Know The Reason Behind The Contract Logistics Industry Growth?

Distribution management is a critical function involved in the supply chain that can lead to cost savings in the overall supply chain. An organized distribution network saves significant money for the businesses the costs to store them for longer times at the warehouses is eliminated. Inventory stored at warehouses incur costs to the businesses. Rent, interest payments, insurance taxes about the stock stored coupled with depreciation and obsolescence of the product add to the costs. The services offered by logistics firms add substantial value to the manufacturing companies.

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Contract Logistics

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. Distribution management is, therefore a great value-added service in the contract logistics market.

The growth of the contract logistics market is primarily attributed to the swift growth of manufacturing industry & their focus laid on core competencies and burgeoning needs for achieving cost efficiency, task optimizations and technological integrations pertaining to supply chain activities. Moreover, the benefits in managing seasonal variations of products is likely to boost the growth of the market.

Geographically, the market is currently dominated by Asia-Pacific and Europe, however, the market is expected to be in favor of Middle East & Africa and North America, which is anticipated to witness remarkable growth rate owing to the increase in demand for service integration, data management, and inclination of manufacturers towards more flexible solutions. Contract logistics is becoming essential for retailers owing to growing e-commerce worldwide. The companies are trying to achieve online and omnichannel strategies, thus, contract logistics is necessary for retailers. Contract logistics ensures the better online order fulfillment by managing the company’s inventory, packaging, tracking, transportation of goods, reporting & forecasting, and warehouse management.

 Many of the online retailers reported that free and fast shipping is the most important thing for customers. Thus, retailers are highly shifting toward contract logistics in order to manage all or part of their supply chain processes and gain a competitive advantage in the market. The in-house management if the supply chain is difficult and costly as well, as the company needs to invest in staff, necessary technology, and locations. It also helps retailers to manage costs and effectively source raw materials and assure timely delivery of their products in the market.

Leading Players

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.

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