Understanding the logistics industry is essential for anyone operating in or around it, from logistics managers themselves to sellers and customers who are impacted by the supply chain. Read along to learn more about the logistics industry and just how big it actually is.
What is Logistics?
Logistics is the transportation of commercial goods from a seller to a customer. This is often handled through logistics management services, companies like ours, known as third-party logistics providers (3PL), who safely transport goods from the place of origin to its final destination. Here’s a brief video further explaining how logistics works:
How Big is the Logistics Industry?
Most of the data we have on logistics are estimates based on a percentage of global GDPs. The closest estimate for the global logistics industry is between $8 trillion to $12 trillion each year. In the US alone, estimates are that about 10% of the GDP is attributable to the logistics industry, a sizable amount in any given year. If we take 2019’s data for example, 10% of the GDP is $2 trillion, an incredible total showing the sheer size of the logistics industry and all it touches.
Globally, the conversation changes slightly, as the processes and efficiencies are more of a challenge outside the US, resulting in less consistent data over the last five years. Poor efficiencies cause elevated cost structure, differing the global data from that specific to the US. Globally, the logistics market was $9.6 trillion in 2018, of which trucking accounted for 43% of total logistics costs. Storing inventory was also a top cost, as well as non-trucking modes such as air, maritime and rail.
Forecasts predict total global logistics costs to grow at a rate over 5% annually, which would put the total market over $12 trillion by 2023. If we add in the costs associated with infrastructure, such as road repairs,, ports, rail and airports, the size of the global logistics industry will exceed $15 trillion by 2023, making it one of the most significant industries in the world.
Logistics in the United States
Similar to the global logistics numbers, US logistics costs were more than $1.6 trillion, with nearly two-thirds of the cost related to transportation. The next greatest cost was inventory costs accounting for 30% of all costs. Trucking, expectantly, accounts for the bulk of US logistics spend, as most goods are transported throughout the country by truck utilizing the highway systems. Parcel transportation is the second greatest mode of transportation, as the rise of e-commerce sales have increased significantly in recent years. Finally, rail transportation is third, accounting for about 8% of transportation revenue in 2018.
With the recent growth of the Tech and Auto sectors especially, outsourcing logistics management has been necessary for many growing companies. This has resulted in the 3PL market growing to $213.5 billion in gross revenue in 2018, almost double the level reported in 2009.
Need Logistics Management Services?
If you’re in need of logistics management services, look no further! LogiWorld has a team of experienced professionals with decades of experience, ready to help. Contact us today for a quote on your shipment!