Share
October 11, 2017 10:15 AM, EDT
New Report Projects $1.1 Trillion Market for Global Logistics Services in 2022
staxnet/flickr

Global spending on third-party logistics services is projected to top $1.1 trillion in 2022 from $802 billion in 2016, according to new estimates by Armstrong & Associates Inc.

The projections are based on market estimates for seven major regions and 190 countries.

In a report issued Oct. 5, Armstrong provides a detailed breakdown of global and regional infrastructure, including highways, railroads, waterways and pipelines, and then calculates the total cost of logistics to be $8.2 trillion in 2016 and increasing to $11.2 trillion by 2022.

China is the largest logistics market in the world at $1.7 trillion, and the Asia Pacific region accounts for the biggest share of global logistics costs and 3PL revenue. Greater China and Asia Pacific, not including Japan, also are expected to be the fastest-growing regions for logistics costs from 2016 to 2022.

Logistics is defined as the transportation of goods by ground, air, rail and ocean and warehousing. Armstrong’s estimates are based on government reports from advanced economies, 3PL adoption and outsourcing rates, data on Gross Domestic Product and logistics infrastructure growth and global trade estimates.

“Our approach is to isolate total logistics costs and then subdivide them by mode based on the best available information,” Armstrong said.

Logistics costs as a share of GDP varies widely, with the United States having the lowest ratio at 8.2% and Russia the highest at 16%.

“Countries like the U.S. and China have opted for highway-based trucking solutions,” the report stated. “Countries which interfere with trucking activities (Saudi Arabia, Brazil, etc.) pay a significant price in increased logistics costs and economic competitiveness.”

A major source of growth for logistics spending and 3PL revenue is e-commerce, according to Armstrong’s analysis.

E-commerce customers in the Asia Pacific region spent $22 billion with 3PLs in 2016, and that is expected to reach $40.2 billion in 2022, the report stated. In the United States, e-commerce customers spent $8.7 billion with 3PLs in 2016. That is expected to reach $17.6 billion in 2022.