GLOBAL E-COMMERCE LOGISTICS MARKET
E-commerce is one of the fastest growing sectors when compared to other business sectors, Coronavirus pandemic has accelerated the e-commerce growth to 25% in 2020 compared to the previous year. The pandemic has forced e-commerce onto many consumers who have rarely or never shopped via the Internet previously and expanded the use of current digital shoppers.
Retail e-commerce takes the lion’s share in the total e-commerce sector, the total sales in this sector has reached $ 3.9 Trillion and this is expected to reach $ 6.8 Trillion by 2025 with a year-on-year growth of 12%. Most of the large e-commerce are marketplace models like Amazon.com and Alibaba who have transformed their business to an e-marketplace connecting large pool of customer with vendors across nations and even cross border. Third party logistics service providers are trying to grab as much as market share provided by these marketplaces.
E-commerce logistics market can be segmented as follows:
- E-commerce Logistics Market Business Model
- Business to Business (B2B): e-commerce players connecting businesses is the B2B segment, there are a lot of players venturing into this segment for example players like Ninjakart in India who exclusively serve the retail stores by connecting them with farmers and manufacturers. This follows hip from store-to-store fulfillment model
- Marketplace: most of the e-commerce operate in this segment connecting the retails and manufacturers to the customers, in this segment logistics players use Distribution centers for fulfillment and the inventory risk is assumed by the retail player. This follows ship from store-to-home fulfillment model.
- Inventory Model: In this model e-commerce players hold inventory this gives them a strong control over inventory, they directly serve the customer with the inventory they have. This model is partly followed by Amazon in many countries and many of fashion apparel industries do follow this. But the market is moving from Inventory model to marketplace model. This follows ship from DC-to-home fulfillment model.
- E-commerce Logistics Market they serve
- Domestic market: most of the e-commerce markets do operate in this market they connect the vendors and customer in one single nation. This is a popular in countries like US, India and China.
- International market: Some companies do connect players in different countries for trade this is either B2B or B2C, Amazon Global is a perfect example of this. Many Indian/ Chinese vendors do maintain inventory in United States Amazon global helps them by providing services like transportation, warehousing, freight forwarding and customs clearance. This is one of the fastest growing models as this helps in earning foreign exchange to export countries and help in managing the demand at importing nation. This is also a very popular model across the European Union.
- E-commerce Logistics Market Ownership
- Government owned: For example, in India to facilitate better connectivity and bring more price transparency Indian government has initiated Kisan Rath mobile app facilitates farmers, FPOs and traders across India to search and contact the transport service providers for transporting the Agriculture & Horticulture produce. It connects them with the transport service providers, providing a wide range of trucks and tractor trolleys, and also allows posting the requirements of part-load as well as full-load. As this provides 3PLs with huge scope of contract logistics.
- Private owned: most of the players in the market are private owned like Amazon, e-bay, Alibaba, etc.
E-COMMERCE LOGISTICS MARKET DYNAMICS
The global e-commerce market is expected to grow at the rate of CAGR XX% by the year 2026 to be worth $XX billion. The number of companies investing in the e-commerce business is increasing which increases the outreach of existing companies and enhances the growth of the market. The logistics companies have been implementing innovative technologies to expand their business and offer a greater number of delivery options.
The most recent trends used by logistics companies are drone-based delivery systems, GPS enabled tracking orders which helps the customer to track orders, tie-ups with local vendors to deliver products on the same day. Generally, e-commerce companies sign agreements with logistics companies to enable widespread delivery systems which help them in efficiently monitoring and managing their services.
RECENT TRENDS IN E-COMMERCE LOGISTICS MARKET
- With the advent of Amazon into the pharmacy retail has given a huge potential to logistics players in both the forward and reverse logistics.
- Coronavirus pandemic has changed consumer spending patterns many of the larger retails have observed bulkier and less frequent orders, this is one good news for transportation industry which would see a high asset utilization with full truck loads, but this would put pressure warehousing space.
- FedEx Corp. has agreed to acquire ShopRunner, an e-commerce service that provides shipping for more than 100 brands, as the courier seeks to deepen its ties with online shoppers. This shows the 3PLs are moving fast into the e-commerce market this trend is likely to increase and bring the cost of transportation lower.
- This is not just in the US but Facebook Inc.’s $5.7 billion investment in a unit of India’s Reliance Industries Ltd. creates an e-commerce leviathan to take on Amazon.com and Walmart Inc. in one of the world’s most competitive internet arenas.
- The company Aramex which is a leading logistics and transportation solution company announced the adoption of a new operating model with the strategic objective of enhancing the customer service levels as well as operating efficiencies with the B2B segments.
- Aramex announced an agreement with Salesforce CRM which provides customized digital solutions. The agreement is set to digitally upgrade the company using Salesforce’s platform to enhance customer service levels.
- CEVA Logistics has developed a new platform in collaboration with CMA CGM which will be available in 160 countries. The platform offers access to networking services to customers which help them expand their business.
- CEVA logistics announced the use of e-commerce customs supervision codes to deliver shipments of parcels. The custom codes 9710 and 9810 will be used to deliver transport solutions via the Alashankou port.
