RIO DE JANEIRO, BRAZIL – A research report by Technavio has indicated that the third-party logistics market will see a CAGR of 5% in five years between 2020 and 2025. In the entire third-party logistic market, the maximum demand will be from the consumer’s good segment.
This does not come as a surprise provided the fact there has been a global rising demand for fast-moving food, beverage, and consumer goods along with other products such as electronic products. In short, there are ample growth opportunities for the logistic market players and this holds true even for the players of other countries like DTDC and India Post.
There has been a mutual growth of eCommerce companies and third-party logistic companies around the world, especially during and after the pandemic.
Third-Party Logistic Market in Brazil
Just like any logistic market, even the third-party logistic market in Brazil is very fragmented in the process and also in terms of players as it comprises both global and regional players.
Even though there are dominating players in the logistic sector of Brazil, there is still competition amongst them and the minor players can be described as cut-throat. In addition, it has been noticed that there has been a constant influx of global logistic players in the market, especially through the process of mergers and acquisitions. The end result of which is consolidation in the market.
With the increase of both manufacturing and agricultural activities, it is expected that the competition between the various third-party logistic players will further intensify. The maximum growth for these logistic players is expected to come from the warehousing sector.
Market Trends In Third-Party Logistic Market
The increasing acceptance of blockchain technology for goods has been a major hit in the third-party logistic markets in Brazil. Using blockchain technology has improved both the data security and efficiency of the companies. In addition to that, blockchain technology is the driving factor to eliminate overhead costs.
A few years back the process of documents and administration alone bore 15-20% of the overall cost of transportation but such cost can be easily wiped out with the help of blockchain technology. This is an emerging trend and it is expected that blockchain technology acceptance in the third-party logistic players will result in the growth of the business.
However, the report indicates that the growth expected from the adoption of blockchain technology will be reduced owing to the rise of cargo thefts in the country. Most of the logistic services in Brazil are provided through roads and there have been rising cases of cargo theft. As a result of this, many third-party logistic players are taking precautionary safety measures to stay away from it. However, it is currently a challenge for the third-party logistic players.
A growth of 5% between 2020 to 2025 for the third-party logistic players in Brazil indicates that the market share will increase by US$5.22 billion. Currently, the flourishing e-commerce sector of Brazil is driving the growth of third-party logistics. It is expected that this will be helpful in the decline that the segment faced especially during the Covid-19 pandemic.
The e-commerce companies are not currently working to have their own logistic service. They are dependent on third-party logistic companies to ensure that the products reach the end-users living in different regions of the country. The third-party logistic companies are the ones that are ensuring the efficiency in the supply chain of the e-commerce companies.
In 2020, the eCommerce companies of Brazil will witness a growth of 56% resulting in a sales revenue of almost US$20 million. The rising growth of the eCommerce companies will further increase the demand for third-party logistic companies too. As discussed above, this is a global trend where mutual growth is seen between the eCommerce companies and logistics companies.
Currently, to make the most out of the opportunity, the third-party logistic players should focus on both fast-growing segments and slow-growing segments that have the potential to grow in the future. The maximum growth is expected to come from the consumer goods segment followed by the manufacturing and automotive segment.
Also, it needs to be noted that the consumer goods which are generally in demand in Brazil are both seasonal and uncertain, therefore the logistic service along with transporting the goods should also over the companies the option of storing these goods for a better service. This will ensure reduced cost and fast fulfillment of the orders.