Warehousing shortage slows contract logistics market

Last year saw the slowest pace of growth in the contract logistics market since 2014 (other than the Covid contraction of 2020), according to TI’s latest Global Contract Logistics Report.

The research found that the contract logistics market was hit by the global economic slowdown and a weakening economy, compounded by a lack of warehousing.

The report, published this week, examined core trends influencing the contract logistics market, such as M&A, robotics and automation in the warehouse, warehousing availability and cost.

It also looked at some of the key challenges effecting the contract logistics market and found that one of the major constraining factors was lack of warehouse space for logistics providers.

The report revealed that nine out of ten 3PL respondents are currently experiencing increased pressure on margins, driven predominantly by increased costs.

In addition, whilst M&A deals have been particularly prevalent the past several years, the pace of acquisitions has slowed into 2023, the report notes.

Nia Hudson, TI research analysts, said: “2022 has brought an increasingly challenging operating environment for contract logistics providers, characterised by high inflation and weak demand.

“Contract logistics companies have largely mitigated inflationary issues at the top line by largely passing increasing costs on to customers.

“However, from a demand perspective, the market does not seem to have fared as well following the markets post-pandemic bounce back in 2021. Ti’s real terms growth forecast, which shows underlying market growth and changes to market performance, illustrates this well.”

Original Article – https://motortransport.co.uk/blog/2023/06/28/warehousing-shortage-slows-contract-logistics-market/