- CEVA Logistics has announced the provision of responsive logistics solutions with improved sustainability. The company is offsetting 100% of its less-than-container-load (LCL) offering to reduce the carbon footprint of its customers at no extra cost.
- DHL Express has announced the inclusion of the first-ever electric cargo planes as part of the sustainable aviation future to be used for e-commerce deliverables and other cargo deliveries.
CHALLENGES THAT ARE LIKELY TO BE SEEN IN THE E-COMMERCE LOGISTICS MARKET
- Increasingly complex last-mile delivery, which can account for 30%-40% of the total cost of transportation.
- Reverse logistics as e-commerce merchandise is returned up to three times more frequently than products purchased in store.
- Digital would play a bigger role in e-commerce, 3PL with less technology adoption are likely to be pushed to the back seat and more mergers and acquisitions are likely to been seen in the near future.
- A tight warehousing labor market as e-commerce fulfillment requires three times as many employees per square foot than a traditional 3PL or Retail warehouse, with wages and incentives to retain employees are increasing and also driving increased use of autonomous robots to support activities such as picking and replenishment
- The e-commerce platforms have limited reach in the rural areas where people do not have the technology to place an order online as well as the strict government regulations hinder the growth of the market to full potential.
COVID IMPACT ON E-COMMERCE LOGISTICS MARKET
The COVID-19 pandemic resulted in lockdowns and a halt in manufacturing activities across the world. Due to the lockdowns placed, people could not go out to buy products and necessities such as groceries and medicines. The lockdown implementation resulted in closing of the non-essential retail shops which promoted people to turn to e-commerce and shop online.
The demand for same-day and last-mile delivery increased tremendously for groceries and other essential necessities. The e-commerce platforms saw an increase in sales, for instance, in Italy the supermarket chain named Carrefour reported that their orders doubled during the lockdown. The logistics company Glovo, which was just a start-up, saw a 10-fold increase in the order for deliveries.
As the lockdowns lifted, customers started to return to the conventional way of shopping. However, the demand for e-commerce has still flourished due to the convenience customers have of ordering products sitting at home. The additional discounts serve as incentives for people to shop online, increasing the market of e-commerce logistics.
The logistics company Aramex recently reported the financial results for the second quarter of the year 2021 with revenue worth $427.6 million which was an increase by 21% from the revenue reported for the same term in the year 2020 with $352.2 million. The company reported that the growth is driven by the strong recovery in the business-to-business services sector, particularly in the FMCG and healthcare companies. The company has announced a partnership with Cashfree, a payments and banking technology company based in Bengaluru, India. The partnership will work by the company integrating Cashfree’s global payouts solution.
The company CEVA Logistics has announced a new joint venture as part of the new development strategy with WAC in Karachi, Lahore and Faisalabad which will be fully branded as CEVA logistics. The company has also announced an agreement to acquire 100% of the shares of Cargex S.A. which is an international freight forwarding and perishable goods expert based in Bogota, Colombia. The company is set to acquire full control of Cargex which will advance the global expansion strategy of the company.
The company has also opened a state-of-the-art in-house operations site at the ASM International NV’s new global manufacturing headquarters in Singapore as a key provider for specialized requirements of the semiconductor industry. The company will provide critical logistics support such as storage management and inventory, trash removal, spare part management along with value-added services supporting manufacturing.
DHL Express has announced the opening of a new international hub at the Charles de Gaulle airport in Paris. The facility is set to strengthen the business of DHL in France with the company already investing EUR 80 million over the last six years for the French infrastructure. The company has also announced a strategic partnership with the e-commerce platform PrestaShop. The company will strengthen its worldwide presence by engaging PrestaShop’s 300,000 participating merchants via joint promotional events and pre-installed DHL application.
The company has announced an agreement to acquire 100% of the J.F. Hillebrand Group AG and its subsidiaries at the equity value of EUR 1.5 billion. The group is the global e-commerce logistics provider and ocean freight forwarding and transportation company. The company also announced the financial results for the second quarter of the year 2021 with revenue worth EUR 19.5 billion which was a 22.2% increase from the revenue of the same term for the year 2020 which reported revenue worth EUR 15.9 billion.
The company is launching a global brand campaign to strengthen its position as the leader of e-commerce. The company has announced a partnership with Fiat professionals to further electrify its last-mile delivery services. It plans to introduce 14,000 more electric vans to be operated in Europe by the year 2030 in order to reduce carbon emissions.
E-COMMERCE LOGISTICS MARKET COMPANIES PROFILED
- Aramex International LLC
- C.H. Robinson Worldwide Inc.
- CEVA Logistics AG
- Deutsche Post DHL Group
- FedEx Corp.
- Gati Ltd.
- Kerry Logistics Network Ltd.
- Kuehne + Nagel International AG
- United Parcel Service Inc.
- XPO Logistics Inc.
THIS E-COMMERCE LOGISTICS MARKET REPORT WILL ANSWER FOLLOWING QUESTIONS
- E-commerce Logistics Market size and Forecast, by region, by application
- Average B-2-B price for E-commerce Logistics Market , by region, per user
- Technology trends and related opportunity for new E-commerce Logistics Market tech suppliers
- E-commerce Logistics Market share of leading vendors, by region,
- 5. Coronavirus impact on E-commerce Logistics Market earnings