Summary

Europe is a leader in the global contract logistics market. The market for contract logistics in Europe is expected to register a CAGR of more than 3% during the forecast period.

While the impacts of COVID-19 have been negative overall on the economy, certain sectors have seen significant growth in sales, such as grocery, retail, and consumer electronics, marking positive developments for the European contract logistics market in 2020. Owing to the rise in demand for more integrated services, data management, and the preference for flexible solutions, the contract logistics market is expected to witness high growth.

As the demand for specific processes along the value chain and comprehensive services is growing, contract logistics is becoming the ideal solution for companies. The Western European region dominates the market by taking more than three-fourths of the market, with Germany accounting for the major share. However, countries in the Central and Eastern Europe regions are expected to achieve high growth in the future.

The retail sector is a key end-user sector of the contract logistics market in general. With Europe being a global hub for the automotive industry, it accounts for a significant share of the European contract logistics market. The contract logistics market across the world is witnessing trends of consolidation. From strategies adopted by major players, it can be observed that the companies are following the trend of acquisition to maintain a competitive edge in the market.

Key Market Trends

The Outsourced Contract Logistics Market to Grow at a High Pace

The degree of outsourcing in contract logistics is low, indicating significant room for growth. Globally, the share of outsourced contract logistics in the total market stands in the range of 10-15% only; for Europe, this share is estimated to be about 20%. The levels of outsourcing vary significantly between countries. Generally, transport and warehousing services are majorly outsourced.

E-commerce is expected to be a major driver for the growth of outsourcing. As the e-commerce market is growing rapidly, the consumer expectations for faster and reliable deliveries are also growing. In this context, outsourcing of services, such as warehousing, and order fulfillment, among others, is expected to grow. Contract logistics offers e-commerce businesses of all sizes advantages, such as easy management of the business, advanced technological solutions, reduced risk, and scalability. The European e-commerce market was valued at more than USD 700 billion at the end of 2020, growing at a rate of more than 11% as compared to 2019.

Growth in Manufacturing is Expected to Drive the Demand for Contract Logistics Services

The largest European nations such as Germany, the United Kingdom, France, and Italy traditionally dominate the manufacturing sector. As these countries became increasingly service-oriented, the manufacturing sector saw large losses, with manufacturing industries relocating and general employment in the sector decreasing. Luckily, for Europe, instead of moving abroad, much of the manufacturing has just moved over to Central and Eastern Europe. Countries such as Poland, Slovakia, and the Czech Republic have taken up the mantle of manufacturing in Europe. These countries and their neighbors have seen tremendous growth in the manufacturing sector, and they are helping reaffirm Europe as a global manufacturing center.

As of 2020, the program called ‘Move to 4.0’ was launched to support the transformation of existing manufacturing companies in Europe by diversifying or transforming their businesses through innovative technologies and new business models.

The developed countries in Europe are of high importance, as they have the required infrastructure and skills readily developed. This is expected to result in a trend of reshoring manufacturing back to Europe, and automation is very often one of the reasons for reshoring in Europe.

Competitive Landscape

The prominent players in the market include Deutsche Post DHL Group, Schenker AG (DB Schenker), Ceva Logistics, DSV AS, and SNCF Logistics/Geodis. These players based in Europe have a significant presence across the world. Even though these major players have a strong footprint across the region and account for significant market share, the market is still fragmented to some extent, with many players providing contract logistics services at different levels.

It is necessary for the companies to make sure they are constantly evolving to match the industry trends. This is likely to help them gain a stronger foothold by attracting new customers.

Most major companies are based out of the Western European region. The number of local contract logistics providers in the CEE region is comparatively lower. This is an opportunity for the existing local logistics players in the CEE region to enter the contract logistics market and gain significant market share.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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