APAC Contract Logistics - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2024 - 2029)

The APAC Contract Logistics Market size is estimated at USD 259.64 billion in 2024, and is expected to reach USD 335.32 billion by 2029, growing at a CAGR of 5.25% during the forecast period (2024-2029).

The region's ability to weather the storm of economic instability strengthens its position as a preferred destination for investors and companies looking for more stability. By enhancing regional economic integration and providing access to a larger market, the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) Agreement, which took effect in January 2022, would help the ASEAN countries recover from the recent epidemic while also spurring economic growth.

Key Highlights

• Asia-Pacific is the area that is gaining ground the fastest in this market due to its quick economic development and thriving business climate. Europe has been eclipsed by Asia-Pacific to take the top spot in the global market for contract logistics. The region's growth is being fueled by a combination of robust economic expansion, rising retail enactment, and rising disposable income.
• For the seventh year in a row, China held the title of largest logistics market in the world in 2022 generating a revenue of CNY 12.7 trillion (about USD 1.83 trillion) from the country's logistics industry. The country's infrastructure is being developed with significant funding from the Chinese government. China will soon become the global leader in the logistics and transportation sectors thanks to the Belt and Road Initiative's execution. 5.2% and 5.3%, respectively, of the region's GDP growth in emerging Asia in 2022 and 2023.
• However, the rate of recovery differs amongst subregions. But, domestic demand in economies that are still catching up to their pre-pandemic trend, particularly in South Asia, supports regional growth. Growth in South Asia remained robust in 2022 at 7.0% before soaring to 7.4% in 2023. The growth rates in East Asia are normalized to 4.7% in 2022 and 4.5% in 2023, practically returning to their pre-pandemic pattern in 2021.

APAC Contract Logistics Market Trends

China is leading the way in the contract logistics market

As customer demand in China continues to grow, companies are being pressed to create more advanced distribution channels. This is due to the increased demand for higher-priced consumer goods and perishable foods that require logistics management that includes better security and handling. This is only one of the deeper changes in these economies that point to a significant growth in the demand for high-end services in both China and developing countries over the next few years.

China is expected to lead the Asia-Pacific contract logistics market. The contract logistics market in China is growing steadily. This has created new challenges for the sector, such as the need to expand product and service offerings, the need for more efficient networks, and the need to control variable costs.

The Chinese contract logistics market is mainly concentrated in consumer retail, automotive, medicine, electronics, and other industries, with the consumer retail industry making up about 50% (compared to the pre-pandemic period of 2019).

For Instance, in Febuary 2023, Cainiao Network, a logistics arm of e-commerce giant Alibaba Group Holding, announced a new agreement to build the biggest parcel lockers network in Poland with German courier giant Deutschlandpost DHL Group. The agreement, with Deutsche Post ECommerce Solutions, a division of Deutsche Post E-commerce Group, provides a foothold for the Chinese technology giant into one of Europe's fastest-growing e-commerce markets. According to the agreement, Deutsche Post ECommerce Group (DHL) and Cainiao Network (the logistics arm of Alibaba Group Holding) will jointly invest 60 million euro (USD 64,75 million) in the construction of parcel lockers throughout Poland. The two companies will combine their existing networks in order to provide consumers with more convenient access to parcel lockers, which will be installed at key locations with modern, easy-to-use interfaces. DHL's parcel shop network in Poland has already reached 1,200 locations, and DHL's parcel lockers have tripled in quality and speed in the past three years.

Demand from the Manufacturing and Automotive Sector is Driving the Contract Logistics Services

Asia Pacific is one of the world's manufacturing hubs, accounting for almost 48.5% of global manufacturing output. Today, more countries around the world are building advanced manufacturing capabilities to support Industry 4.0 growth. Industry 4.0 is revolutionizing the way global manufacturers produce and distribute their products. Cloud computing, analytics, AI, and machine learning are just a few of the technologies that leading businesses are looking to incorporate into their operations.

In 2022, China exported around 3.59 trillion USD worth of goods, which represents a growth of around 7 percent compared to 2021. Vietnam has become an increasingly attractive market for manufacturers due to the country's regional centrality, high market integration, and low production costs. Samsung, Apple, Nintendo, LG, Panasonic, and Intel are all based in Vietnam. Vietnam is also making progress in the value chain by positioning itself as a very attractive market for mid-tech due to its electronic sector.

In March 2023, China's industrial output increased by 3.9% YoY in the first quarter of 2023, according to the NBS, indicating a slight improvement in the country's economic recovery in the wake of the COVID-19 pandemic. Value-added industrial output grew by 3 percent YoY, representing a YoY increase of 0.3 percentage points compared to the previous quarter. In 2022, Chinese car manufacturers produced 27.02 m units, an increase of 3.4% YoY, while sales rose 2.1% YoY to 26.86 million. China is consolidating its position as the world's most attractive manufacturing hub, while Thailand is benefitting from cost profile improvements.

APAC Contract Logistics Industry Overview

The Asia-Pacific Contract logistics market is fragmented in nature, with a mix of major international and local companies. Some of the countries in the region, like Indonesia and the Philippines, are moderately growing, with the presence of a large number of local players and some major international players. However, Singapore, Vietnam, and Thailand are highly competitive markets, with the presence of a large number of international players. Companies are constantly under pressure to minimize costs and optimize operational efficiency. In the wake of investment shifts and diversification of global supply chains, international investors are increasingly interested in mergers and acquisitions in the APAC logistics market.

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