, which is leading to higher logistics demands and costs. Another trend is the emergence of value-added services, such as innovative packaging and kitting, which can help businesses differentiate themselves and reduce their own internal logistics costs. Additionally, economic diversification and industrialization are creating new opportunities for logistics providers in various industries. Digitization is also playing a crucial role in the market, with the implementation of advanced technologies like automation and robotics helping to streamline operations and improve efficiency. Foreign direct investments are also on the rise, bringing new capital and expertise to the market. However, the market also faces several challenges. These include the need for effective supply chain management and risk management in the face of increasing complexity and uncertainty. High logistics costs remain a significant concern, and insourcing is becoming a more common strategy for some companies looking to reduce their reliance on external logistics providers. In summary, the market is being driven by the growth of e-commerce, the emergence of value-added services, and the impact of digitization and industrialization. However, the market also faces challenges related to supply chain management, risk, and cost control. To remain competitive, logistics providers must stay abreast of these trends and find innovative solutions to meet the evolving needs of their clients.

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The market is witnessing significant growth due to the increasing demand for efficient and cost-effective supply chain solutions. This market caters to various industries, including the e-commerce sector and healthcare logistics, among others. Resource management is a crucial aspect of contract logistics, which involves outsourcing the management of resources, such as warehousing, transportation, and distribution, to third-party providers. This approach enables businesses to focus on their core competencies while reducing logistics costs and improving operational efficiency. Inventory management plays a vital role in contract logistics, ensuring that the right products are available at the right place and time. Artificial intelligence (AI) and big data analytics are transforming inventory management by providing real-time insights into inventory levels, demand patterns, and stock movements. The logistics sector in the US is grappling with high logistics costs, which can be addressed through the adoption of cost-efficient solutions such as route optimization, intelligent transportation, and cloud-integrated logistics. AI and digital payments are revolutionizing the logistics industry by enabling real-time tracking, automation, and seamless transactions. Urbanization is driving the demand for sustainable logistics solutions, as businesses seek to reduce their carbon footprint and comply with regulations. Contract logistics providers are responding to this trend by offering green logistics services, such as electric vehicle fleets and energy-efficient warehouses.

Market Segmentation

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.

• Type
  • Outsourcing
  • Insourcing
• End-USer
  • Retail
  • Pharmaceutical
  • Automotive
  • Others
• Geography
  • US

By Type Insights

The outsourcing segment is estimated to witness significant growth during the forecast period. In today's business landscape, outsourcing logistics functions to third-party providers (3PLs) has become a popular trend among companies looking to reduce high logistics costs and focus on their core competencies. Third-party logistics is a business model where companies outsource their distribution and logistics functions to specialized service providers, known as 3PLs.

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The outsourcing segment was the largest segment and was valued at USD 13.90 billion in 2018. These providers offer various services, including warehousing, transportation, freight forwarding, and value-added services (VAS). VAS include inventory management, cross-docking, kitting and assembling, door-to-door delivery, and innovative packaging solutions. 3PLs play a crucial role in supply chain management by providing operational and strategic value to shippers worldwide. With the increasing industrialization and economic diversification, there is a growing demand for efficient and effective logistics solutions. Hence, such factors are fuelling the growth of this segment during the forecast period.

Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

US Contract Logistics Market Driver

Growth in e-commerce market in US is notably driving market growth. The e-commerce sector's continuous growth in the US is driving the demand for contract logistics services. This trend is attributed to the increasing preference for online shopping and transactions.

Contract logistics providers respond to this shift by investing in technological developments, such as cloud-based logistics and automation, to enhance their service offerings. Moreover, the transportation industry faces challenges like a truck driver shortage and the need to reduce carbon footprint. Thus, such factors are driving the growth of the market during the forecast period.

US Contract Logistics Market Trends

Emergence of big data analytics is the key trend in the market. Contract logistics companies in the US are utilizing big data analytics to extract valuable insights from extensive data sets and secure a competitive edge in the industry. By implementing big data analytics solutions, businesses can derive insights to fuel strategic initiatives such as tailoring services, expediting market demands, and adopting a flexible business model.

However, the adoption of big data analytics in the US contract logistics sector is still in its infancy due to substantial IT disparities. In the logistics industry, big data analytics offers a significant competitive advantage in several areas: operational efficiency and effectiveness, enhanced customer experience, and the exploration of new business models. Thus, such trends will shape the growth of the market during the forecast period.

US Contract Logistics Market Challenge

Increased lead time and supply-demand imbalance is the major challenge that affects the growth of the market. The logistics industry has been significantly impacted by the global pandemic, leading to disruptions in supply chain operations and transportation resources. The imbalance between supply and demand, labor shortages, and reduced working hours have posed challenges to logistics fulfillment networks.

Domestic transportation services have been particularly affected due to pandemic-related restrictions, causing a backlog of incoming and outgoing freight in restricted areas. Contract logistics providers have faced complications due to evolving regulations in various jurisdictions, resulting in extended lead times. Additionally, raw material shortages, limited workforces, and lockdowns at the manufacturer level have contributed to increased lead times. Hence, the above factors will impede the growth of the market during the forecast period.

Exclusive Customer Landscape

The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

 CUStomer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Burris Logistics Co: The company offers contract logistics products such as 3PL.

The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• C H Robinson Worldwide Inc.
• CMA CGM SA Group
• Coyote Logistics LLC
• DB Schenker
• DHL Express Ltd.
• Echo Global Logistics Inc.
• FedEx Corp.
• Hub Group Inc.
• J B Hunt Transport Services Inc.
• Kuehne Nagel Management AG
• Landstar System Inc.
• Nippon Express Holdings Inc.
• Nolan Transportation Group LLC
• Ryder System Inc.
• Schneider National Inc.
• Syncreon
• Total Quality Logistics LLC
• United Parcel Service Inc.
• XPO Inc.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

 The market is witnessing significant growth due to the increasing outsourcing of resource management in various industries. Warehousing, transportation, distribution, and inventory management are the primary services offered by contract logistics providers. The e-commerce sector's rapid expansion is driving the demand for cost-efficient order fulfillment solutions. Healthcare logistics is another significant application area for contract logistics, given the high logistics costs and the need for risk management and technology integration. The use of artificial intelligence, route optimization, and real-time tracking is transforming logistics management, enabling cost savings and improving sustainability. The digitization and industrialization of economies, foreign direct investments, and the growth of e-commerce are key factors fueling the market's expansion. Technological developments, such as cloud-integrated logistics, big data analytics, and blockchain technology, are revolutionizing the transportation industry, from demand forecasting to last-mile delivery. Joint ventures and transportation management are becoming increasingly popular as companies seek to optimize their supply chain management and reduce their carbon footprint. The truck driver shortage and the need for automation are also driving the adoption of innovative packaging and aftermarket logistics solutions. The aerospace, high-tech, and pharma and healthcare industries are significant consumers of contract logistics services. Sustainability solutions and carbon-neutral services are gaining popularity as companies strive to reduce their environmental impact. Logistics fulfillment centers and distribution management are essential components of the market, ensuring cost efficiency, customer support, and budget planning. The market is expected to continue growing, driven by the increasing need for cost savings and the digitization of various industries.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting between 2024 and 2028
• Precise estimation of the size of the market  and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming market growth and trends and changes in consumer behaviour
• Growth of the market across US
• Thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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