Growth in global e-commerce logistics may approach 10 percent in 2016-2020 period

By Patrick Burnson, Executive Editor
March 08, 2016

Despite a slowdown in world trade this spring, the e-commerce logistics market is expected to grow at 9.69 percent through 2020, maintain analysts at Technavio, a leading market research company with global coverage, based in London.

Researchers say cross-border online shopping is particularly strong in emerging markets.

These countries have recorded an increase in foreign goods consumption and are driving the demand for e-commerce logistics. During the forecast period, China is expected to emerge as the largest market for online shopping, as their growing middle-class population is increasingly spending on foreign products. Thanks to this development, the logistics market in China is predicted to exhibit significant growth and contribute to the overall revenue of the global e-commerce logistics market.

“While initially international transportation management was the primary service demanded, more recently, domestic value-added warehousing and distribution are also finding a positive reception in developing countries,” says Sharan Raj, one of Technavio’s lead analysts.

Last-mile deliveries for e-commerce

Two types of warehouses are required for e-commerce logistics, small facilities for last-mile deliveries, and larger requirements serving regional e-fulfillment. Last-mile delivery facilities are located in proximity to city centers. Originally, logistics service providers were focusing on developing regional centers, but with the growing demand for same day deliveries, last-mile delivery centers are also gaining traction.

To cater to the constantly changing logistical requirements of the e-commerce industry, vendors are expanding their existing networks or acquiring new ones.

In September 2015, Menlo Logistics partnered with real estate developer Prologis to build a distribution facility in the Netherlands. Their warehousing, distribution and fulfillment center will provide direct access to markets in neighboring countries such as Belgium and Germany. Technavio researchers predict strong demand for heavy-goods last-mile logistics, which will continue to drive the e-commerce logistics market in Europe and vendors will continue to expand their logistics capabilities, including technological capabilities, to accommodate customer requests for last-mile services.

Increasing technology investment

One of the major trends set to emerge in the e-commerce logistics market is an increase in investments in technology to help logistics service providers enhance their delivery services and monitor the movement of goods accurately given the short lead times. The use of software technologies such as warehouse management software, automated material handling equipment, warehouse control software, and other evolving technologies, such as mobile technology, global positioning systems, trailer seals, RFID, and biometrics, is expected to help logistics providers maintain a balance in inventory levels and monitor products correctly.

For instance, in 2014, Deutsche Post DHL signed a five-year contract with the Escher Group for using a software, which will allow DPDHL to streamline its network by introducing easier collection and delivery of parcels in Germany. To augment further expansion, DPDHL has also invested in BravoAdvantage, a next-generation procurement platform BravoSolution, which provides the Deutsche Post DHL group an e-procurement platform that integrates five key areas of strategic sourcing: savings management, spend analysis, supplier relationship management, and sourcing and contract management.